Category Archives: Daily Market Update

Daily Market Update – October 15,  2015  (8:15 AM)

Yesterday’s sell off was really unexpected, but if you filtered out the really large drops in Wal-Mart and Boeing, both DJIA components, all of a sudden it wasn’t quite that large.

Those two accounted for more than half of yesterday’s loss in that index, which was down 0.8%, while the S&P 500 was only down by 0.5%.

That’s still a sizeable drop, but it was really greased by the rapid plunge in Wal-Mart, which took a nearly 10% plunge in a heart beat, about 64 minutes into trading.

This morning it looks as if we’re back to the pattern that was in effect prior to the run higher over the previous 10 days.

That pattern had large declines one day being very often offset in part the following day by some kind of tepid recovery.

The net result of that pattern was to take the market lower and lower.

While I’d like to see the market strengthen, the way it had moved higher over these two previous weeks isn’t really the historical way that the markets have built strength.

For the rest of this week and for next week, which is the start of the November 2015 option cycle, there continues to be relatively little news.

While we await the FOMC meeting the following week most of our attention will be focused on earnings which really started in force earlier this week and continued this morning with some big names reporting.

With some mixed results coming from the major financials there hasn’t been too much reason for the market to make a strong statement in one direction or another as the financial sector results so far seem to be very much company specific and without any over-riding themes.

For the rest of the week I don’t think that I’ll surprise myself again and open another new position as was the case yesterday. Increasingly, as this market goes back and forward, I find myself doing what has often been the easiest and most profitable of all things, which is simply to go back to the well for the same stocks over and over again. As long as those stocks go back and forth around some kind of arbitrary price point it is almost like shooting fish in a barrel.

That accounts for the fact that two of this week’s purchases weren’t on the prospective weekly list and that’s been the case over the past few weeks, as well.

There’s no doubt that doing things that way is more boring, but it’s the kind of boring that I can easily live with and would much rather deal with than the excitement of new discovery.

Hopefully this week will again end with a good combination of rollovers and assignments and leave us in good shape to begin populating the November weekly cycle with positions.

Daily Market Update – October 14,  2015  (Close)

Yesterday was another pretty boring day made even more so by having had my internet and cable connections restored.

The day started with some disappointing earnings by Johnson and Johnson that couldn’t be ignored even after the announcement of a big stock buyback and ended with a less than enthusiastic reception from investors after the market closed when both JP Morgan and Intel reported earnings.

The early response to the Intel earnings may paint a picture of what this new earnings season may be like, as the initial response was actually a very positive one, as the earnings were better than expected. Not too long afterward the selling started and reasonably good news was treated as if it was disappointing.

Of course, just when you think you have it all figured out, Intel turned around beautifully even as the overall market just crumbled away.

Early indications this morning, however, from Bank of America and Wells Fargo were showing their early earning gains as holding up, but their conference calls still awaited and Wells Fargo wilted, while Bank of America at least kept its head above water..

So this morning’s futures were again flat, as that had been the theme for this week, so far, but the market paid no attention to that and went its own not so merry way that just got less and less merry as the day wore on.

With a couple of new purchases for the week and now entering the mid-point, I thought that I was likely done spending money for the week and would instead have loved to have simply had the opportunity to do anything to generate some more income for the week.

Instead, there was more parting of the ways with cash and some more opportunity to generate cash, thanks to some strength in precious metals.

After a few weeks of large moves, this week, was looking as if it was  shaping up as one for everyone to just sit back and take a deep collective breath.

So much for appearances.

From a technician’s point of view a breather would have been a very good thing following a very quick 6% move higher, just as developing a period of stability after a large drop would be considered to be a good thing.

Having these periods of collection is usually a sign that those who are prone to rash trading have been flushed out and more rational minds can prevail, even if their time period for dominance can be measured only in minutes sometimes.

I don’t know where those rational minds went today, because despite Wal-Mart’s glum news, there really wasn’t much reason for the market to follow along.

For now, things do still seem rational, but there really hasn’t been much in the way of news that can elicit a market response. While we will be getting a torrent of earnings coming in over the next two weeks, the real news may just end up being the more macroeconomic stories that can be interpreted as having an influence over the FOMC as they prepare to have their October meeting.

Until then, though, it will be a focus on individual names and at some point there may be an over-riding theme, as there has been for the past couple of quarters. 

That theme has been missing on the top line and beating on the bottom line.

While everyone loves to see profits it doesn’t necessarily paint a very positive picture when comparative revenues are down or less than expected, even as profits may increase, especially when those profits are being reported on a per share basis and the denominator of shares is shrinking.

Or when the profits come as a result of cost savings, such as was the case for Bank of America this morning, which reported a quarter with significantly lower legal costs and
was actually suffering from some of the bigger picture issues that JP Morgan reported.

That over-riding theme hasn’t been the most conducive for the market to continue its move higher, even though for the longest time the market did ignore the illusion of profits.

Daily Market Update – October 14,  2015  (8:15 AM)

Yesterday was another pretty boring day made even more so by having had my internet and cable connections restored.

The day started with some disappointing earnings by Johnson and Johnson that couldn’t be ignored even after the announcement f a big stock buyback and ended with a less than enthusiastic reception from investors after the market closed when both JP Morgan and Intel reported earnings.

The response to the Intel earnings may paint a picture of what this new earnings season may be like, as the initial response was actually a very positive one, as the earnings were better than expected. Not too long afterward the selling started and reasonably good news was treated as if it was disappointing.

Early indications this morning, however, from Bank of America and Wells Fargo are showing their early earning gains as holding up, but their conference calls still await.

So this morning’s futures are again flat, as that’s been the theme for this week, so far.

With a couple of new purchases for the week and now entering the mid-point, I’m likely done spending money for the week and would love to have the opportunity to do anything to generate some more income for the week.

After a few weeks of large moves, this week, however, is shaping up as one for everyone to just sit back and take a deep collective breath.

From a technician’s point of view that would be a very good thing following a very quick 6% move higher, just as developing a period of stability after a large drop would be considered to be a good thing.

Having these periods of collection is usually a sign that those who are prone to rash trading have been flushed out and more rational minds can prevail, even if their time period for dominance can be measured only in minutes sometimes.

For now, things do seem rational, but there really hasn’t been much in the way of news that can elicit a market response. While we will be getting a torrent of earnings coming in over the next two weeks, the real news may just end up being the more macroeconomic stories that can be interpreted as having an influence over the FOMC as they prepare to have their October meeting.

Until then, though, it will be a focus on individual names and at some point there may be an over-riding theme, as there has been for the past couple of quarters. 

That theme has been missing on the top line and beating on th bottom line.

While everyone loves to see profits it doesn’t necessarily paint a very positive picture when comparative revenues are down or less than expected, even as profits may increase, especially when those profits are being reported on a per share basis and the denominator of shares is shrinking.

Or when the profits come as a result of cost savings, such as was the case for Bank of America this morning, which reported a quarter with significantly lower legal costs and was actually suffering from some of the bigger picture issues that JP Morgan reported.

That over-riding theme hasn’t been the most conducive for the market to continue its move higher, even though for the longest time the market did ignore the illusion of profits.

Daily Market Update – October 13,  2015  (Close)

Yesterday was a pretty boring day, or at least so I think it may have been.

That’s because I had an internet and cable outage from about 11 AM to 6 PM and spent the day trying to get the usual amount of information through the tiny form factor of a cell phone.

That’s not a very satisfying way of trying to get anything done, especially if you weren’t anticipating that to be the case.

As far as I could tell markets weren’t moving much, but for me the flow of news that usually serves as a background for what’s going on, was absent. Toggling back and forth between tiny screens and not having a grasp on whatever intuitive design there may have been to the brokerage app made it a long day.

I suppose I could have done something constructive around the house or otherwise with my time but the expectation was that the outage was only going to be momentary.

The good news was that the work crews beat their 3 AM estimate by about 9 hours.

I did have one other trade sitting hoping to get made, but tweaking the prices and checking the quotes on that little hand held is a lot harder than on a big screen and a full program, rather than a streamlined app.

Today the market looked as if it would be getting off to a slightly negative start. Despite having had a couple of tiny losses in the S&P 500 over the past week and half, the DJIA has been on a streak that may be challenged today.

Today would also turn out to be a boring day and it would also break the DJIA consecutive streak, but not in any meaningful way.

With some money sitting in reserve, I had no qualms about putting some more of it to work this week, although volatility has come down despite there still being considerable uncertainty about what’s coming next.

What is next are the beginning of the big names reporting earnings. Financials start this afternoon after the final bell and will continue through to next week.

Good numbers from the financial sector don’t necessarily say anything about how the rest of the market will react when they start reporting numbers, but good numbers from the financials wouldn’t hurt.

With a handful of positions expiring this week and some chance for either assignment or rollover and a couple of ex-dividend positions this week, I still wouldn’t mind trying to find some new opportunities to generate some more income and after today’s new purchase. The likelihood is that I would like to stick with a weekly option, but as the week draws on there’s more reason to look at expanded weekly time frames, especially if a dividend is involved, although there isn’t much on the dividend radar screen for next week.

Tomorrow does bring a Retail Sales Report that could also serve to move markets. With credit card companies now suggesting that consumer discretionary spending is finally starting to move higher, perhaps representing the energy dividend that we’ve been waiting to receive for nearly a year, there may finally be reason to think that the data will become more compelling for the FOMC to take some action.

The next FOMC meeting is later this month, although it seems that there would have to be a lot of good news and in a very short period of time to result in an interest rate increase, especially after the last Employment SItuation Report.

So for now, we may simply be guided by fundamentals for the next few weeks, barring any international crises in the Middle East or financial meltdowns in China.

A world guided by fundamentals and not distracted by explosive events and fears would be a good thing, even if only until the end of the year.

Daily Market Update – October 13,  2015  (9:00 AM)

Yesterday was a pretty boring day, or at least so I think it may have been.

That’s because I had an internet and cable outage from about 11 AM to 6 PM and spent the day trying to get the usual amount of information through the tiny form factor of a cell phone.

That’s not a very satisfying way of trying to get anything done, especially if you weren’t anticipating that to be the case.

As far as I could tell markets weren’t moving much, but for me the flow of news that usually serves as a background for what’s going on, was absent. Toggling back and forth between tiny screens and not having a grasp on whatever intuitive design there may have been to the brokerage app made it a long day.

I suppose I could have done something constructive around the house or otherwise with my time but the expectation was that the outage was only going to be momentary.

The good news was that the work crews beat their 3 AM estimate by about 9 hours.

I did have one other trade sitting hoping to get made, but tweaking the prices and checking the quotes on that little hand held is a lot harder than on a big screen and a full program, rather than a streamlined app.

Today the market looks as if it will be getting off to a slightly negative start. Despite having had a couple of tiny losses in the S&P 500 over the past week and half, the DJIA has been on a streak that may be challenged today.

With some money sitting in reserve, I have no qualms about putting some of it to work this week, although volatility has come down despite there still being considerable uncertainty about what’s coming next.

What is next are the beginning of the big names reporting earnings. Financials start this afternoon after the final bell and will continue through to next week.

Good numbers from the financial sector don’t necessarily say anything about how the rest of the market will react when they start reporting numbers, but good numbers from the financials wouldn’t hurt.

With a handful of positions expiring this week and some chance for either assignment or rollover and a couple of ex-dividend positions this week, I still wouldn’t mind trying to find some new opportunities to generate some more income. The likelihood is that I would like to stick with a weekly option, but as the week draws on there’s more reason to look at expanded weekly time frames, especially if a dividend is involved.

Tomorrow does bring a Retail Sales Report that could also serve to move markets. With credit card companies now suggesting that consumer discretionary spending is finally starting to move higher, perhaps representing the energy dividend that we’ve been waiting to receive for nearly a year, there may finally be reason to think that the data will become more compelling for the FOMC to take some action.

The next FOMC meeting is later this month, although it seems that there would have to be a lot of good news and in a very short period of time to result in an interest rate increase, especially after the last Employment SItuation Report.

So for now, we may simply be guided by fundamentals for the next few weeks, barring any international crises in the Middle East or financial meltdowns in China.

A world guided by fundamentals and not distracted by explosive events and fears would be a good thing, even if only until the end of the year.