Category Archives: Daily Market Update

Daily Market Update – July 9,  2015  (Close)

Remember that 300 point turnaround on Tuesday?

It was pretty much a forgotten thing after yesterday’s 250 point loss.

As if that wasn’t enough to eclipse the memory of the turnaround, the shutdown in trading at the NYSE for almost 4 hours will be talked about for a long time. Triple digit gains, losses and turarounds come and go, but these kind of trading halts all have a life of their own and persist  for archivists and novice historians alike.

You may be able to add yesterday to the White Bronco chase and other events over the years that somehow leave an indelible mark on memories.

With the issues at United Airlines yesterday and reports of the Wall Street Journal’s web site being down, had to set off alarms even in non-conspiracy oriented people. Coincidences occur all the time, but it’s hard to totally dismiss the idea that concerted efforts could be behind a string of unexpected software crashes.

This morning it appeared as if coincidence is the diagnosis and we move on. What was shown, for those who may be plotting to crash the NYSE system is like a heart attack patient who is fortunate enough to have had or to develop good collateral circulation, helping to keep vital tissue perfused and alive, it’s ood to be diversified. In this case it’s the existence of multiple other exchanges that created collateral circluation and kept the enterprise going, even as the NYSE was out for the count.

To the market’s credit, in the face of a large decline already in the making because of the Chinese drag, the market didn’t add on in any palpable way to that loss and create an avalanche of selling.

Today was a new day and we’re back to the reality that lately has been a case of 4 steps back and 3 steps forward. This morning’s futures looked as if it is trying to play a game of catch-up and add another one of those forward steps top the mix. For the briefest of times it actually did erase the entirety of yesterday’s loss, but that wasn’t to last.

Still, it was a decent day, although not as much catch up as was needed or wanted.

While last week the real news was Greece, this week it is clearly all about China.

Yesterday’s market followed a plunge in China as their feeble attempts at manipulating markets by suppressing them failed to impress anyone, nor to solve the underlying problem of widespread use of leverage and a building bubble.

This morning we woke up to the market in China having moved about 6% higher.

The least we could have done with that kind of a move was to give it a nod and maybe consider taking that step forward. At least some step forward, even if much smaller than needed, was something.

And it’s a good thing.

With yesterday’s decline the S&P 500 was about 4.5% off its last high point. That puts it right in the mini-correction neighborhood.

But where the real test may be is that the S&P 500 ended the day yesterday within a breath of its
support level. A simple additional 20 point drop in the DJIA could have been enough to get technicians really concerned or could have triggered algorithmic programs, most likely with sell orders.

So the rebound in Shanghai came at a good time.

Maybe the ensuing rally here in the states may be enough, if it can continue, to put what few positions are set to expire this week and the next week into contention for either rollover or assignment and maybe get things back on track.

Unfortunately, just as there was a good 300 point turnaround the other day, today’s turnaround was nearly 220 points and not in the right direction, even while ending the day higher.

Who knows what tomorrow will bring to end this week. With reports of a final, or near final decision to be made in the Greek debt crisis by tomorrow morning there could be reason for markets to celebrate or head for the hills.

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

Remember that 300 point turnaround on Tuesday?

It was pretty much a forgotten thing after yesterday’s 250 point loss.

As if that wasn’t enough to eclipse the memory of the turnaround, the shutdown in trading at the NYSE for almost 4 hours will be talked about for a long time. Triple digit gains, losses and turarounds come and go, but these kind of trading halts all have a life of their own and persist  for archivists and novice historians alike.

You may be able to add yesterday to the White Bronco chase and other events over the years that somehow leave an indelible mark on memories.

With the issues at United Airlines yesterday and reports of the Wall Street Journal’s web site being down, had to set off alarms even in non-conspiracy oriented people. Coincidences occur all the time, but it’s hard to totally dismiss the idea that concerted efforts could be behind a string of unexpected software crashes.

This morning it appears as if coincidence is the diagnosis and we move on. What was shown, for those who may be plotting to crash the NYSE system is like a heart attack patient who is fortunate enough to have had or to develop good collateral circulation, helping to keep vital tissue perfused and alive. In this case it’s the existence of multiple other exchanges that created collateral circluation and kept the enterprise going, even as the NYSE was out for the count.

To the market’s credit, in the face of a large decline already in the making because of the Chinese drag, the market didn’t add on in any palpable way to that loss and create an avalanche of selling.

Today is a new day and we’re back to the reality that lately, it has been a case of 4 steps back and 3 steps forward. This morning’s futures looks as if it is trying to play a game of catch-up and add another one of those forward steps top the mix.

While last week the real news was Greece, this week it is clearly all about China.

Yesterday’s market followed a plunge in China as their feeble attempts at manipulating markets by suppressing them failed to impress anyone, nor to solve the underlying problem of widespread use of leverage and a building bubble.

This morning we woke up to the market in China having moved about 6% higher.

The least we could do woith that kind of a move is to give it a nod and maybe consider taking that step forward.

With yesterday’s decline the S&P 500 was about 4.5% off its last high point. That puts it right in the mini-correction neighborhood.

But where the real test may be is that the S&P 500 ended the day yesterday within a breath of its support level. A simple additional 20 point drop in the DJIA could have been enough to get technicians really concerned or could have triggered algorithmic programs, most likely with sell orders.

So the rebound in Shanghai comes at a good time.

Maybe the ensuing rally here in the states may be enough, if it can continue,
to put what few positions are set to expire this week and the next week into contention for either rollover or assignment and maybe get things back on track.

Daily Market Update – July 8,  2015  (Close)

You had to be impressed with yesterday’s 300 point turnaround on the DJIA.

Fortunately, that turnaround was in the right direction, because we weren’t heading in the right direction this morning, as there were very large sell-offs in China overnight and those sell-offs spread to other Asian markets, even as European markets seem to be moving higher this morning.

The Chinese sell-off can’t be too much of a surprise, as lots of evidence shows that when there are attempts to manipulate markets those efforts tend to fall flat after a day or so. Generally, that is the situation seen during currency crises, when central banks move in to prop up their currencies, only to find that they can stem the tide for the briefest of moments. The only thing that can really correct the situation is time and following the natural cycle of ups and downs that characterize every market that has underlying value.

Ultimately, the force of markets isn’t very different from the forces of nature. Good luck trying to rein either in and showing them who’s the real boss.

Like most of these kind of events, they will pass, but it’s always of question of how long it will take and how we can withstand the pressures.

In the case of China, they aren’t very new to this capitalism game called the stock market and the speculative frenzy and heavy use of margin may have a depressing impact on their econopmy for quite a while, as debt is a heavy burden to lift.

You also have to wonder whether the Chinese government will know what to do, not that any government, including our own, has any kind of certainty over what to do when there is a bursting of a bubble. The fear is that the CHinese government will over-react and try to show the markets that they are the boss in a very heavy handed way.

The other question is how a Chinese stock market sell off will impact US markets.

This morning, the obvious impact wa the one manifesting itself, as the futures were trading down triple digits, but that very first question applies here, too. 

Just how long will that impact persist, particularly since US markets can benefit from perceived weakness elsewhere.

While our futures were down triple digits this morning, it’s another of these much weaker sessions that are actually improved over where the futures had been trading, so there was always some hope for moderation to sneak into the market.

But what was a surprise was the NYSE outage for what seemed like lots longer than 3 1/2 hours.

Depending on how you want to skew your bias, the fact that the market didn’t panic as news of a software problem with United Airlines, the Wall Street Journal’sweb site being down and the NYSE halting trades, is good.

The fact that the market did deteriorate from where the futures had been indicating is not good, but it could have been much worse if the conspiracy people could have taken charge.

There’s still time for moderation, but it will have to wait until tomorrow.

Some of that moderation can begin tonight, as earnings season begins. While it’s not very much of a barometer anymore, there’s no question that some good numbers from Alcoa could give markets some hope of an economy that is moving forward, although there has to be some concern for what a Chinese slowdown may do to the prospects of future revenues.

Some more moderation could come if the EU and Greece begin acting like adults, now that the deadline has passed and the referendum is history. Anything constructive on that end, short of a Greek exit from the EU should be of benefit to the markets, but like everything else, just for the briefest of moments.

Today, as expected, was a day for watching and wondering where it ends. Wednesdays are usually slow trading days and today was no exception. The added reason for all of that quiet and inactivity was an exception, though. 

The only hope is that the hole that may be dug today isn’t so deep as to materially jeopardize the few positions scheduled for expiration this week and next.

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

You had to be impressed with yesterday’s 300 point turnaround on the DJIA.

Fortunately, that turnaround was in the right direction, because we’re not heading in the right direction this morning, as there were very large sell-offs in China overnight and those sell-offs spread to other Asian markets, even as European markets seem to be moving higher this morning.

The Chinese sell-off can’t be too much of a surprise, as lots of evidence shows that when there are attempts to manipulate markets those efforts tend to fall flat after a day or so. Generally, that is the situation seen during currency crises, when central banks move in to prop up their currencies, only to find that they can stem the tide for the briefest of moments. The only thing that can really correct the situation is time and following the natural cycle of ups and downs that characterize every market that has underlying value.

Ultimately, the force of markets isn’t very different from the forces of nature. Good luck trying to rein either in and showing them who’s the real boss.

Like most of these kind of events, they will pass, but it’s always of question of how long it will take and how we can withsatnd the pressures.

In the case of China, they aren’t very new to this capitalism game called the stock market and the speculative frenzy and heavy use of margin may have a depressing impact on their econopmy for quite a while, as debt is a heavy burden to lift.

You also have to wonder whether the Chinese government will know what to do, not that any government, including our own, has any kind of certainty over what to do when there is a bursting of a bubble. The fear is that the CHinese government will over-react and try to show the markets that they are the boss in a very heavy handed way.

The other question is how a Chinese stock market sell off will impact US markets.

This morning, the obvious impact is the one manifesting itself, as the futures are trading down triple digits, but that very first question applies here, too. 

Just how long will that impact persist, particularly since US markets can benefit from perceived weakness elsewhere.

While our futures are down triple digits this morning, it’s another of these much weaker sessions that are actually improved over where the futures had been trading, so there’s always some hope for moderation to sneak into the market.

SOme of that moderation can come tonight, as earnings season begins. While it’s not very much of a barometer anymore, there’s no question that some good numbers from Alcoa could give markets some hope of an economy that is moving forward, although there has to be some concern for what a Chinese slowdown may do to the prospects of future revenues.

Some more moderation could come if the EU and Greece begin acting like adults, now that the deadline has passed and the referendum is history. Anything constructive on that end, short of a Greek exit from the EU should be of benefit to the markets, but like everything else, just for the briefest of moments.

Today will in all likelihood be a day of watching and wondering where it ends. Wednesdays are usually slow trading days and today should be no exception. 

The only hope is that the hole that may be dug tod
ay isn’t so deep as to materially jeopardize the few positions scheduled for expiration this week and next.

Daily Market Update – July 7,  2015  (Close)

WIth dueling bad news over the weekend from Greece and China and seeing the depths to which the futures had traded on Sunday evening, there’s not much doubt that we got off easily yesterday.

While there really wasn’t any good news to account for yesterday’s very mild decline, there wasn’t any additional bad news to serve as fuel.

It’s hard to believe, given the constellation of events, that the market was even briefly positive nearly 90 minutes after the open.

That’s certainly a positive, but even more positive may be the fact that a couple of attempts to sell off the market again in the afternoon fizzled out.

When you start the morning with a loss that’s expected to be 200 points on the DJIA and after a recovery into positive territory starts to re-approach a triple digit loss, you begin to have a sinking feeling that the market had only been fooling itself and was taking us for a ride.

Monday of last week started off very badly and then recovered, only to see the bottom then fall out later in the afternoon and take the DJIA to a 350 point slide. There had to be a small part of the brain that kept thinking that yesterday might be the same.

But it wasn’t.

This morning the futures wee trading in a much more sedate fashion, just as the world seems to have calmed down.

Not that the problems are gone, but at least it appears as if Greece and The EU may at start speaking to one another in good faith and maybe bring some resolution to their joint crisis.

The issue in China, however, swamps that of Greece in size and importance to our stock and bond markets and we really have no template that might be able to describe what to expect.

The use of margin borrowing is rampant in China and that turns investing into speculation. 

Sometimes speculation ends well, but when so many are speculating in the same way, it’s hard to imagine a good outcome for all.

While China is trying to manipulate the market through various measures, including a cessation of all IPOs, there are very few examples of massive government intervention that can turn a ship on a dime when it’s going off course.

Unlike a Greek default, which wouldn’t have very much impact on our markets, other than perhaps to drive some European investment funds to our shores on the positive side and strengthen the USD on the negative side, China is the real deal.

But sedate or otherwise, those pre-opening futures shed no light at all on what today would be like as the market traded in a range of more than 300 points.

Importantly, the low side, down more than 200 points happened first. The upswing, that saw a triple digit gain until the final moments of trading still acquitted the market nicely.

With a couple of new positions opened yesterday an
d 1 additional new position today, I haven’t had the same pessimism about committing new funds as I’ve had the past few weeks, despite really wanting to preserve cash.

Sometimes, what you want to do and what you actually do can be two very different things. When that’s the case, the only thing that you can hope for is that there won’t be a period of regret to follow.

At least today didn’t offer the regret.

We’ll see if we can add another day of no negative news to add to today’s nice turnaround.