Jan92015
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Daily Market Update – January 9, 2015 (8:15 AM) The Week in Review will be posted by 6 PM and the Weekend Update will be posted by Noon on Sunday. Today’s possible trade outcomes include: Assignments: BAC Rollovers: GPS Expirations: EMC This week’s ex-dividend positions were: GPS (1/5 $0.22) Next week’s ex-dividend positions are: CHK (11/13 $0.09), FCX (11/13 $0.31), WFM (1/14 $0.13)
Trades, if any, will be attempted to be made prior to 3:30 PM EST
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Jan82015
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Daily Market Update – January 8, 2015 (Close) It’s wasn’t too easy to understand why this morning’s futures were pointing so strongly higher. Wait. That’s what I said yesterday. This morning the futures were even higher than they were yesterday and there’ wasn’t much reason to account for it. It would be easy to point to yesterday’s FOMC Statement release and say that was responsible, but the market was virtually unchanged in the aftermath of that release in the afternoon. The new confusion that was contained in the altered wording of the statement would have ordinarily caused gyrations in the market as it tried to figure out what the FOMC meant, was instead simply discussed and not the basis of any emotionally charged swings in trading. That’s either adult-like or rational, neither of which are usually adjectives used when describing stock trading behavior among the masses. What was really interesting was how last night’s futures, at a time when not much is happening, suddenly went nearly 100 points higher at about 8:30 PM. At that time of the night no major markets are open to lead the US futures in sentiment, so it was odd seeing that happen, but more odd seeing that high level sustained through the night. Later during this morning’s trading there was some consensus that the rise was fueled by words from new voting FOMC Governor Charles Evans, but the timing wasn’t quite right if trying to connect his comments and the spike in futures. With so much focus on yesterday’s tragic events in France you might have thought that the sudden surge reflected some kind of substantive development in the story. While initial rumors proved to be false, had those been the impetus for the sudden pop higher, they would also have been the reason for any bursting of that bubble, except that this morning the rally is even stronger. As the morning’s strength continued and wass able to add to yesterday’s strength, that reduced the nearly 5%sudden decline in about half, in about as much time as it took to reach the bottom in that drop earlier this week. That meant trying to do more of the same and keeping an eye on all of next week’s positions and taking advantage of any price strength by either rolling over into that strength or, even better, being fortunate enough to find the opportunities to sell new call positions on uncovered positions. What I can tell you, based on the option premiums, is that next week’s premiums don’t reflect the same kind of optimism that is still being reflected for tomorrow’s market. That’s because I tried rolling over a good number of po Regardless of how today ended up, and the addition of another 30 points was a nice way to end the day, there is still tomorrow’s Employment Situation Report. There’s not too much reason to think that there will be anything in the report to spook or elate markets, although at some point there may be evidence of decreasing employment statistics related to the suddenly reduced energy prices and subsequent reduced drilling activities. While the actual statistic may not have too much impact directly on how markets react, an overly strong number will get people playing the game of “what will the FOMC think?” Too much good news could herald the kind of economic heating up that the FOMC will want to squash by increasing interest rates, although they too will have an eye on how those falling energy prices can increase GDP, while also adversely impacting employment statistics. Hopefully, as earnings season starts next week some of the impact of lower oil prices will be seen in earnings, and maybe more importantly on future guidance. Those could be the fuel for the next level higher and could bring “The January Effect” really back to life.
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Jan82015
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Daily Market Update – January 8, 2015 (8:30 AM) It’s not too easy to understand why this morning’s futures were pointing so strongly higher. Wait. That’s what I said yesterday. This morning the futures are even higher than they were yesterday and there’s not much reason to account for it. It would be easy to point to yesterday’s FOMC Statement release and say that was responsible, but the market was virtually unchanged in the aftermath of that release in the afternoon. The new confusion that was contained in the altered wording of the statement would have ordinarily caused gyrations in the market as it tried to figure out what the FOMC meant, was instead simply discussed and not the basis of any emotionally charged swings in trading. That’s either adult-like or rational, neither of which are usually adjectives used when describing stock tradoing behavior among the masses. What was really interesting was how last night’s futures, at a time when not much is happening, suddenly went nearly 100 points higher at about 8:30 PM. At that time of the night no major markets are open to lead the US futures in sentiment, so it was odd seeing that happen, but more odd seeing that high level sustained through the night. With so much focus on yesterday’s tragic events in France you might have thought that the sudden surge reflected some kind of substantive development in the story. While initial rumors proved to be false, had those been the impetus for the sudden pop higher, they would also have been the reason for any bursting of that bubble, except that this morning the rally is even stronger. If this morning’s strength continues and is able to add to yesterday’s strength, that would reduce the nearly 5%sudden decline in about half, in about as much time as it took to reach the bottom in that drop earlier this week. If so, that means trying to do more of the same and keeping an eye on all of next week’s positions and taking advantage of any price strength by either rolling over into that strength or, even better, being fortunate enough to find the opportunities to sell new call positions on uncovered positions. Regardless of how today will end up, there is still tomorrow’s Employment Situation Report. There’s not too much reason to think that there will be anything in the report to spook or elate markets, although at some point there may be evidence of decreasing employment statistics related to the suddenly reduced energy prices and subsequent reduced drilling activities. While the actual statistic may not have too much impact directly on how markets react, an overly strong number will get people playing the game of “what will the FOMC think?” Too much good news could herald the kind of economic heating up that the FOMC will want to squash by increasing interest rates, although they too will have an eye on how those falling energy prices can increase GDP, while also adversely impacting employment statistics. Hopefully, as earnings season starts next week some of the impact of lower oil prices will be seen in earnings, and maybe more importantly on future guidance. Those could be the fuel for the next level higher and could bring “The January Effect” back to life.
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Jan72015
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Daily Market Update – January 7, 2015 (Close) It’s not too easy to understand why this morning’s futures were pointing so strongly higher. Usually there has to be some kind of news for that kind of reaction prior to the markets open to account for the strong commitment in either direction. While tepid futures moves don’t have much meaning for the market’s trading once the day begins, the strong kind of early mornings usually do have some staying power, although not necessarily for the entire session. Today it stayed that way for the who session, even adding some on top of the already strong early advances. What made it unusual this morning was that it came after a failed recovery attempt in the final hour of trading, which ended up adding another 130 points to the 330 point loss from the day before. But even more unusual, while it dis come in the absence of any economic news, it also came hours before the FOMC Statement.release. It can be a risky thing to commit too much in advance of the release as you never know how the slightest nuanced change in wording can set off programmed trading. For the past couple of months the FOMC Statement hasn’t really set off too much in the way of fireworks, even with last month’s wording change, but those days could easily return. The double dip in markets seen over the last couple of weeks that had us returning toward than typical 2 month mini-correction level just a couple of weeks after the most recent one, is itself something that should be getting some attention, as that hasn’t happened in nearly 3 years and might make me reluctant to plow money into new positions, despite what appeared to be some bargain prices yesterday. This morning, my primary thought was that if the early rally could hold, I’d be more than happy to be able to sell calls on uncovered positions. However, the preceding drop of nearly 500 points in the two prior days meant that there’s lots of catching up to go making it challenging to get those sales done. While I would have liked to see some of that recovery today put positions set to expire this week into better position to either be assigned or rolled over, I would especially like to see any advance over the next few days accomplish exactly that, but for the next week, which is the final week of the January 2015 option cycle. Happily, today did offer some chance for early rollovers, both for this week and next. With only 3 positions now set to expire this week, while it would be nice to see them contribute to the weekly income stream or to regenerate cash supplies, the 11 positions expiring next week could be more meaningful contributors, so it would be nice to see their prospects improved by some continuing market strength to offset the previous few days. In the meantime, while awaiting this afternoon’s FOMC Statement, I was happy to see the market start to reclaim some of the substantial ground that it had lost over the past couple of days, especially as that resulted in something more than just paper gains for the day. While I wasn’t expecting to make any new purchases yesterday, I would have been really stunned if I added more new positions today or for the rest of the week, for that matter. Fortunately, my heart didn’t have to be put to that test, as it was nice just having the chance to capitalize a little on the advance and be left in a better position to end the day than when the day started. Other than taking advantage of any short term market climb I expect that the rest of the week will be fairly passive and filled with lots of observation, even though there’s still plenty of economic and market moving news to come in the final 1 1/2 days of trading for the week. More of what today brought would be a good way to get things started for next week.
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Jan72015
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Daily Market Update – January 7, 2015 (9:00 AM) It’s not too easy to understand why this morning’s futures are pointing so strongly higher. Usually there has to be some kind of news for that kind of reaction prior to the markets open to account for the strong commitment in either direction. While tepid futures moves don’t have much meaning for the market’s trading once the day begins, the strong kind of early mornings usually do have some staying power, although not necessarily for the entire session. What makes it unusual this morning is that it comes after a failed recovery attempt in the final hour of trading, which ended up adding another 130 points to the 330 point loss from the day before. But even more unusual, while it does come in the absence of any economic news, it also comes hours before the FOMC Statement.release. It can be a risky thing to commit too much in advance of the release as you never know how the slightest nuanced change in wording can set off programmed trading. For the past couple of months the FOMC Statement hasn’t really set off too much in the way of fireworks, even with last month’s wording change, but those days could easily return. The double dip in markets seen over the last couple of weeks that had us returning toward than typical 2 month mini-correction level just a couple of weeks after the most recent one, is itself something that should be getting some attention, as that hasn’t happened in nearly 3 years and might make me reluctant to plow money into new positions, despite what appeared to be some bargain prices yesterday. This morning, if the early rally holds, I’d be more than happy to be able to sell calls on uncovered positions, but the preceding drop of nearly 500 points in the two prior days means that there’s lots of catching up to go. While I’d like to see some of that recovery today put positions set to expire this week into better position top either be assigned or rolled over, I’d especially like to see any advance over the next few days accomplish exactly that, but for the next week, which is the final week of the January 2015 option cycle. With only 4 positions now set to expire this week, while it would be nice to see them contribute to the weekly income stream or to regenerate cash supplies, the 11 positions expiring next week could be more meaningful contributors. In the meantime, while awaiting this afternoon’s FOMC Statement, I’d be happy to see the market start to reclaim some of the substantial ground that it has lost over the past couple of days, especially if that results in something more than just paper gains for the day. While I wasn’t expecting to make any new purchases yesterday, I think that I’d really be stunned if I added more new positions today or for the rest of the week, for that matter. Other than taking advantage of any short term market climb I expect that the rest of the week will be fairly passive and filled with lots of observation, even though there’s still plenty of economic and market moving news to come in the final 2 1/2 days of trading for the week.
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