Author Archives: TheAcsMan

Daily Market Update – June 6, 2014 (8:30 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 outcomes include:

Assignments:  JPM, MET

Rollovers:  FDO, GPS, LOW

Expirations:  BMY, BMY, EBAY, HFC,

Trades, if any, will be attempted to be made prior to 3:30 PM EDT

Daily Market Update – June 5, 2014 (Close)

The ECB announcement, which had been talked about for more than a week, came off as expected and the market appeared to be showing no interest, continuing to trade with a modest upside biaas the announcement was made.

For the most part, modest moves, whether higher of lower have characterized the pre-opening sessions lately, as well as the regular trading sessions, so it appeared as if the ECB had absoluely no impact.

Very little has had an impact on the market as a whole, although individual stocks have been beaten up more than usual lately and have been staying down longer than usual.

Since the ECB news was widely expected, it’s not too surprising that the morning seemed to be showing no impact. In what I can’t quite understand, the overnight deposit rate in the EU is now negative, while the lending rate is down to 0.15%.

The latter is even better than some of those no interest loans from your credit card company, especially since there’s no origination fee. You just have to belong to the EU.

You would think that such low rates would have an incredible stimulatory effect on the economy, but if you look at own own banking experience in the aftermath of the financial meltdowns in 2007 and 2008, that really hasn’t been the case. While our own markets went much higher after easy money became available to the banking system, it wasn’t because of any ensuing economic boom. It’s not too likely that the same kind of market growth will be seen in the European markets and there’s certainly no expectation that multi-national businesses will experience much benefit from increased spending.

So that leaves tomorrow’s Employment Situation Report as the final test for the week that saw another record close on the S&P 500 yesterday and shows no sign of giving up on the climb.

At least that’s what you would have thought, until 10:16 AM, when the market abruptly turned around from it’s morning low point, which had the DJIA down about 20 points and the S&P 500 down 5 points from yesterday’s close.

The conventional wisdom is that this market was once again moved by the casual thoughts of hedge fund manager David Tepper, who said he now had less to worry about, except that those words came almost two hours after the turnaround started. In fact, the S&P went up only another 2 points after his comments and the DJIA went up just another 9 points.

So you can be the judge.

We still do have tomorrow to deal with.

Lately the talk has started looking at the growth in employment from a cynical perspective, beginning to question whether the recent large numbers have been sufficient or at least meaningful.

While I don’t expect much to happen with tomorrow’s announcement, that kind of skepticism can get magnified in the event that the reported number comes in as a disappointment, particularly now that weather is out of the equation.

But none of that changes what has been the goal this week.

What has gotten in the way of achieving the goal have been the tepid moves seen. Ideally, the time to sell new calls is when there is a strong move higher in a stock, but those have been few and far between, as most have simply just showed up this week and are going through the motions.

TOday was a real contra-distinction to the past couple of weeks and it was nice to see any kind of conviction.

With next week’s weekly contracts appearing today a nice move higher was especially welcome in that it more broadly trickled down to the market’s components that have been essentially left out of the party. At least there was some opportunity to take advantage of that strength today and hopefully there will be some mopre tomorrow.

For now, it’s just sitting back and waiting for any sign or any signal.

Daily Market Update – June 5, 2014 (8:45 AM)

The ECB announcement, which had been talked about for more than a week, came off as expected and the market appears to be showing no interest, continuing to trade with a modest upside bias. FOr the most part, modest moves, whether higher of lower have characterized the pre-opening sessions lately, as well as the regular trading sessions.

Very little has had an impact on the market as a whole, although individual stocks have been beaten up more than usual lately and have been staying down longer than usual.

Since the ECB news was widely expected, it’s not too surprising that the morning seems to be showing no impact. In what I can’t quite understand, the overnight deposit rate in the EU is now negative, while the lending rate is down to 0.15%.

The latter is even better than some of those no interest loans from your credit card company, especially since there’s no origination fee. You just have to belong to the EU.

You would think that such low rates would have an incredible stimulatory effect on the economy, but if you look at own own banking experience in the aftermath of the financial meltdowns in 2007 and 2008, that really hasn’t been the case. While our own markets went much higher after easy money became available to the banking system, it wasn’t because of any ensuing economic boom. It’s not too likely that the same kind of market growth will be seen in the European markets and there’s certainly no expectation that multi-national businesses will experience much benefit from increased spending.

So that leaves tomorrow’s Employment Situation Report as the final test for the week that saw another record close on the S&P 500 yesterday and shows no sign of giving up on the climb.

Lately the talk has started looking at the growth in employment from a cynical perspective, beginning to question whether the recent large numbers have been sufficient or at least meaningful.

While I don’t expect much to happen with tomorrow’s announcement, that kind of skepticism can get magnified in the event that the reported number comes in as a disappointment, particularly now that weather is out of the equation.

But none of that changes what has been the goal this week.

What has gotten in the way of achieving the goal have been the tepid moves seen. Ideally, the time to sell new calls is when there is a strong move higher in a stock, but those have been few and far between, as most have simply just showed up this week and are going through the motions.

With next week’s weekly contracts appearing today any nice move higher that more broadly trickles down to the market’s components may finally offer that opportunity.

For now, it’s just sitting back and waiting for any sign or any signal.

Daily Market Update – June 4, 2014 (Close)

With the exception of the monthly release of the FOMC statement, Wednesdays tend to be quiet trading days. Even the ADP employment statistics don’t do very much to shake up the market and today seemed to be no exception in the early morning and stayed true to that path.

At different times over the years different economic statistics have had acute importance. There was a time when it was the money supply. Then there was a time when it was the trade deficit. Inflation rate was once an important measure and so on and on.

This week there are still two potentially big events to come, but I don’t think that either will have too much of an impact, yet there’s very little reason to chance that belief.

A real contrarian would believe that all of the negative sentiment going around, even as we hit new highs, can be nothing more than a signal to commit even more to the long side.

While the crowd usually isn’t right, there has to be the realization that sometimes even the crowd gets it right.

How unusual is it that a market that continually reaches new highs does so on such consistently light volume?

This morning looked to get off to a mildly negative start and it wasn’t  too likely that the market would commit very strongly in either direction in advance of the ECB announcement and then the Employment Situation Report.

As the morning started, I didn’t think that it too unlikely that I’d be adding any new positions this week, although I believed that to be the case yesterday, as well. The difference is that today was Wednesday and that tends to be a slow trading day for me, as well as for the markets. For many positions the new option contracts don’t come out until tomorrow and the premium for just three days, especially in a low volatility environment makes it very difficult to justify taking on the risk. For a 7 day contract? Perhaps. But 3 days? Not likely.

One thing that caught my interest yesterday was a report by Goldman Sachs on commodities, which have basically been the bane of my recent existence.

They are shifting to a more bullish stance on commodities and they have been an influential voice in the past, although not always right and not always right away. Certainly not today.

This time, though, I hope they’re right and soon, too.

Not only for the direct impact on commodity prices, but also on the indirect impact which would be reflected in increasing industrial activity and economic growth.

Not much happens overnight, but if anything, I’m patient and hopeful that this t
ime Goldman has gotten it right. If they have, it’s not too likely that the current stock market has anticipated that kind of growth and that could be a catalyst to go even higher, as it’s otherwise difficult to see what the catalyst would be.

This morning, as for the past 2 days, I was hopeful for some opportunities to find new cover for some positions, but as the market has been so quiet and trading within such a narrow range, there haven’t been too many of those opportunities, so it has been a very slow week, made sustainable only by last week’s rollovers.

As with most event driven markets, that situation could easily change tomorrow or Friday, or on both days. Hopefully, the week will be one that finds no disappointment in the awaited reports and some of the market’s climb higher trickles down to more stocks and carries them along for a change.

Too many have been left behind and the market has been very unforgiving while holding grudges for far too long.

Daily Market Update – June 4, 2014 (9:00 AM)

With the exception of the monthly release of the FOMC statement, Wednesdays tend to be quiet trading days. Even the ADP employment statistics don’t do very much to shake up the market and today seems to be no exception.

At different times over the years different economic statistics have had acute importance. There was a time when it was the money supply. Then there was a time when it was the trade deficit. Inflation rate was once an important measure and so on and on.

This week there are still two potentially big events to come, but I don’t think that either will have too much of an impact, yet there’s very little reason to chance that belief.

A real contrarian would believe that all of the negative sentiment going around, even as we hit new highs, can be nothing more than a signal to commit even more to the long side.

While the crowd usually isn’t right, there has to be the realization that sometimes even the crowd gets it right.

This morning looks to get off to a mildly negative start and it’s not too likely that the market would commit very strongly in either direction in advance of the ECB announcement and then the Employment Situation Report.

At the moment, I think that it’s unlikely that I’ll be adding any new positions this week, although I believed that to be the case yesterday, as well. The difference is that today is Wednesday and that tends to be a slow trading day for me, as well as for the markets. For many positions the new option contracts don’t come out until tomorrow and the premium for just three days, especially in a low volatility environment makes it very difficult to justify taking on the risk. For a 7 day contract? Perhaps. But 3 days? Not likely.

One thing that caught my interest yesterday was a report by Goldman Sachs on commodities, which have basically been the bane of my recent existence.

They are shifting to a more bullish stance on commodities and they have been an influential voice in the past, although not always right.

This time, I hope they’re right.

Not only for the direct impact on commodity prices, but also on the indirect impact which would be reflected in increasing industrial activity and economic growth.

Not much happens overnight, but if anything, I’m patient and hopeful that this time Goldman has gotten it right. If they have it’s not too likely that the current stock market has anticipated that kind of growth and that could be a catalyst to go even higher, as it’s otherwise difficult to see what the catalyst would be.

This morning,
as for the past 2 days, I’m hopeful for some opportunities to find new cover for some positions, but as the market has been so quiet and trading within such a narrow range, there haven’t been too many of those opportunities, so it has been a very slow week, made sustainable only by last week’s rollovers.

As with most event driven markets, that situation could easily change tomorrow or Friday, or on both days. Hopefully, the week will be one that finds no disappointment in the awaited reports and some of the market’s climb higher trickles down to more stocks and carries them along for a change.