Category Archives: Daily Market Update

Daily Market Update – October 12,  2015  (Close)

This is a week that has the Shanghai market in China back in action and starting the week off with a large gain and the People’s Republic of China  putting out comments saying that the correction is over.

History shows that it’s difficult to know with much certainty when an economy or when a stock market is really at an inflection point and braggarts have a way of getting humbled very easily if they own up to their own comments.

This morning begins the first substantive week of earnings with the financial sector getting things started. As long as using history as a barometer, it’s pretty clear that the financials don’t necessarily tell us too much about the rest of the economy.

Over the past few years as the market has been in recovery, we’ve had lots of quarters with earnings jumping out of the gate as the financials had roared back, but the retail and industrial portion of the S&P 500 didn’t necessarily follow along in reporting great revenues.

Increasingly lots of attention is being placed on both the top line and the bottom line, with the top line having recently become more important. That’s because every one now admits that the bottom lines have been artificially altered by all of the stock buy backs and it has been nearly impossible to compare one quarter to a next when the number of outstanding shares has really been a moving target.

When that point comes that the top lines of companies do start to grow, we are likely headed for another leg higher and are likely to finally give the FOMC some reason to act.

This week does have a Retail Sales Report and that may give some glimpse into what is being experienced within the economy, but the more telling information will come in a few weeks as the major retailers begin spinning their numbers.

With some money in hand from a fair number of assignments last week and with only a small number of potential assignments or rollovers this week, I am very open to adding new positions, but will likely be looking at weekly expirations.

This morning the pre-opening futures were very flat, having ended last week in the same way, after accruing some nice gains for the week. The market has essentially been on an upward climb since the mid-morning turnaround on the Friday of the last Employment SItuation Report. 

With the S&P 500 having hit a low point of being nearly 12% lower, it starts this week only about 6% lower, but when the day came to its end, it was one of those rare days when not much happened and the trading range was very narrow.

That climb higher had been great, but you do have to wonder about those straight shots higher. The market rarely goes on to gains in that manner. It usually puts together lots of incremental pieces that just create a cumulative effect.

As with large declines, the market usually tries to fill in the gaps and there is certainly a big gap right now. 

Part of the reason for that gap may be that markets have again gone to believing that the delay in an interest rate increase means that their party ways can now continue. In other words, bad economic news has created an environment that’s perceived to be good for the markets.

What that means is that we will likely once again be faced with a market that will then look at good economic news as being bad for markets, just as we had finally started interpreting news on its face value.

So there may be reason to buckle up again and maybe not spend all of that money that recently showed up after last week’s assignments.

Daily Market Update – October 12,  2015  (8:45 AM)

This is a week that has the Shanghai market in China back in action and starting the week off with a large gain and the People’s Republic of China  putting out comments saying that the correction is over.

History shows that it’s difficult to know with much certainty when an economy or when a stock market is really at an inflection point and braggarts have a way of getting humbled very easily if they own up to their own comments.

This morning begins the first substantive week of earnings with the financial sector getting things started. As long as using history as a barometer, it’s pretty clear that the financials don’t necessarily tell us too much about the rest of the economy.

Over the past few years as the market has been in recovery, we’ve had lots of quarters with earnings jumping out of the gate as the financials had roared back, but the retail and industrial portion of the S&P 500 didn’t necessarily follow along in reporting great revenues.

Increasingly lots of attention is being placed on both the top line and the bottom line, with the top line having recently become more important. That’s because every one now admits that the bottom lines have been artificially altered by all of the stock buy backs and it has been nearly impossible to compare one quarter to a next when the number of outstanding shares has really been a moving target.

When that point comes that the top lines of companies do start to grow, we are likely headed for another leg higher and are likely to finally give the FOMC some reason to act.

This wee does have a Retail Sales Report and that may give some glimpse into what is being experienced within the economy, but the more telling information will come in a few weeks as the major retailers begin spinning their numbers.

With some money in hand from a fair number of assignments last week and with only a small number of potential assignments or rollovers this week, I am very open to adding new positions, but will likely be looking at weekly expirations.

This morning the pre-opening futures are very flat, having ended last week in the same way, after accruing some nice gains for the week. The market has essentially been on an upward climb since the mid-morning turnaround on the Friday of the last Employment SItuation Report. 

With the S&P 500 having hit a low point of being nearly 12% lower, it starts this week only about 6% lower.

That climb has been great, but you do have to wonder about those straight shots higher. The market rarely goes on to gains in that manner. It usually puts together lots of incremental pieces that just create a cumulative effect.

As with large declines, the market usually tries to fill in the gaps and there is certainly a big gap right now. 

Part of the reason for that gap may be that markets have again gone to believing that the delay in an interest rate increase means that their party ways can now continue. In other words, bad economic news has created an environment that’s perceived to be good for the markets.

What that means is that we will likely once again be faced with a market that will then look at good economic news as being bad for markets, just as we had finally started interpreting news on its face value.

So there may be reason to buckle up again and maybe not spend all of that money that recently showed up after last week’s assignments.

Daily Market Update – October 9,  2015  (8:15 AM)

The Week in Review will be posted by 6:00 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments:  GE, MET

Rollovers:  ANF, BAC

Expirations:  none

The following were ex-dividend this week:   GPS (10/5 $0.23)

The following will be ex-dividend next week:  FCX (10/13 $0.05)

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

Daily Market Update – October 8,  2015  (Close)

Just as you think you are seeing a pattern it disappears.

That was the case yesterday as the recent pattern would have had the day give back the gains that the market accrued 2 days prior.

Instead, and there’s no reason to complain about it, the market added on to those gains after having taken a day to catch its breath.

If that pattern were to be back in force today it would be another day to catch breath and get ready for what has been typically a very active day to close the week.

These past few weeks the market has opened and closed with a bang and has also done so on Wednesdays.

Yesterday’s gain was unexpectedly nice and another in a growing list of triple digit moves, although the net result of those moves has been to take the market to its first real correction in quite a while.

The market’s turnaround last week Friday to yesterday’s close has now shaved the loss down to 7% from its summertime highs. That’s still large by recent standards, but that gain has been sizable and very quick to unfold.

This morning the market loosed as if it will be giving back yesterday’s gains and is trading for the first time in a week with the Shanghai markets back open. Prior to those markets closing for a holiday there was some stability, but there was certainly less of an overhang for us with a very significant market being closed.

Today starts earnings season, which now basically never ends. The real torrent of important earnings begins next week as the financials start to report. Between now and then there wasn’t too much to potentially pull the market strongly in either direction as we awaited the outcome of open contracts that expire on Friday.

But what there was, were the FOMC Minutes from last month and even though we knew the bottom line decision, the minutes gave buyers reason for more buying and drove the DJIA to yet another triple digit gain and one that got stronger and stronger going into the close.

I’ve learned to not get overly wedded to the likely outcome after a Friday closing bell until after that bell has sounded, but there does appear to be a good chance of achieving some rollovers and assignments in order to be better positioned for next week, which marks the end of the October 2015 option cycle.

Today’s action helped to instill even more confidence in that belief.

Somewhat uncharacteristically, with that final week, I have fewer expiring options than is usually the case, as more and more positions have extended option contracts open with aspirational strike prices, hoping to see the market erase some losses and collect some dividends along the way.

I didn’t expect to be doing too much today, but would happily have jumped on any opportunity to sell some calls on uncovered positions or even roll over something from next week or the following weeks while there is still some additional premium from elevated volatility, which is now in the process of shrinking back.

That volatility was good while it lasted and I wouldn’t mind the market giving back some of these recent gains in order to extend some of the time that the volatility enhanced premiums would be around. That’s especially true if energy and commodities can continue to show some stability or even some strength.

That would be the best of all worlds right now, until finally getting a chance to ease up on some of those sector holdings.

Hope may not be a strategy, but without it you have nothing.

Daily Market Update – October 8,  2015  (9:00 AM)

Just as you think you are seeing a pattern it disappears.

That was the case yesterday as the recent pattern would have had the day give back the gains that the market accrued 2 days prior.

Instead, and there’s no reason to complain about it, the market added on to those gains after having taken a day to catch its breath.

If that pattern were to be back in force today it would be another day to catch breath and get ready for what has been typically a very active day to close the week.

These past few weeks the market has opened and closed with a bang and has also done so on Wednesdays.

Yesterday’s gain was unexpectedly nice and another in a growing list of triple digit moves, although the net result of those moves has been to take the market to its first real correction in quite a while.

The market’s turnaround last week Friday to yesterday’s close has now shaved the loss down to 7% from its summertime highs. That’s still large by recent standards, but that gain has been sizable and very quick to unfold.

This morning the market looks as if it will be giving back yesterday’s gains and is trading for the first time in a week with the Shanghai markets back open. Prior to those markets closing for a holiday there was some stability, but there was certainly less of an overhang for us with a very significant market being closed.

Today starts earnings season, which now basically never ends. The real torrent of important earnings begins next week as the financials start to report. Between now and then there isn’t too much to potentially pull the market strongly in either direction as we await the outcome of open contracts that expire on Friday.

I’ve learned to not get overly wedded to the likely outcome after a Friday closely bell until after that bell has sounded, but there does appear to be a good chance of achieving some rollovers and assignments in order to be better positioned for next week, which marks the end of the October 2015 option cycle.

Somewhat uncharacteristically, with that final week, I have fewer expiring options than is usually the case, as more and more positions have extended option contracts open with aspirational strike prices, hoping to see the market erase some losses and collect some dividends along the way.

I don’t expect to be doing too much today, but would happily jump on any opportunity to sell some calls on uncovered positions or even roll over something from next week or the following weeks while there is still some additional premium from elevated volatility, which is now in the process of shrinking back.

That volatility was good while it lasted and I wouldn’t mind the market giving back some of these recent gains in order to extend some of the time that the volatility enhanced premiums would be around. That’s especially true if energy and commodities can continue to show some stability or even some strength.

That would be the best of all worlds right now, until finally getting a chance to ease up on some of those sector holdings.

Hope may not be a strategy, but without it you have nothing.