Category Archives: Daily Market Update

Daily Market Update – June 11, 2015  (Close)

After yesterday’s 230+ point gain, you can be excused for wanting to see more, but it’s not very reasonable to do so.

Lately gains have been fairly sparse and they have been reversed the following day.

For a while there had been a regular alternating pattern of up and down days, but most recently that’s been superceded by a predominance of weakness.

This morning, however, the pre-opening futures were at least giving some hope that the gains of yesterday would at least be preserved.

Surprisingly, they were. But even more surprisingly there was the opportunity to get a trade made. One that I had been hoping to get made yesterday.

Given how poor of a job those pre-opening futures have done in even predicting the opening market action in the past few weeks, with even some very large early moves being reversed shortly after the opening bell, there’s no telling what was going to be in store today, but there’s always room for hope.

Sometimes hoping works, but most of the time it’s going against the prevailing currents.

Now, with just 1 days left in the week and only 6 trading days left until the June 2015 option cycle comes to its end, this had been shaping up to be the second occurrence of a week with no trades.

With only 3 positions set to expire this week and seemingly out of competition for either rollovers or assignment and with all ex-dividend positions now having come and gone, there’s little likelihood of any other action this week, although I never do give up on the hope.

The reason the hopes were realized this morning was because the morning brought the Retail Sales Report and Jobless Claims.

The expectation was that both should add to the growing data that suggests the economy itself is growing and supporting the notion that the bond traders finally have gotten it right, as interest rates continue to climb.

That climb is ahead of now what is expected to be an earlier rise in rates from the FOMC.

The Retail Sales Report did, in fact, support that view, although the Jobless Claims didn’t have too much to say and the futures remained essentially unchanged.

That increase in Retail Sales, though, is probably the more important of the two pieces of data and does reflect some increasing consumer confidence. More importantly, confidence doesn’t really add to the economy, but sales do, so the morning’s data release is significant and should be reflected in earnings reports starting next month.

As with the earlier part of the week, I assume that I’ll simply be sitting and watching things unfold.

I did try to have a few trades made yesterday in attempts to sell calls on uncovered positions, but didn’t see those go through. A little bit of yesterday’s momentum continuing let one of those trades happen today in an effort to create even the barest trickles of incom
e this week.

Fortunately, this was another week of multiple ex-dividend positions, but that’s really not sufficient to create the income flow that I like and need to see.

While this week may and likely will end up being a lost cause, next week, with a fair number of positions set to expire and with an FOMC Statement release scheduled, will hopefully offer all of the opportunities that this week hasn’t.

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Daily Market Update – June 11, 2015  (8:45 AM)

After yesterday’s 230+ point gain, you can be excused for wanting to see more, but it’s not very reasonable to do so.

Lately gains have been fairly sparse and they have been reversed the following day.

For a while there had been a regular alternating pattern of up and down days, but most recently that’s been superceded by a predominance of weakness.

This morning, however, the pre-opening futures are at least giving some hope that the gains of yesterday will at least be preserved.

Given how poor of a job those pre-opening futures have done in even predicting the opening market action in the past few weeks, with even some very large early moves being reversed shortly after the opening bell, there’s no telling what may be in store today, but there’s always room for hope.

With just 2 days left in the week and only 7 trading days left until the June 2015 option cycle comes to its end, this is shaping up to be the second occurrence of a week with no trades.

With only 2 positions set to expire this week and seemingly out of competition for either rollovers or assignment and with all ex-dividend positions now having come and gone, there’s little likelihood of any action this week.

This morning brings the Retail Sales Report and Jobless Claims.

The expectation was that both should add to the growing data that suggests the economy itself is growing and supporting the notion that the bond traders finally have gotten it right, as interest rates continue to climb.

That climb is ahead of now what is expected to be an earlier rise in rates from the FOMC.

The Retail Sales Report did, in fact, support that view, although the Jobless Claims didn’t have too much to say and the futures remained essentially unchanged.

That increase in Retail Sales, though, is probably the more important of the two pieces of data and does reflect some increasing consumer confidence. More importantly, confidence doesn’t really add to the economy, but sales do, so the morning’s data release is significant and should be reflected in earnings reports starting next month.

As with the earlier part of the week, I assume that I’ll simply be sitting and watching things unfold.

I did try to have a few trades made yesterday in attempts to sell calls on uncovered positions, but didn’t see those go through. Hopefully, there will be some continuing momentum and let those trades happen today in an effort to create even the barest trickles of income this week.

Fortunately, this was another week of multiple ex-dividend positions, but that’s really not sufficient to create the income flow that I like and need to see.

While this week may and likely will end up being a lost cause, next week, with a fair number of positions set to expire and with an FOMC Statement release scheduled, will hopefully offer all of the opportunities that this week hasn’t.

Daily Market Update – June 10, 2015  (Close)

Lately there haven’t been too many mornings that you would be waking up to the futures indicating a stronger opening.

This morning, however, that was the case. Even though the gains weren’t very strong at that time, at least there was a chance to see some gains from the opening bell for a change.

The recent direction of the market, however, would take a fairly significant gain to erase some of the weakness that has been the theme over those past few weeks as the S&P 500 is now about 3% lower.

And that’s exactly what the market did in reacting favorably to word that there might be an agreement regarding the mechanism by which Greece makes good on its debt obligations to the IMF and ECB.

We’ll see about that.

What may still concern some technicians is that after a 6 month period of seeing higher lows as the market has undulated from 1862 to 2036, we are now sitting at a relative low that is lower than the last low.

That’s pretty esoteric, but for some that’s very important and would indicate that the trend of 3 steps forward and 2 steps back is being broken.

Most people don’t really care about such esoteric things.

Of course, the other pattern that has already been broken is the one where we see a 5% mini-correction every few months.

Sitting at a 3% lower level to start this day may have simply been a mid-point for that expected decline, although over the past few years those declines have come fairly precipitously, while this most recent decline has come in very small doses, maybe the same way a frog doesn’t realize that it’s been swimming in a pot very slowly being brought to a boil.

It continues to be difficult, however, to understand what the next catalyst to propel markets higher, even to the point of simply approaching its previous high, would be. While the next earnings season could bring some better than expected earnings results as the currency exchange issues haven’t worsened, as had been expected, that’s still a month away.

While awaiting that next earnings season there is still the prospect of a continuing overhang coming from uncertainty over when the FOMC will finally raise interest rates. It may just be that the best catalyst to move higher would be to remove that overhang, but to remove it due to good economic news and not because the economy is shrinking.

That overhang can be eliminated if the market sees good news as being good news.

If this morning’s Mortgage Applications data is any indication, the concern that rates may be going higher could spur economic activity and most agree that housing is a great place to begin any real economic expansion.

While we could use some good news, between now and next Friday, which marks the end of the June 2015 option cycle, my hope is that there is just no bad news so that the relatively large number of positions set to expire next week can either be assigned or rolled over. Right now, the burden of the past few weeks has made that more difficult, so we could use a little bit of a respite from the erosion that has been going on since the June cycle began.

Hopefully today’s good start to taking another few steps forward will still have some staying power to take us through this week and next.

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Daily Market Update – June 10, 2015  (8:45 AM)

Lately there haven’t been too many mornings that you would be waking up to the futures indicating a stronger opening.

This morning, however, that’s the case. Even though the gains aren’t very strong, at least there’s a chance to see some gains from the opening bell for a change.

The recent direction of the market, however, would take a fairly significant gain to erase some of the weakness that has been the theme over those past few weeks as the S&P 500 is now about 3% lower.

What may concern some technicians is that after a 6 month period of seeing higher lows as the market has undulated from 1862 to 2036, we are now sitting at a relative low that is lower than the last low.

That’s pretty esoteric, but for some that’s very important and would indicate that the trend of 3 steps forward and 2 steps back is being broken.

Most people don’t really care about such esoteric things.

Of course, the other pattern that has already been broken is the one where we see a 5% mini-correction every few months.

Sitting at a 3% lower level may simply be a mid-point for that expected decline, although over the past few years those declines have come fairly precipitously, while this most recent decline has come in very small doses, maybe the same way a frog doesn’t realize that it’s been swimming in a pot very slowly being brought to a boil.

It continues to be difficult, however, to understand what the next catalyst to propel markets higher, even to the point of simply approaching its previous high, would be. While the next earnings season could bring some better than expected earnings results as the currency exchange issues haven’t worsened, as had been expected, that’s still a month away.

While awaiting that next earnings season there is still the prospect of a continuing overhang coming from uncertainty over when the FOMC will finally raise interest rates. It may just be that the best catalyst to move higher would be to remove that overhang, but to remove it due to good economic news and not because the economy is shrinking.

That overhang can be eliminated if the market sees good news as being good news.

If this morning’s Mortgage Applications data is any indication, the concern that rates may be going higher could spur economic activity and most agree that housing is a great place to begin any real economic expansion.

While we could use some good news, between now and next Friday, which marks the end of the June 2015 option cycle, my hope is that there is just no bad news so that the relatively large number of positions set to expire next week can either be assigned or rolled over. Right now, the burden of the past few weeks has made that more difficult, so we could use a little bit of a respite from the erosion that has been going on since the June cycle began.

Hopefully today will be a start to taking another few steps forward

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Daily Market Update – June 9, 2015  (Close)

We are about a month away from the next earnings season and between now and then, other than the usual major economic reports or events, such as the Employment Situation Report or an FOMC Statement release, there isn’t too much to get anyone overly excited.

There’s still some drama in Europe, but mostly we’re in a holding pattern, although the market may simply become susceptible to technical factors. The latter is only likely to do one thing if it takes hold and that’s to pull markets lower.

With the weakness theme having taken hold over the last few weeks we are still only less than 3% below market highs as attrition has been gnawing at the market. It’s that slow attrition that could bring the technical traders back to life, as the S&P 500 approaches the 2041 level, which would require about another 2.5% decline and from there has only 2000 as a support level.

But even with all of those events taking place, that would only account for less than a 7% decline.

With this morning’s pre-opening futures trading looking as if it will be just another of the same days as we’ve been seeing over the past 3 weeks, there wasn’t too much telling how the day would proceed. Yesterday was one of slow erosion and attrition as buyers are just finding little reason to get excited about anything.

Today turned out to be a day of biding time as both sides of the unchanged level were tested and no one wanted to be on either side for very long.

Meanwhile, as interest rates are climbing, as they are now for the third time over the past few months, there’s renewed competition for investor’s dollars. What remains to be seen is whether these interest rate increases being seen in the market will persist. Previous attempts to predict the Federal Reserve’s actions proved to be too early and those interest rates fell back down giving some momentum back to stocks.

This time around the bond market may finally be getting it right. This week’s Retail Sales Report may give some further ammunition to the idea that the economy isn’t as weak as the GDP has been indicating.

That leads to next week and the FOMC Statement Release.

It’s probably not too likely that any policy change will occur by then, but all it takes is a change in the wording of the statement that might indicate a change in policy is coming soon. The initial impact of that will probably be to drive even more activity over to bonds and put further pressure on stocks.

Hopefully, though, that kind of pressure will be short lived, as it usually is and will be followed by an earnings season that ends up with better revenues and increased bottom lines, as the expected continuing dollar strength hasn’t materialized.

Right now, that’s still in the distant future.

In the immediate future, such as this week and next it’s all going to be about the FOMC and getting prepared to deal with that as the monthly option cycle will end just 2 days after the FOMC release.

While awaiting the news I have neith
er the available cash and am generally unwilling to use margin, nor the inclination to put much more at risk at a time when the bias is definitely on the side of sellers.

As with most cycles, whether up or down, it’s just a question of how long it will go on and whether the next leg of the cycle will atone for what preceded it.

For the remainder of this week I expect that I’ll be a spectator more than anything else while letting others figure out what the next step will be and let the stock and bond guys fight it out over who gets the marginal dollars that may be on the fence.

Right now, they won’t be my dollars.

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