Category Archives: Daily Market Update

Daily Market Update – April 29, 2015  (8:30 AM)

I don’t know what the outcome of the GDP Report and the FOMC Statement release will be but the Twitter debacle last night may still keep people’s attention for a while.

Like most news, though, even the most highly significant economic news, it will be forgotten as soon as the next bit of news comes forward.

So today will have two potentially very significant events and still more earnings to come.

Those earnings reports will be slowing down significantly once this week is over. At that point every one will try to interpret what the meaning of the past earnings season had been and what the prospects are for the coming quarter.

For now, the theme appears to not be ready to change any time soon. The dollar is strong and oil prices, despite rallying higher, are still low.

While this quarter was characterized by higher EPS data, but on lower top line revenue, as long as corporate buy backs continue into the next quarter, there may be some offset for the adverse impact of a strong dollar.

What may be different the next quarter is that if low energy prices do continue we may see the kind of consumer led expansion of the GDP that we’ve been waiting for since the beginning of 2015.

This morning the expectation is for another set of disappointing GDP statistics, so we’ll see where that leads if materialized or where a surprise may lead if expansion is finally noted.

With enough new positions opened this week to keep me happy and generating some weekly income, I’d like to see prices strengthen a little bit more to have a better opportunity to see those positions set to expire this week either be assigned or get rolled over.

While I didn’t expect to make any new position trades yesterday, but did so, my expectations are even lower today, as they are on most Wednesdays when focus really turns to managing existing positions to close out the week or be put into position for subsequent weeks.

With today’s big economic news there’s even more reason to just be a casual observer at the ready to sell calls on existing positions if the opportunity arrives, but not to put more cash at risk.

Something always needs to be held back in the event that real opportunity appears in the event of anything that’s going to be construed as bad news, especially if it has some staying power, or leads to the next mini-correction.

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Daily Market Update – April 28, 2015  (Close)

Apple reported nice earnings yesterday and continued its assault on the $1 trillion market capitalization line, as it also approaches the $1,000/share level prior to its stock split.

The market cap of Apple is even more amazing when you consider how many shares have now been bought back and retired, no longer being counted toward that $1 trillion mark.

But unlike 2011 and much of 2012 when the S&P 500 could have been summarized simply on the basis of Apple’s moves, it is no longer the stock that moves markets up and down, just as IBM had been in an earlier era.

With the market in mild decline yesterday and with early indications of some mild decline continuing this morning, there doesn’t appear to be too much euphoria, even as Apple is pennies away from an all time high as the morning session is about to begin. The early DJIA numbers would be far weaker, though, if Apple and Merck, also having reported earnings, were not both up so strongly.

Interestingly, the day ended with a nice gain, but did so without the help of Apple, which ended up falling by about $2, which ended up shaving about 14 points off the DJIA.

As is often the case, news becomes stale quickly, especially as there’s more news coming and this week has plenty of more news coming, as earnings will keep pouring in all throughout the week.

With the FOMC meeting beginning today the last 2 months have gotten away from that strange habit of earlier months that saw unusual moves much higher on the day prior to the release. Today’s move higher after a large decline in the first hour wasn’t the typical higher move that had been seen in previous months prior to the FOMC Statement release.

Whatever confidence investors had about what would be contained in the FOMC Statement has vanished, as now it’s hard to know whether there is actually any news that could possibly be considered as being positive for the market in the near term.

The biggest fear, that of increasing interest rates coming sooner rather than later, could be assuaged if the GDP comes in weak tomorrow morning, as expected.

However, while those fears may be put on hold, a rational person would be concerned that the economy isn’t heating up enough to warrant even the slightest of interest rate increases.

Those rate increases usually come as corporate earnings are climbing strongly, but that’s not really the case at the moment. So if the FOMC is focused and hell bent on increasing rates, one has to wonder whether, in the face of lackluster profit growth, that interest rate increase might not be the straw that finally broke the camel’s back and created the correction that seems so long overdue.

I’m glad other people get paid to think about those sort of things. They are far too complex even for those people that know what they’re looking at, thinking about and creating policy.

With a couple of purchases yesterday, a rollover and the sale of a call on an uncovered position, I should maybe have given some thought to calling it a week, but it was hard to look the other way watching Lexmark take a hit following its earnings release.

But with cash available and some positions still within the realm of possibility of either being assigned or rolled over, I wouldn’t mind making even some more purchases.

While Lexmark seemed to fit the bill for the kind of compelling opportunity that I was looking for if trading in advance of the FOMC release, I don’t think tomorrow will offer anything similar, so I’ll be taking it in, would be my guess.until there’s a chance of gaining some clarity.

Daily Market Update – April 28, 2015  (9:00 AM)

Apple reported nice earnings yesterday and continued its assault on the $1 trillion market capitalization line, as it also approaches the $1,000/share level prior to its stock split.

The market cap of Apple is even more amazing when you consider how many shares have now been bought back and retired, no longer being counted toward that $1 trillion mark.

But unlike 2011 and much of 2012 when the S&P 500 could have been summarized simply on the basis of Apple’s moves, it is no longer the stock that moves markets up and down, just as IBM had been in an earlier era.

With the market in mild decline yesterday and with early indications of some mild decline continuing this morning, there doesn’t appear to be too much euphoria, even as Apple is pennies away from an all time high as the morning session is about to begin. The early DJIA numbers would be far weaker, though, if Apple and Merck, also having reported earnings, were not both up so stroingly.

As is often the case, news becomes stale quickly, especially as there’s more news coming and this week has plenty of more news coming, as earnings will keep pouring in all throughout the week.

With the FOMC meeting beginning today the last 2 months have gotten away from that strange habit of earlier months that saw unusual moves much higher on the day prior to the release.

Whatever confidence investors had about what would be contained in the FOMC Statement has vanished, as now it’s hard to know whether there is actually any news that could possibly be considered as being positive for the market in the near term.

The biggest fear, that of increasing interest rates coming sooner rather than later, could be assuaged if the GDP comes in weak tomorrow morning, as expected.

However, while those fears may be put on hold, a rational person would be concerned that the economy isn’t heating up enough to warrant even the slightest of interest rate increases.

Those rate increases usually come as corporate earnings are climbing strongly, but that’s not really the case at the moment. So if the FOMC is focused and hell bent on increasing rates, one has to wonder whether, in the face of lackluster profit growth, that interest rate increase might not be the straw that finally broke the camel’s back and created the correction that seems so long overdue.

I’m glad other people get paid to think about those sort of things. They are far too complex even for those people that know what they’re looking at, thinking about and creating policy.

With a couple of purchases yesterday, a rollover and the sale of a call on an uncovered position, I should maybe think about calling it a week.

But with cash available and some positions still within the realm of possibility of either being assigned or rolled over, I wouldn’t mind making some more purchases.

With the market appearing to open the morning with
a mildly negative tone, I’m not expecting many opportunities to do what I would really like to do and simply sell more calls on uncovered positions. While there’s still the possibility of adding positions, something would have to seem as a really strong buy to do so before tomorrow’s potentially big GDP and FOMC news.

Daily Market Update – April 27, 2015  (Close)

Compared to last week, anything would qualify as being a busy week, but this coming week will meet the definition at any time.

In addition to being the second of the two busiest earnings weeks each quarter, getting started with Apple after today’s closing bell, there’s lots more on tap.

Before Wednesday afternoon’s FOMC Statement is released, there will also be a GDP Report.

That tandem may be a powerful combination.

With the FOMC meeting crafting its statement lasting for  1 1/2 days, that GDP release may change the verbiage used in the final statement release.

The question needing to be answered from the GDP Report is whether or not the anticipated consumer led expansion from decreasing energy prices is ever going to happen.

The expectation is that it may, but not yet.

Sooner or later weather can’t keep being an excuse.

After the GDP is release we get to scour the FOMC Statement and try to figure out whether interest rate increases will happen sooner or maybe wait until the next winter, when it would serve as the perfect anti-complement to weather induced slow-downs.

As busy as the week may be, with the exception of the Apple report today, there wasn’t not too much going on to move markets.

The early futures trading were looking to add to Friday’s closing highs in the S&P 500 and the NASDAQ, but the day ended up being very listless.

In fact, it was interesting that early on, while the market was higher, the Volatility Index was actually also higher, whereas it would have been expected to have gone lower.

However, if you looked at the minute charts for the S&P 500 you would have seen that there were lots of ups and downs during that time period of the first 2 hours, that despite being in a narrow range,, really did satisfy the mathematical definition of volatility, despite our not perceiving it as such.

With a little more cash in hand and a handful of positions expiring this week that are at least in striking range of their strikes, I’m again hopeful for a week that will have a decent combination of new call options sold, rollovers and assignments.

With that cash, I’m a little less reluctant to add new positions, but will likely look for weekly option expirations and try to balance the number of new positions with the number of assignments that I think me be likely.

The turned out to bbe the case today to start the week, with 2 new positions initiated, one rollover and even a call sale on a long uncovered position, Coach, which happens to report earnings tomorrow.

With the FOMC and GDP having the ability to significantly alter the path of the market, I definitely do not want to get
too far out ahead of it and may also consider adding new positions after the FOMC Statement release, but then looking at the following week’s expiration.

As the morning got ready to begin, I was, as expected, an observer and wasn’t too eager to jump aboard if the climb happened to go much higher from where the futures were indicating. With a little decline from the early modest climb up, it looked like a good time to get involved and wait for the ride that may be coming later in the week.

In the meantime, as the march does continue higher and with concerns that it brings added downside risk, there may also be reason to again focus on the added value and safety that dividends may provide in the near term. Hopefully, today’s purchase of Kinder Morgan, which is ex-dividend tomorrow is a step in the right direction.

Daily Market Update – April 27, 2015  (9:00 AM)

Compared to last week, anything would qualify as being a busy week, but this coming week will meet the definition at any time.

In addition to being the second of the two busiest earnings weeks each quarter, getting started with Apple after today’s closing bell, there’s lots more on tap.

Before Wednesday afternoon’s FOMC Statement is released, there will also be a GDP Report.

That tandem may be a powerful combination.

With the FOMC meeting crafting its statement lasting for  1 1/2 days, that GDP release may change the verbiage used in the final statement release.

The question needing to be answered from the GDP Report is whether or not the anticipated consumer led expansion from decreasing energy prices is ever going to happen.

The expectation is that it may, but not yet.

Sooner or later weather can’t keep being an excuse.

After the GDP is release we get to scour the FOMC Statement and try to figure out whether interest rate increases will happen sooner or maybe wait until the next winter, when it would serve as the perfect anti-complement to weather induced slow-downs.

As busy as the week may be, with the exception of the Apple report today, there’s not too much going on to move markets.

The early futures trading is looking to add to Friday’s closing highs in the S&P 500 and the NASDAQ.

With a little more cash in hand and a handful of positions expiring this week that are at least in striking range of their strikes, I’m again hopeful for a week that will have a decent combination of new call options sold, rollovers and assignments.

With that cash, I’m a little less reluctant to add new positions, but will likely look for weekly option expirations and try to balance the number of new positions with the number of assignments that I think me be likely.

With the FOMC and GDP having the ability to significantly alter the path of the market, I definitely do not want to get too far out ahead of it and may also consider adding new positions after the FOMC Statement release, but then looking at the following week’s expiration.

As the morning gets ready to begin, I will likely be an observer and wouldn’t be to eager to jump aboard if the climb goes much higher from where the futures are indicating. However, any weakness in positions that are on the radar, including those from previous week’s may still be open game, such as American Express, which received a downgrade this morning.

In the meantime, as the march does continue higher and with concerns that it brings added downside risk, there may
also be reason to again focus on the added value and safety that dividends may provide in the near term.