Category Archives: Daily Market Update

Daily Market Update – September 22,  2015  (Close)

This morning’s sharp decline in the futures was probably an invalidation of yesterday’s decent gain coming after a sharp reversal in fortunes last week.

Yesterday seemed like a day that traders were getting back to their previous behavior that welcomed the delay of any interest rate increase because it extended their handout, which was good for equity trading. They were more than happy to continue receiving that handout rather than seeing the economy show the kind of tangible and sustained improvement that would slow down the flow of those handouts.

That initial reversal of fortune was directly tied to the realization that no one of importance over at the FOMC could sway enough other voting members to vote to finally increase interest rates. That inability was a reflection of the belief that not enough of those people believed that the economy was showing enough building strength to warrant even the tiniest of taps on the brakes

More importantly, as the FOMC has indicated that it wants to finally push through a rate increase and that it has indicated that it would do so ahead of the curve, that seems to send a message that the kind of improvement in the economy to warrant a rate increase isn’t necessarily right around the corner.

Too bad that had to happen just at the same time that the market came to the realization that a rate increase wouldn’t mark the end of the world and instead had set its hopes up for that rate increase after years of pinning everything on the continuation of the Zero Interest Rate Policy.

Funny how those sort of things seem to happen.

For people who are supposed to understand the economy and investor psychology they certainly don’t do a very good job of it.

It continues to amaze me that there would ever be such sharp moves, especially on an alternating basis, as even the most clueless person would know that the basic health of the market and the economy could never change on a dime and then do so again in a back and forth manner. But it also still amazes me that there can be such large moves seen in so many individual stocks, given how many analysts follow so many of those companies and have as much of an informed position as almost anyone else in the world.

Yet, they get it wrong all the time.

So what did this morning’s marked weakness mean?

As I was pondering that question in the morning it meant nothing more than a buying opportunity, as we again were approaching a correction on the S&P 500 if the decline were to hold.

It was and it did.

What may be important this week, maybe more so than usual, will be Friday’s GDP release.

With some discussion that a rate hike may still be on the table in October, perhaps even before the next FOMC meeting, another strong GDP statistic could send an “all’s clear” to investors who now want to see a rate hike and would welcome that strong GDP number.

History shows that September is generally a very weak month and October not much better.

As we approach the end of September it would be nice to see an October that if not moving the market higher, at least continues this volatile kind of back and forth. The trick will be to attempt to capitalize on any strong move higher by finding any opportunity to sell some calls and also finding some of the braveness necessary to buy something on the way down.

I had some of that braveness today and hope that it’s not really more stupidity. If those best and brightest on Wall Street can’t readily tell the difference I’m not going to worry too much about being able to know so myself until all the cards are played.

Daily Market Update – September 22,  2015  (8:30 AM)

This morning’s sharp decline in the futures is probably an invalidation of yesterday’s decent gain coming after a sharp reversal in fortunes last week.

Yesterday seemed like a day that traders were getting back to their previous behavior that welcomed the delay of any interest rate increase because it extended their handout, which was good for equity trading. They were more than happy to continue receiving that handout rather than seeing the economy show the kind of tangible and sustained improvement that would slow down the flow of those handouts.

That initial reversal of fortune was directly tied to the realization that no one of importance over at the FOMC could sway enough other voting members to vote to finally increase interest rates. That inability was a reflection of the belief that not enough of those people believed that the economy was showing enough building strength to warrant even the tiniest of taps on the brakes

More importantly, as the FOMC has indicated that it wants to finally push through a rate increase and that it has indicated that it would do so ahead of the curve, that seems to send a message that the kind of improvement in the economy to warrant a rate increase isn’t necessarily right around the corner.

Too bad that had to happen just at the same time that the market came to the realization that a rate increase wouldn’t mark the end of the world and instead had set its hopes up for that rate increase after years of pinning everything on the continuation of the Zero Interest Rate Poiicy.

Funny how those sort of things seem to happen.

For people who are supposed to understand the economy and investor psychology they certainly don’t do a very good job of it.

It continues to amaze me that there would ever be such sharp moves, especially on an alternating basis, as even the most clueless person would know that the basic health of the market and the economy could never change on a dime and then do so again in a back and forth manner. But it also still amazes me that there can be such large moves seen in so many individual stocks, given how many analysts follow so many of those companies and have as much of an informed position as almost anyone else in the world.

Yet, they get it wrong all the time.

So what does this morning’s marked weakness mean?

I’m looking at it, for the moment, as nothing more than a potential buying opportunity, as we again approach a correction on the S&P 500 if the decline holds up.

What may be important this week, maybe more so than usual, will be Friday’s GDP release.

With some discussion that a rate hike may still be on the table in October, perhaps even before the next FOMC meeting, another strong GDP statistic could send an “all’s clear” to investors who now want to see a rate hike and would welcome that strong GDP number.

History shows that September is generally a very weak month and October not much better.

As we approach the end of September it would be nice to see an October that if not moving the market higher, at least continues this volatile kind of back and forth. The trick will be to attempt to capitalize on any strong move higher by finding any opportunity to sell some calls and also finding some of the braveness necessary to buy something on the way down.

Daily Market Update – September 21,  2015  (Close)

Last week the market finally started doing the right thing and followed the logical direction with regard to their expectations for the FOMC’s action.

It’s just that the FOMC didn’t do what everyone had only very recently come to expect. Even more recent than that expectation was the decision to act accordingly.

Acting accordingly meant sending the market higher in advance of the expected announcement of that initial interest rate increase and then sending stocks lower when that expectation was dashed.

This morning’s futures were indicating a recovery of at least the further loss that occurred on Friday, although that still leaves us in the hole for the very large reversal that took place during the course of Janet Yellen’s press conference.

Normally, when Janet Yellen has spoken at the post-FOMC press conferences, her words have either supported the initial rise higher in stocks after the announcement or sent them even higher, so this past week’s reversal of fortune was a real surprise.

What seems to have occurred is that traders felt disappointed, but for the right reason.

Over the past 18 months as expectations for an eventual rate increase began, the disappointments that were expressed all had to do with fearing the end of the Federal Reserve’s handout through their Zero Interest Rate Policy. Now the concern seems to have become that the economy may not be as strong as we had hoped and was unable to withstand an increase in interest rates.

This morning’s futures bounce didn’t really provide much in the way of sentiment. It could easily be nothing more than some bargain hunting on small volume.

The way the day traded you could interpret it any way you pleased. Most of all it was some kind of ambivalence and maybe some kind of fear of missing out.

The market kept its triple digit gain for much of the session, having been up nearly 200 points at one point and then gave it all back, only to end the day right where the futures said it was going to be.

That doesn’t happen too often, but it definitely wasn’t a very direct route.

The story, as it almost always does, began for real at the opening bell and while I was hopeful that the next series of sustained moves would be higher and move us further away from the line between correction and no correction, it’s just not that clear that will be the case, despite the gain on the day.

At least China wasn’t a factor as this week has now begun, as Shanghai moved higher to open their week, but lately our own markets have discounted their wild swings.

Instead, we seem much more likely to start focusing on economic news and fundamentals.

This week brings a GDP report, but not much else.

Earnings start again in about 3 weeks, but otherwise it may just be a period of time for investors to either tread water or speculate over the meaning of every bit of economic news.

With some more cash in hand after a couple of assignments last week and with only one position set to expire this week and only a single ex-dividend position, I wouldn’t mind adding some new positions in an effort to create some income for the week.

Ordinarily, I’d like to do that with weekly expirations in mind, but a number of the potential trades this week may require the use of expanded weekly options due to the dividend dates involved in those stocks and while providing income may make it more difficult to be prepared to open even more new positions the following week if  those positions aren’t assigned early to capture dividends.

I expect th
is to be another relatively quiet week with regard to personal portfolio trading, but would be very anxious to capitalize on any opportunity to sell some calls on unhedged positions, especially after some rebound in volatility to close the week.

That would likely also look to see whether it makes sense to use some longer term contracts, as was the case with the new position opened in Cypress Semiconductor today, in an effort to lock in some higher premiums while awaiting some long overdue price rebounds as 2015 is now heading into the final stretch.

Let’s see if tomorrow brings any more clarity, but at least there wasn’t reason to continue the pessimism of the latter part of last week.

Who knows, maybe what little is left in the month of September can do something to dispel the reality that September tends not to be a very good month to count on market gains.

Daily Market Update – September 21,  2015  (8:30 AM)

Last week the market finally started doing the right thing and followed the logical direction with regard to their expectations for the FOMC’s action.

It’s just that the FOMC didn’t do what everyone had only very recently come to expect. Even more recent than that expectation was the decision to act accordingly.

Acting accordingly meant sending the market higher in advance of the expected announcement of that initial interest rate increase and then sending stocks lower when that expectation was dashed.

This morning’s futures are indicating a recovery of at least the further loss that occurred on Friday, although that still leaves us in the hole for the very large reversal that took place during the course of Janet Yellen’s press conference.

Normally, when Janet Yellen has spoken at the post-FOMC press conferences, her words have either supported the initial rise higher in stocks after the announcement or sent them even higher, so this past week’s reversal of fortune was a real surprise.

What seems to have occurred is that traders felt disappointed, but for the right reason.

Over the past 18 months as expectations for an eventual rate increase began, the disappointments that were expressed all had to do with fearing the end of the Federal Reserve’s handout through their Zero Interest Rate Policy. Now the concern seems to have become that the economy may not be as strong as we had hoped and was unable to withstand an increase in interest rates.

This morning’s futures bounce doesn’t really provide much in the way of sentiment. It could easily be nothing more than some bargain hunting on small volume.

The story, as it almost always does, begins for real at the opening bell and while I’m hopeful that the next series of sustained moves will be higher and move us further away from the line between correction and no correction, it’s just not that clear.

At least China wasn’t a factor as this week is set to begin, as Shanghai moved higher to open their week, but lately our own markets have discounted their wild swings.

Instead, we seem much more likely to start focusing on economic news and fundamentals.

This week brings a GDP report, but not much else.

Earnings start again in about 3 weeks, but otherwise it may just be a period of time for investors to either tread water or speculate over the meaning of every bit of economic news.

With some more cash in hand after a couple of assignments last week and with only one position set to expire this week and only a single ex-dividend position, I wouldn’t mind adding some new positions in an effort to create some income for the week.

Ordinarily, I’d like to do that with weekly expirations in mind, but a number of the potential trades this week may require the use of expanded weekly options due to the dividend dates involved in those stocks and while providing income may make it more difficult to be prepared to open even more new positions the following week if  those positions aren’t assigned early to capture dividends.

I expect this to be another relatively quiet week with regard to personal portfolio trading, but would be very anxious to capitalize on any opportunity to sell some calls on unhedged positions, especially after some rebound in volatility to close the week.

That would likely also look to see whether it makes sense to use some longer term contracts in an effort to lock in some higher premiums while awaiting some long overdue price rebounds as 2015 is now heading into the final stretch.

Daily Market Update – September 18,  2015  (7:45 AM)

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

The following trade outcomes are possible today:

Assignments:  CVC

Rollovers:  HPQ

Expirations:  CY, GDX, GPS, KO, KSS, MOS, NEM

The following were ex-dividend this week: GE (9/17 $0.23), LVS (9/18 $0.65)

The following will be ex-dividend next week: CY (9/22 $0.11)

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