Author Archives: TheAcsMan

Daily Market Update – February 28, 2014 (9:00 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:

Assigned: LOW, MA, MOS, VZ

Rolled: GE, TGT, YUM

Expired:  AIG, APC, CSCO, INTC

Trades, if any, will be attempted to be made prior to 3:30 PM (EST)

Daily Market Update – February 27, 2014 (Close)

Normally, you would think that on a day that has Durable Goods, Jobless Claims and Janet Yellen offering Congressional testimony it would be a potentially volatile day in the markets.

With some disappointment in those numbers one may also have expected a tenuous market to respond with some negativity, particularly since there’s little indication that the Federal Reserve might turn the “mother’s milk” spigot back on in response to single data points.

The problem is that makes use of rational thought and logic.

Instead, the past few days have seemed to be focused on different numbers and no emphasis on words relating to policy.

Specifically the market has simply cared about the intra-day high on the S&P 500 and the closing high.

Today, in a very calm manner, it did just that.

Anything else happening during the past few days, such as earnings reports or news from Crimea, served only as a means to bring the market closer to, or further away from those levels.

Technicians are jumping up and down telling everyone that will listen that if only you had looked at the charts you would have known that there would be this kind of resistance.at that level.

If the market had skyrocketed higher those same technicians would have been jumping up and down to tell anyone that would listen that if only you had looked at the charts you would have known that the market was set to explode at that level.

They’re right. You can have your cake and eat it, too.

For me, Thursdays just represent that time when you begin thinking about the coming week.

What past opportunities will come to their natural ends as the week comes to an end and which opportunities won’t, as well as which will go on to live yet another week, while earning their keep.

Whatever the answers to those questions may turn out to be, they then predicate thoughts for the coming week.

While still sitting on some cash and hopefully adding to it by tomorrow’s close, it would be nice to see some resolution around that 1850 level.

My expectation is that resolution will be on the higher side of 1850, but in the past comebacks from correction attempts there hasn’t been the slightest hesitancy in moving forward once that inflection point was reached. So far, this time is a little different and the resistance has been there, especially manifesting itself a few times this week with reversals that moved the market from above to below the magical 1850 level.

I’m not a technician and don’t place too much emphasis on that sort of thing, but it’s not likely that kind of behavior is coincidental. There are plenty of believers and their beliefs matter, particularly as a collective gro
up.

While I usually hope to see alternating market moves, especially as they may contribute to volatility, for now, my hope is that the direction is just higher, but in moderation.

Moderate price moves in either direction are always good, especially when looking to make purchases, but lately the markets have been exhibiting lots of “all or none” kind of behavior and sustaining prices longer than in the past when the behavior has been in response to disappointment.

Retail is a good example and seems to be suddenly waking up after more than a quarter in deep slumber, with some very few exceptions. Never mind that the excitement over the numbers is related to significantly reduced expectations and comments like “losses weren’t as bad as expected.”

Imagine the response of retail stock share price if they actually had something good to report. Yet the sentiment has quickly changed, despite there not being tangible evidence that people are in a position to increase their discretionary spending.

Ultimately, whereas these sort of things used to matter, it’s not so clear that they any longer do.

Instead, looking forward a few days at a time and changing sentiment and outlook as often as the market does, seems to be an increasingly rational alternative to believing in the sustained rational behavior of the market and the people that guide its movements.

For a change, today’s sanity, as the 1850 level was breached, was a welcome change from what we’ve gotten used to out of necessity.

Daily Market Update – February 27, 2014 (9:30 AM)

Normally, you would think that on a day that has Durable Goods, Jobless Claims and Janet Yellen offering Congressional testimony it would be a potentially volatile day in the markets.

With some disappointment in those numbers one may also have expected a tenuous market to respond with some negativity, particularly since there’s little indication that the Federal Reserve might turn the “mother’s milk” spigot back on in response to single data points.

The problem is that makes use of rational thought and logic.

Instead, the past few days have seemed to be focused on different numbers and no emphasis on words relating to policy.

Specifically the market has simply cared about the intra-day high on the S&P 500 and the closing high.

Anything else happening during the day, such as earnings reports, served only as a means to bring the market closer to, or further away from those levels.

Technicians are jumping up and down telling everyone that will listen that if only you had looked at the charts you would have known that there would be this kind of resistance.at that level.

If the market had skyrocketed higher those same technicians would have been jumping up and down to tell anyone that would listen that if only you had looked at the charts you would have known that the market was set to explode at that level.

They’re right. You can have your cake and eat it, too.

For me, Thursdays just represent that time when you begin thinking about the coming week.

What past opportunities will come to their natural ends as the week comes to an end and which opportunities won’t, as well as which will go on to live yet another week, while earning their keep.

Whatever the answers to those questions may turn out to be, they then predicate thoughts for the coming week.

While still sitting on some cash and hopefully adding to it by tomorrow’s close, it would be nice to see some resolution around that 1850 level.

My expectation is that resolution will be on the higher side of 1850, but in the past comebacks from correction attempts there hasn’t been the slightest hesitancy in moving forward once that inflection point was reached. So far, this time is a little different and the resistance has been there, especially manifesting itself a few times this week with reversals that moved the market from above to below the magical 1850 level.

I’m not a technician and don’t place too much emphasis on that sort of thing, but it’s not likely that kind of behavior is coincidental. There are plenty of believers and their beliefs matter, particularly as a collective group.

While I usually hope to see alternating market moves, especially as the
y may contribute to volatility, for now, my hope is that the direction is just higher, but in moderation.

Moderate price moves in either direction are always good, especially when looking to make purchases, but lately the markets have been exhibiting lots of “all or none” kind of behavior and sustaining prices longer than in the past when the behavior has been in response to disappointment.

Retail is a good example and seems to be suddenly waking up after more than a quarter in deep slumber, with some very few exceptions. Never mind that the excitement over the numbers is related to significantly reduced expectations and comments like “losses weren’t as bad as expected.”

Imagine the response of retail stock share price if they actually had something good to report. Yet the sentiment has quickly changed, despite there not being tangible evidence that people are in a position to increase their discretionary spending.

Ultimately, whereas these sort of things used to matter, it’s not so clear that they any longer do.

Instead, looking forward a few days at a time and changing sentiment and outlook as often as the market does, seems to be an increasingly rational alternative to believing in the sustained rational behavior of the market and the people that guide its movements.

Daily Market Update – February 26, 2014 (Close)

I recently had a comment on Seeking Alpha by someone who is absolutely convinced that Deckers, which reports earnings this week will be another Michael Kors in that regard. Specifically, he was as sure and as emotional as you could likely be that Deckers will blow out their numbers and equally certain that they’ll put forward great guidance. He then equated those two with shares going to $95, which would represent about a 12% gain.

He may very well be right. In fact, the option market almost agreed with that opinion, believing that shares could go to $93.

However, another part of the equation is a little less objective than the numbers. which arguably can themselves have some of their objectivity stripped away and modified as they’re being processed prior to reporting.

That part of the equation is the reaction of the market place.

No one ever has any clue how the market will react. Ever.

Just look at Monday’s nearly 200 point gain.

In fact, the market itself may not be monolithic. Now just look at Macys yesterday. It was down about 2% in the pre-open and then immediately turned around once the bell rang and was one of the strongest stocks for the day, up about 6%.

How could that be?

Doug Kass, a fairly well know investor who is often short the market, just bemoaned the fact that no one ever says “I don’t know.” It’s s if there’s some shame in admitting that there’s sometimes neither rhyme nor reason for that which we observe.

When it comes to retail, which has been an abysmal place to be as that part of the economy isn’t readily demonstrating much in the way of vitality, suddenly the message is that disappointing performance may be good. That’s essentially an aexample of “if you can’t beat them, join them,” at work.

That’s not too unusual, as we’ve certainly seen days when good news isn’t good enough or good news is met by choruses of “what have you done for me lately?”

I don’t mind a more accepting attitude, as I’d be happy to see some of my retail stocks get assigned or at least make back some of what they’ve lost. Certainly if you suffered when the attitude was not as accepting you feel as if you’re owed something.

For those that don’t have the patience that comes with having pretty much seen it all, you may never get the opportunity to see both sides of that sine curve that takes you through ups and downs, not only in price but in attitude and outlook.

I’m also reminded a little of some emotional reactions to some opinions regarding Facebook and Apple back in mid-2012. If you can recall where those two stocks were at that point, you can probably guess what the prevailing emotional opinions were at that time.

While you can always select out examples to prove or disprove a point, one thing that is certain is that certainty and the emotion that supports that certainty aren’t in your best interests when it comes to investing.

I can’t remember the  last time I was excited by a stock or the market. It undoubtedly goes back to the last time my broker tried to sell me on something, but that was a really long time ago.

I always said “yes” and almost always felt some remorse when we sold something at a loss, since I had the bad habit of continuing to follow the stock and watch that sine curve.

With the market still within easy striking reach of another new high it’s easy to get excited but I still can’t get excited about individual stocks. I still see them as utilitarian and helping to contribute to a larger mosaic rather than any one specific stock standing out as a superstar.

I really don’t know how analysts can do what they do. There was a recent story this week that spoke of how burned out they get and how quickly most leave the industry as they are constantly measured by their ability to hit the long ball, which most people are aware is well correlated with strike outs.

But everyone loves making the headlines.

I like staying below the radar and plugging away. Mid-week on the day before more Congressional testimony from Janet Yellen, I don’t know how much plugging away there will be today, probably not too much, but if the market wants to continue on a little ride higher today and maybe for the rest of the week, I still don’t mind being an observer and occasional participant in something new.

For the moment, this week is looking as quiet as last week was busy as far as trading is concerned. For now, my focus is on seeing a reasonable portion of this weeks’s expirations either being assigned or rolled over, although I’d like to add to the paltry three new positions for the week, if only something would excite me.

I was a little surprised by having made a few trades as the day unfolded, both adding new positions and finding some new cover in a day that really had no strong tone or conviction one way or another, but did demonstrate some continues resistance at the 1850 level on the S&P 500.

While previous attempts at a correction had no problems blasting through their respective highs and while I’ve been expecting the same to happen this time around, so far it’s proving to be a little different.

Tomorrow we get Janet Yellen, so we’ll see whether she can once again give the market a goose, as she did a couple of weeks ago in her second, albeit interrupted,  day of testimony. In the past, with both Greenspan and Bernanke, but especially Greenspan, when testimony was given over two consecutive days, we rarely saw the same market performance on both days. In fact, so often the net result was no impact, despite the frequent strong moves that ended up cancelling one another out.

This time, thanks to the two week weather induced break the result may be different.

That would be nice as the week and its contracts come to an end.

Daily Market Update – February 26, 2014 (9:30 AM)

I recently had a comment on Seeking Alpha by someone who is absolutely convinced that Deckers, which reports earnings this week will be another Michael Kors in that regard. Specifically, he was as sure and as emotional as you could likely be that Deckers will blow out their numbers and equally certain that they’ll put forward great guidance. He then equated those two with shares going to $95, which would represent about a 12% gain.

He may very well be right. In fact, the option market almost agreed with that opinion, believing that shares could go to $93.

However, another part of the equation is a little less objective than the numbers. which arguably can themselves have some of their objectivity stripped away and modified as they’re being processed prior to reporting.

That part of the equation is the reaction of the market place.

No one ever has any clue how the market will react. Ever.

Just look at Monday’s nearly 200 point gain.

In fact, the market itself may not be monolithic. Now just look at Macys yesterday. It was down about 2% in the pre-open and then immediately turned around once the bell rang and was one of the strongest stocks for the day, up about 6%.

When it comes to retail, which has been an abysmal place to be as that part of the economy isn’t readily demonstrating much in the way of vitality, suddenly the message is that disappointing performance may be good.

That’s not too unusual, as we’ve certainly seen days when good news isn’t good enough or good news is met by choruses of “what have you done for me lately?”

I don’t mind a more accepting attitude, as I’d be happy to see some of my retail stocks get assigned or at least make back some of what they’ve lost. Certainly if you suffered when the attitude was not as accepting you feel as if you’re owed something.

For those that don’t have the patience that comes with having pretty much seen it all, you may never get the opportunity to see both sides of that sine curve that takes you through ups and downs, not only in price but in attitude and outlook.

I’m also reminded a little of some emotional reactions to some opinions regarding Facebook and Apple back in mid-2012. If you can recall where those two stocks were at that point, you can probably guess what the prevailing emotional opinions were at that time.

While you can always select out examples to prove or disprove a point, one thing that is certain is that certainty and the emotion that supports that certainty aren’t in your best interests when it comes to investing.

I can’t remember the  last time I was excited by a stock or the market. It undoubtedly goes back to the last time my broker tried to sell me on something, but that was a really long time ago.

I always said “yes” and almost always felt some remorse when we sold something at a loss, since I had the bad habit of continuing to follow the stock and watch that sine curve.

With the market still within easy striking reach of another new high it’s easy to get excited but I still can’t get excited about individual stocks. I still see them as utilitarian and helping to contribute to a larger mosaic rather than any one specific stock standing out as a superstar.

I really don’t know how analysts can do what they do. There was a recent story this week that spoke of how burned out they get and how quickly most leave the industry as they are constantly measured by their ability to hit the long ball, which most people are aware is well correlated with strike outs.

But everyone loves making the headlines.

I like staying below the radar and plugging away. Mid-week on the day before more Congressional testimony from Janet Yellen, I don’t know how much plugging away there will be today, probably not too much, but if the market wants to continue on a little ride higher today and maybe for the rest of the week, I still don’t mind being an observer and occasional participant in something new.

For the moment, this week is looking as quiet as last week was busy as far as trading is concerned. For now, my focus is on seeing a reasonable portion of this weeks’s expirations either being assigned or rolled over, although I’d like to add to the paltry three new positions for the week, if only something would excite me.