Category Archives: Daily Market Update

Daily Market Update – July 7,  2015  (8:45 AM)

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 nealy 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 are 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.

With a couple of new positions opened yesterday and 2 additional new position trades awaiting the right price point for execution, I didn’t have 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.

Daily Market Update – July 6,  2015  (Close)

Waking up this morning was like a throwback to last week at the same time.

Both Monday mornings were preceded by a meltdown of the S&P 500 Futures trading on Sunday, but both seemed to recover as Monday morning’s futures trading got underway prior to  heading into the opening bell.

Last Monday it ended up actually further deteriorating instead of improving, once the bell rang.

This morning the futures, while greatly improved from yesterday evening’s levels, were not really showing any movement higher from their preliminary opening levels, as we all waited to see what the next step of this Greek tragedy will be.

Still, with the S&P 500 Futures having been down by as much as 28 points last night, a decline of 16 points with an hour to go until the opening was a rally of sorts.

It’s still bad, just not as bad.

Somehow, for a brief moment, the market was actually in the green in the late morning.

With the announcement of the resignation of the controversial Greek Finance Minister, who threatened to resign in the event of a “Yes” vote and did so anyway even with a resoundinly large “No” vote, there may be some room for compromise between the EU and Greece, both of whom were willing to play their cards.

While the Greek Prime Minister is thought to be a polarizing figure, his Finance Minister was even more so and has likely been the architect of the greek strategy in dealing with the EU and plotting out a course that could be followed in a post-EU membership Greece.

The very thought that a major impediment to any reasonable resolution to the debt crisis has left the picture could be a very positive event.

What happens next is still anyone’s guess, as we are really in uncharted territory.

For today, however, it turned out not to be as bad as it looked, although that brief moment in the morning did give way to more selling. No matter how you looked at the weakness, though, it was pretty orderly and muted.

While the markets were weaker this morning as we got ready for trading to begin for the week the only real downside for US stocks, once the dust settles, is that the USD may again begin its march to parity with the Euro. The cessation of that march is something that I’ve been expecting to be the good news coming out of this new earnings season, which begins after the market close on Wednesday.

However, always as important and sometimes more important than earnings, which represent old news, is the forward guidance. If the USD looks as if it may go back to getting stronger and stronger against the EUro, that forward guidance may have to be tempered.

With another large decline looming this morning, there’s always the temptation of looking for bargains. With a little bit of cash in reserve I would ordinarily be reluctant to dip into that reserve, but I started the morning with a belief that the market may have discounted much of the worst that could occur with this crisis, including factoring in an exit from the EU by Greece.

That may make it a reason to be buying on this dip, as if it occurs to the level that the Futures are indicating, will be bringing us into “mini-correction” territory.

The fact that I also have no option contracts expiring this week, and therefore none that could be potentially assigned or rolled over, may also have played into the decision to loosen up the purse strings just a little.

I actually had more trades entered beyond the 2 new positions established, but there’s always tomorrow, as well.

Other than Greece, there’s not too much economic news this week to contend with, other than earnings. Those earnings, however, don’t really get going for real until next week and by then you would think that whatever will happen in Greece will have settled down by then.

So I will began the morning as an observer, but didn’t take too long to test the waters, as there’s not likely to be the kind of bad news ahead that we haven’t already thought about, unless you want to start thinking about China and its attempts to manipulate their stock market.

That may be a story for another time.

Daily Market Update – July 6,  2015  (8:45 AM)

Waking up this morning was like a throwback to last week at the same time.

Both Monday mornings were preceded by a meltdown of the S&P 500 Futures trading on Sunday, but both seemed to recover as Monday morning’s futures trading got underway prior to  heading into the opening bell.

Last Monday it ended up actually further deteriorating instead of improving, once the bell rang.

This morning the futures, while greatly improved from yesterday evening’s levels, are not really showing any movement higher from their preliminary opening levels, as we all wait to see what the next step of this Greek tragedy will be.

Still, with the S&P 500 Futures having been down by as much as 28 points last night, a decline of 16 points with an hour to go until the opening is a rally of sorts.

It’s still bad, just not as bad.

With the announcement of the resignation of the controversial Greek Finance Minister, who threatened to resign in the event of a “Yes” vote and did so anyway even with a resoundinly large “No” vote, there may be some room for compromise between the EU and Greece, both of whom were willing to play their cards.

While the Greek Prime Minister is thought to be a polarizing figure, his Finance Minister was even more so and has likely been the architect of the greek strategy in dealing with the EU and plotting out a course that could be followed in a post_EU membership Greece.

The very thought that a major impediment to any reasonable resolution to the debt crisis has left the picture could be a very positive event.

What happens next is still anyone’s guess, as we are really in uncharted territory.

While the markets are weaker this morning as we get ready for trading to begin for the week the only real downside for US stocks, once the dust settles, is that the USD may again begin its march to parity with the Euro. The cessation of that march is something that I’ve been expecting to be the good news coming out of this new earnings season, which begins after the market close on Wednesday.

However, always as important and sometimes more important than earnings, which represent old news, is the forward guidance. If the USD looks as if it may go back to getting stronger and stronger against the EUro, that forward guidance may have to be tempered.

With another large decline looming this morning, there’s always the temptation of looking for bargains. With a little bit of cash in reserve I would ordinarily be reluctant to dip into that reserve, butI start the morning with a belief that the market may have discounted much of the worst that could occur with this crisis, including factoring in an exit from the EU by Greece.

That may make it a reason to be buying on this dip, as if it occurs to the level that the Futures are indicating, will be bringing us into “mini-correction” territory.

The fact that I also have no option contracts expiring this week, and therefore none that could be potentially assigned or rolled over, may also play into the decision to loosen up the purse strings just a little.

Other than Greece, there’s not too much economic news this week to contend with, other than earnings. Those earnoings, however, don’t really get going for real until next week and by then you would think that whatever will happen in Greece will have settled down by then.

So I will begin the morning as an observer, but may be willing to test the waters, as there’s not likely to be the kind of bad news ahead that we haven’t already thought about, unless you want to start thinking about China and its attempts to manipulate their stock market.

That may be a story for another time.

Daily Market Update – July 2,  2015  (8:15 AM)

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

The following trade outcomes are possible today:

Assignments:  none

Rollovers:  none

Expirations: CSCO, DOW, WY

The following were ex-dividend this week: EMC (6/29 $0.12), WFM (6/30 $0.13), CSCO (7/1 $0.21)

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

Daily Market Update – July 1, 2015  (Close)

Well, the first 6 months of the year have now come to a close, and so far, 2015 isn’t much to crow about.

Maybe today will get the back half of the year back on track.

For a short while, at the very beginning of the year, the back and forth triple digit moves were reminiscent of the volatility last seen in the latter half of 2011, but that didn’t last very long.

There were still lots of triple digit moves during the rest of the first 6 months, but the net result had been to move markets higher and volatility actually declined.

With the spike in volatility on Monday following the 350 point drop it was a little better, but still not terribly enticing. Along with low premiums you would tend to expect an increase in buying demand, but that hasn’t been the case, as even speculators aren’t betting that the market will move in any significant way in either direction. Volume in the options market has been drying up and the bid – ask spreads have generally gotten larger, making it more difficult to get trades done.

I can’t recall the last time I’ve had so many trades go unexecuted at the end of the day, as has been the situation in the past month.

With yesterday’s minimal gain after a pre-opening futures session that was looking at triple digit gains, both the DJIA and S&P 500 finished the first half of the year virtually unchanged and it was yet another day with no trades of any sort.

This morning, on news that the technically in default nation of Greece may now be coming closer to some kind of agreement with some of its debtors, is sending the market higher. For the most part, the US equity markets don’t care how much the creditors give in on loan terms, until the realization that how Greece is handled may be a template for what awaits as other debtor nations in the EU are closely looking on.

The talk of contagion means nothing, whether in banking or in infectious disease, until that tipping point is activated. Then it becomes clear what the concerns were all about and why they were justified.

But for now, all anyone can see is the tip of their nose. And if an agreement can come on Greek debt to the IMF, then all will be fine with the world, until the next banking crisis occurs, which it will. Maybe even with Greece again.

But that doesn’t matter for now.

Again it was a matter of another triple digit gain in the futures as this morning brought a preview of tomorrow’s Employment Situation Report as the ADP Report was released.

Since the story is that a decision on any Greece agreement wouldn’t come until after Sunday’s referendum, there should be reason to believe that the Greek induced rally could have legs, but the ADP report could have presented some challenges to that, if it showed too strong job growth.

Instead, those numbers were right in line and so traders could fantasize about a happy outcome to Sunday’s Greek referendum.

With the early morning gains, my only hope was that there would be some broad lifting and give some possibility for any kind of trad
e today that can either result in more cash in the reserve or more income in my pocket.

There was, but not enough. Hopefully there will be more of the same tomorrow.

Right now, either of those kinds of trades look fairly bleak, but a couple of good market days could change that and get the July 4th celebration off to a better start than what was appearing to be the case as Monday came to its close.