Author Archives: TheAcsMan

Daily Market Update – September 18, 2014 (8:45 AM)

The initial response to yesterday’s FOMC statement was confusion,

While there’s usually some kind of kneejerk reaction, this time traders really didn’t know what to do as the wording, just as Jon Hilsenrath of the Wall Street Journal had said would be the case, remained unchanged.

The market went back and forth with the release but ultimately found reason to be positive during Janet Yellen’s press conference, which was longer than most, having had an unusually long prepared statement portion read before questioning began.

Some may have come to the realization that the dissenting votes in this month’s statement came from those who will no longer have a vote in just four months.

What was clear during the follow-up to the statement’s release was that the more Janet Yellen spoke the more comfortable the market became. Almost immediately as the press conference ended the market started coming down from its highs and ended up closing the day with only a mediocre gain.

But still a gain.

Getting past the FOMC eliminates one of the hurdles for the week.

Today’s hurdle, which really has its impact tomorrow, will be the results of Scotland’s independence referendum, in which 16 and 17 year olds have been newly enfranchised to vote. While they can get married and serve in the military at those ages, they cannot vote in general elections, but will be able to do so today.

Reportedly, that group is overwhelmingly for Scotland’s independence, which probably shouldn’t come as too much of a surprise. What is surprising is that their support is  said to be as a result of their concern that under continued British rule the social safety net, including health care, that they have come to view as an entitlement may be put into private hands or eliminated.

Whether an independent Scotland can continue to provide the same kind of social services isn’t part of the equation, at least for some and could help the “Yes” vote predominate.

That could make Friday a very interesting day.

With the vote seeming to be so close there’s not too much likelihood that any outcome has already been reflected in the market’s pricing. Currency traders know of the impact of the uncertainty, but thus far, our own equity markets have been standing by and awaiting an outcome and then an understanding of what either outcome can really mean in the short and long terms.

I have no clue, other than to know that uncertainty is almost always a bad thing and the only outcome that really brings uncertainty is very possibly in the hands of 16 and 17 year olds.

Having once been at that stage in life that doesn’t give me too much confidence.

This morning the market appears to have some confidence as it awaits Scotland’s decision and then the manner in which the Alibaba IPO is executed, as well as its reception.

With yesterday’s challenge having been met today’s challenge is to decide whether to roll over any positions that still have a chance to be assigned, in order to eliminate the chance that they might get taken down by any untoward market response tomorrow.

At the moment I’m disinclined to do so but would hope to get some opportunity to rollover those positions that have a lower likelihood of being assigned.

At any rate, waking up tomorrow morning will be interesting and the futures trading tomorrow may be the kind that has follow through for the rest of the day, as opposed to the mundane kind of daily trading that we normally see.

Hopefully the close of the September option cycle won’t be marred by the constellation of events colliding in the next 24 hours or so and then further marred by our imperfect interpretations of what goes on around us.

Daily Market Update – September 17, 2014 (Close)

While yesterday’s 100 point gain seems inexplicable, given that the uncertainties for the week are all set to begin this afternoon, I suppose that the 3 day settlement time defined when selling would have to end for those needing to raise money to participate in Friday’s huge Alibaba IPO, may have played a role.

That, at least, would have put some kind of a stop to the rampant selling that went on in many high profile positions that had racked up big gains this year, but doesn’t really account for buying that came in yesterday, unless there are still bargain hunters out there, who took advantage of those same decliners the day after.

Still, yesterday was a nice surprise and it would be wonderful if it could continue today up until and then through the actual time of the FOMC statement release.

Yesterday’s rally was said to be related to Jon Hilsenrath, of the Wall Street Journal, stating a belief that there would be no change in the wording of the FOMC statement that would have indicated the possibility of interest rate hikes coming sooner rather than later.

Hilsenrath seemed to have had an inside track into the Bernanke Federal Reserve’s thinking, and his “scoops” could and did move markets, but even then there were some misses.

He hasn’t established his Yellen Federal Reserve credentials yet, but the market acted as if he was the real thing and knew precisely what wording was going to be contained in this afternoon’s statement.

As it turned out, he was right, in what was really a binary opportunity. No one really factored in the possibility of the wording being changed or unchanged, but qualified in some fashion.

That didn’t happen, but it would have really fooled with everyone and created lots of confusion.

Ultimately, I don’t understand all of the concern. It is similar to what occurred when the market was concerned about the time table for tapering to Quantitative Easing. We all knew that QE had to end and we all know that interest will someday begin to rise. The pre-occupation with the difference a month or two can make in the initiation of those increases is about as ridiculous as the worries over whether tapering would be done over 6 months or 8 months.

We eventually did find that Hilsenrath was correct, but the pre-opening futures appeared to have completed its party mode and was back to awaiting something more tangible and then preparing itself for tomorrow’s results of the independence referendum vote in Scotland, which could easily go either way and could easily send markets in either direction and in unknown magnitude.

For the sake of Hilsenrath’s reputation and my stock holdings, I hoped that he would be right about the Federal Reserve continuing on its same path and not giving any hint of an acceleration.

Mostly I cared about my stocks.

As it turned out, the best thing for stocks was Janet Yellen.

Specifically, it was Janet Yellen speaking. While some began wondering why her press conference was running so long, they failed to notice that while she spoke the market liked what it was hearing. As soon as she stopped the market gave up much of those gains.

The timing of this week’s series of events, including Friday’s IPO is somewhat unfortunate as the monthly options expire this Friday and many of the positions could stand to see some strength going into that date, rather than seeing continued uncertainty and ambivalence.

I had been looking for any possible rollover opportunities prior to the 2 PM announcement, but didn’t not want to eliminate the possibility of some assignments by rolling over too early, thereby limiting cash available to begin next week’s trading activity.

Sometimes you have to roll the dice, instead and at least the rug wasn’t pulled out from under the market.

And my stocks.

Hopefully the voters of Scotland will be every bit as mindful of my needs as our Federal Reserve.

Daily Market Update – September 17, 2014 (8:45 AM)

While yesterday’s 100 point gain seems inexplicable, given that the uncertainties for the week are all set to begin this afternoon, I suppose that the 3 day settlement time defined when selling would have to end for those needing to raise money to participate in Friday’s huge Alibaba IPO, may have played a role.

That, at least, would have put some kind of a stop to the rampant selling that went on in many high profile positions that had racked up big gains this year, but doesn’t really account for buying that came in yesterday, unless there are still bargain hunters out there, who took advantage of those same decliners the day after.

Still, yesterday was a nice surprise and it would be wonderful if it could continue today up until and then through the actual time of the FOMC statement release.

Yesterday’s rally was said to be related to Jon Hilsenrath, of the Wall Street Journal, stating a belief that there would be no change in the wording of the FOMC statement that would have indicated the possibility of interest rate hikes coming sooner rather than later.

Hilsenrath seemed to have had an inside track into the Bernanke Federal Reserve’s thinking, and his “scoops” could and did move markets, but even then there were some misses.

He hasn’t established his Yellen Federal Reserve credentials yet, but the market acted as if he was the real thing and knew precisely what wording was going to be contained in this afternoon’s statement.

Ultimately, I don’t understand all of the concern. It is similar to what occurred when the market was concerned about the time table for tapering to Quantitative Easing. We all knew that QE had to end and we all know that interest will someday begin to rise. The pre-occupation with the difference a month or two can make in the initiation of those increases is about as ridiculous as the worries over whether tapering would be done over 6 months or 8 months.

We’ll find out whether Hilsenrath was correct, but the pre-opening futures appear to have completed its party mode and is back to awaiting something more tangible and then preparing itself for tomorrow’s results of the independence referendum vote in Scotland, which could easily go either way and could easily send markets in either direction and in unknown magnitude.

For the sake of Hilsenrath’s reputation and my stock holdings, I do hope that he is right about the Federal Reserve continuing on its same path and not giving any hint of an acceleration.

Mostly I care about my stocks.

The timing of this series of events, including Friday’s IPO is somewhat unfortunate as the monthly options expire this Friday and many of the positions could stand to see some strength going into that date, rather than seeing continued uncertainty and ambivalence.

I’ll be looking for any possible rollover opportunities prior to the 2 PM announcement, but would not want to eliminate the possibility of some assignments by rolling over too early, thereby limiting cash available to begin next week’s trading activity.

Sometimes you have to roll the dice, instead.

Daily Market Update – September 16, 2014 (Close)

There is so much news packed into the latter half of this week that the market should have considered taking a few days off in preparation.

What really makes this week interesting is that the news is coming from all directions and none of it is additive, although if all pointing in the same direction can end up being very significant.

First, there’s monetary policy news coming from the FOMC. Then there’s political news come from Great Britain and Scotland and finally there’s stock market news coming from the all-time largest IPO offering on Friday and its reception in the secondary market, as well as the manner in which the IPO is executed.

So it’s hard to imagine much of significance happening today as most people wouldn’t want to make any kind of significant commitment in advance of what may be an avalanche of news, any specific bit of such news that could take the market in any direction.

But the market did tack on 100 Dow points today, despite what should have been a day for caution.

Why? Ostensibly because the Wall STreet Journal’s Jon Hilsenrath, who was considered to be the best at divining what the FOMC under Bernanke was thinking, may now have added Yellen to his mind powers.

At least that may be what the market believes as it reacted to Hilsenrath’s opinion that the wording in tomorrow’s statement that could hint at a more speedy introduction of rate hikes if changed, would remain unchanged.

Got that?

At least that deflected some of the Alibaba talk.

Yesterday so much of what was being discussed was how Friday’s upcoming Alibaba IPO could dry up liquidity, although I’m not certain why that was such a late consideration, as it seemed reasonably obvious from the time that the “roadshow” began last week.

As you would expect the money to get shares of Alibaba at or after the IPO has to come from somewhere and it’s extraordinarily unlikely that those who have been sitting on the sidelines with cash are going to be the ones pumping money into those shares. Rather, people tend to take profits first and then just re-circulate the money.

So it shouldn’t have come as too much of a surprise that some of the biggest momentum names, specifically the ones that may have generated some ni
ce capital gains for some people, would be the ones to feel the pressure, especially insofar as you may need settled funds or margin to make the purchase if offered an allocation.

The timing also shouldn’t have been too much of a surprise as it takes three days for settlement and the IPO is on Friday.

Funny how that all worked out.

Having executed two opening positions yesterday I wasn’t too certain that I was going to be actively looking to add anything to that, other than hoping to capitalize on any upward movement on existing, but uncovered positions. As the day progressed there really wasn’t much inviting as far as new positions would go, but I did enjoy the move higher.

Although the morning once again looked as if it would be opening with a downward bias, this time it didn’t last too long, perhaps also helped out by most of the IPO driven selling having been concluded.

While today ended up being more exciting and certainly more profitable than expected, tomorrow morning will likely be sedate as everyone awaits the afternoon’s FOMC release. While awaiting that release the first of the weekly challenges arises as trying to decide whether to attempt rollovers of positions that may have a chance of being assigned on Friday, in an attempt to avoid any nasty surprises.

Part of that quandary is answered by the still relatively high premiums for those contracts expiring on Friday, due to all of the uncertainty and the relatively low premiums for next week, once the uncertainty is history.

For now, that means more of the same. Just sitting back and seeing what direction and sentiment the market takes and going from there while hoping for the best and not feeling guilty if able to capitalize on anything.

Daily Market Update – September 16, 2014 (9:00 AM)

There is so much news packed into the latter half of this week that the market should have considered taking a few days off in preparation.

What really makes this week interesting is that the news is coming from all directions and none of it is additive, although if all pointing in the same direction can end up being very significant.

FIrst, there’s monetary policy news coming from the FOMC. Then there’s political news come from Great Britain and Scotland and finally there’s stock market news coming from the all-time largest IPO offering on Friday and its reception in the secondary market, as well as the manner in which the IPO is executed.

So it’s hard to imagine much of significance happening today as most people wouldn’t want to make any kind of significant commitment in advance of what may be an avalanche of news, any specific bit of such news that could take the market in any direction.

Yesterday so much of what was being discussed was how Friday’s upcoming Alibaba IPO could dry up liquidity, although I’m not certain why that was such a late consideration, as it seemed reasonably obvious from the time that the “roadshow” began last week.

As you would expect the money to get shares of Alibaba at or after the IPO has to come from somewhere and it’s extraordinarily unlikely that those who have been sitting on the sidelines with cash are going to be the ones pumping money into those shares. Rather, people tend to take profits first and then just re-circulate the money.

So it shouldn’t have come as too much of a surprise that some of the biggest momentum names, specifically the ones that may have generated some nice capital gains for some people, would be the ones to feel the pressure, especially insofar as you may need settled funds or margin to make the purchase if offered an allocation.

The timing also shouldn’t have been too much of a surprise as it takes three days for settlement and the IPO is on Friday.

Funny how that all worked out.

Having executed two opening positions yesterday I’m not certain that I’m going to be actively looking to add anything to that, other than hoping to capitalize on any upward movement on existing, but uncovered positions.

This morning once again looks as if it will be opening with a downward bias, but I would imagine that most of the IPO driven selling is now done.

Unfortunately, all of that means that it may be a very boring day today and maybe even for part of the day tomorrow. Part of the quandary that awaits in advance of the first of the weekly challenges is whether to attempt rollovers of positions that may have a chance of bein
g assigned on Friday, in an attempt to avoid any nasty surprises.

Part of that quandary is answered by the still relatively high premiums for those contracts expiring on Friday, due to all of the uncertainty and the relatively low premiums for next week, once the uncertainty is history.

For now, that means more of the same. Just sitting back and seeing what direction and sentiment the market takes and going from there while hoping for the best.