Category Archives: Daily Market Update

Daily Market Update – May 11, 2015  (Close)

Generally, when the week opens following a large move higher to close the previous week, I like to see the market give back most, if not all of those gains.

That’s because those large Friday gains are usually associated with some assignments and with money in hand on Monday, I don’t like the idea of paying up for positions that went up sharply just the previous trading session.

This week is a little bit different, though.

For one thing, it was another week of not having any assignments or fewer than I had hoped to have. So there’s less cash available for new positions and I tend to be very reluctant to use margin credit for leverage, other than to sell covered puts.

So, with the prospect of not likely making any new purchases, I  would much rather see existing positions thrive.

That’s especially the case since this is the end of the May 2015 option cycle and I have a lot of positions riding on the week’s outcome. I would definitely like to see the market continue its climb higher and then end the week with some assignments, or at least rollovers to keep the cash stream flowing.

Even without many assignments over the past week the cash flow has been able to continue as rollovers have been possible for most positions. That at least makes day to day stock watching a little more palatable while waiting for an opportunity to be more pro-active.

As with most weeks the question remains the same, though.

What are the week’s upcoming catalysts to send us higher or to send us lower?

Just like last week this coming week is going to be a very slow one for economic news. It won’t even have anything akin to the previous week’s Employment Situation Report. That, alongside Janet Yellen’s unexpected comment, were the only two catalysts for the week and they sent markets in competing directions.

This week we have tomorrow’s JOLT Survey and Wednesday’s Retail Sales Report.

The former, despite Janet Yellen suggesting that it was an important measure of economic growth, has been widely ignored and the Retail Sales Report won’t hold a candle to the actual earnings reports coming this week from the nation’s leading retailers that actually kick off about an hour prior to the release of the Retail Sales Report.

Those company earnings may be far more important than anything else this week, especially if they give the slightest hint that consumers are finally starting to get involved with the discretionary spending that we’ve been waiting over 6 months to begin seeing.

The pre-opening futures were sitting on the flat line this morning, as might have been expected with such little news coming through, although there was some weekend news out of China that could have set the stage for some optimism in the US, as we are increasingly reliant upon a booming Chinese economy for our own health, but so far that doesn’t appear to be the case.

With that flat line seemingly preparing the market for its open,
I was hopeful there would continue to be some opportunities to sell calls on existing positions as has been the case the past few weeks, although there still may continue to be reason to look at extended option expiration dates to do so.

That didn’t happen, but  the decision to close the AbbVie, at a cost of only $0.06 on the in the money position likely to be assigned on Friday, did offer a little cushion to generate some revenue from new purchase positions.

One of those, Marathon Oil, goes ex-dividend next Monday. I sold the May 22 options in the hope that the shares will be assigned early at Friday’s close. That way, although not getting the dividend,  I would get 2 weeks of option premium and not have to shoulder any of the price reduction related to the dividend and also avoid the risk of an additional week of holding.

As with all great ideas – we’ll see.

Hopefully tomorrow will get back on track and find reasons to take the market higher in a meaningful way and get us one step closer to finishing the monthly option cycle on a decent note.

Daily Market Update – May 11, 2015  (8:30 AM)

Generally, when the week opens following a large move higher to close the previous week, I like to see the market give back most, if not all of those gains.

That’s because those large Friday gains are usually associated with some assignments and with money in hand on Monday, I don’t like the idea of paying up for positions that went up sharply just the previous trading session.

This week is a little bit different, though.

For one thing, it was another week of not having any assignments or fewer than I had hoped to have. So there’s less cash available for new positions and I tend to be very reluctant to use margin credit for leverage, other than to sell covered puts.

So, with the prospect of not likely making any new purchases, I  would much rather see existing positions thrive.

That’s especially the case since this is the end of the May 2015 option cycle and I have a lot of positions riding on the week’s outcome. I would definitely like to see the market continue its climb higher and then end the week with some assignments, or at least rollovers to keep the cash stream flowing.

Even without many assignments over the past week the cash flow has been able to continue as rollovers have been possible for most positions. That at least makes day to day stock watching a little more palatable while waiting for an opportunity to be more pro-active.

As with most weeks the question remains the same, though.

What are the week’s upcoming catalysts to send us higher or to send us lower?

Just like last week this coming week is going to be a very slow one for economic news. It won’t even have anything akin to the previous week’s Employment Situation Report. That, alongside Janet Yellen’s unexpected comment, were the only two catalysts for the week and they sent markets in competing directions.

This week we have tomorrow’s JOLT Survey and Wednesday’s Retail Sales Report.

The former, despite Janet Yellen suggesting that it was an important measure of economic growth, has been widely ignored and the Retail Sales Report won’t hold a candle to the actual earnings reports coming this week from the nation’s leading retailers that actually kick off about an hour prior to the release of the Retail Sales Report.

Those company earnings may be far more important than anything else this week, especially if they give the slightest hint that consumers are finally starting to get involved with the discretionary spending that we’ve been waiting over 6 months to begin seeing.

The pre-opening futures are sitting on the flat line, as might have been expected with such little news coming through, although there was some weekend news out of China that could have set the stage for some optimism in the US, as we are increasingly reliant upon a booming Chinese economy for our own health, but so far that doesn’t appear to be the case.

With that flat line seemingly preparing the market for its open, hopeful
ly there will continue to be some opportunities to sell calls on existing positions as has been the case the past few weeks, although there still may continue to be reason to look at extended option expiration dates to do so.

Otherwise, I expect it to be a fairly passive morning and don’t expect too much action to start the week as I hold on tightly to what little cash is in my pockets at the moment.

Daily Market Update – May 8 , 2015  (8:00 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:  none

Rollovers:  ANF

Expirations:  AZN, LVS, WFM

The following positions were ex-dividend this week:  INTC (5/5 $0.24), BP (5/6 $0.60).  

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

Daily Market Update – May 7 , 2015  (Close)

The one lesson that can be learned from Alan Greenspan and Janet Yellen is that the market doesn’t like it when they vocalize an opinion that essentially says that they believe stocks are too expensive.

Whether it’s Greenspan’s “frothy exuberance” or Yellen’s questioning of bio-technology stock prices, yesterday’s comment  that equities were “priced quite high,” seemed to get an immediate response.

While the knee-jerk reaction is hard to argue, the longer term consequence is less clear cut, as such statements have tended to lead toward the market or the sector to move higher.

Despite a late minute reduction in the decline, taking it out of triple digit territory, yesterday was a very negative trading session, adding onto the decline from the day before.

Lately, when faced with a decline of some note there has been a reflexive bounce back the following day, so yesterday did stand out a little for not following that pattern.

In a week that has basically no scheduled news sometimes it doesn’t take too much to make things happen and yesterday was a good example of that. Tomorrow, however, as the Employment Situation Report is released and most expect a bounce much higher from last month’s disappointing report, anything can happen.

Both “too good” and “bad” are likely to lead in the same downward direction and even “as expected” may be seen as a disappointment.

This morning’s futures, just prior to the Jobless Claims Report had already shown quite a bit of improvement and was only very slightly lower, hopefully putting the brakes on the past couple of days and giving those positions expiring this week a chance to either be assigned or get rolled over. The past few days put either of those goals a little further off the horizon.

With the Jobless Claims Report released and essentially showing no change, the market also showed essentially no change from its improved position and looked at least be ready to start the day without the extreme prejudice that was hanging over it yesterday.

Instead, it actually provided a nice surprise, as the market actually spent quite a bit of the day in triple digit gain territory and at least was there long enough to allow a couple of rollovers. Of course, that doesn’t leave too much for tomorrow, although there may at least be one rollover or assignment still in contention.

Hopefully there will be some more rally tomorrow, even a relief rally would be fine right now, as long as giving some chance to generate some more income from holdings.

As we close in on next week’s month ending expirations and with enough expiring positions to get my attention, we will hopefully not be taken further away from the goal line heading into the expiration date.

After that anything is fair game

 

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

The one lesson that can be learned from Alan Greenspan and Janet Yellen is that the market doesn’t like it when they vocalize an opinion that essentially says that they believe stocks are too expensive.

Yesterday, should have been a quiet day, but then someone remembered that bonds were starting to pose a threat to stocks, as their interest rate has been climbing higher and higher.Whether it’s Greenspan’s “frothy exuberance” or Yellen’s questioning of bio-technology stock prices, yesterday’s comment  that equities were “priced quite high,” seemed to get an immediate response.

While the knee-jerk reaction is hard to argue, the longer term consequence is less clear cut, as such statements have tended to lead toward the market or the sector to move higher.

Despite a late minute reduction in the decline, taking it out of triple digit territory, it was a very negative trading session, adding onto the decline from the day before.

Lately, when faced with a decline of some note there has been a reflexive bounce back the following day, so yesterday did stand out a little for not following that pattern.

In a week that has basically no scheduled news sometimes it doesn’t take too much to make things happen and yesterday was a good example of that. Tomorrow, however, as the Employment Situation Report is released and most expect a bounce much higher from last month’s disappointing report, anything can happen.

Both “too good” and “bad” are likely to lead in the same downward direction and even “as expected” may be seen as a disappointment.

This morning’s futures, just prior to the Jobless Claims Report has already shown quite a bit of improvement and is only very slightly lower, hopefully putting the brakes on the past couple of days and giving those positions expiring this week a chance to either be assigned or get rolled over. The past few days put either of those goals a little further off the horizon.

With the Jobless Claims Report released and essentially showing no change, the market also showed essentially no change from its improved position and may, at least be ready to start the day without the extreme prejudice that was hanging over it yesterday.

Hopefully there will be some rally, even a relief rally would be fine right now, as long as giving some chance to generate some more income from holdings, but for now that doesn’t look too likely today.

As we close in on next week’s month ending expirations and with enough expiring positions to get my attention, we will hopefully not be taken further away from the goal line heading into the expiration date.

After that anything is fair game