Category Archives: Daily Market Update

Daily Market Update – April 14, 2015  (8:30 AM)

It started this morning with Johnson and Johnson reporting, then followed by JP Morgan and Wells Fargo.

Those three have a combined market capitalization that so large that it’s even about 10% larger than that of Apple.

But the good news is that the first 2 major banks to report did nothing to surprise markets and actually beat on revenues.

Johnson and Johnson, which was the first of this season to report with significant currency considerations did report the effects of the stronger dollar and did reduce forward guidance, but as expected, investors were prepared to hear that kind of news. More importantly, the news wasn’t so bad as to have exceeded those expectations.

That’s a good start for what may still be a challenging few weeks ahead, but at the very least the major banks do very often at least set a tone when they’re not behaving badly and thus far this morning the behavior is unremarkable and restrained.

The market too, during its pre-open futures trading is equally restrained and unremarkable.

Given the 3 options of behavior that existed as earnings season gets underway, the same 3 options that exist every day, being restrained and unremarkable can be a good one, if it’s sustained for a while and if any deviations from restraint are soon brought back into line.

Given a portfolio of holdings, some of which are covered, some of which are longing for cover, you can have different hopes for what trend the broader market will be following.

If I had all positions covered I would love seeing a restrained, unremarkable and flat market with occasional punctuations higher and lower. That would make a nice environment for rollovers. That’s the best of all situations when you just roll over position after position and see the income come in on a regular basis.

But when there are uncovered positions the hope is for the ability to see new cover and that typically requires the kind of high tide that pulls everything along. That usually also leads to assignments and rollovers, as well.

So with all of those uncovered positions a flat and restrained market just won’t do it.

While it’s definitely better than a downward moving market at this moment, I’d still like to see this morning’s earnings reports perhaps be the first among a series of non-disappointing reports, that could perhaps serve as the fuel for a move higher.

Until more positions are covered there’s no reason to want to see a lower move by the market. Those are nice to have when you’re sitting on a pile of cash or had a large portion of your holding suddenly called away by a large move higher.

I don’t think that’s going to be the case, although this week’s expiring positions are still in good shape for assignment if the market can avoid any large move lower.

This morning’s early indications following the earnings releases of Johnson and Johnson, JP Morgan and Wells Fargo at least give some hope for the prospects of the rest of the week.

&nbs
p;

Daily Market Update – April 13, 2015  (Close)

While there are some economic reports of interest this week they’re not likely to be anywhere near as important as the real beginning of earnings season this week.

It may have started with Alcoa last week, but tomorrow begins the series of reports from the major money center banks.

While they can do well and not bring the rest of the market higher with it, it’s not to common for those banks to report disappointing earnings and then to see the rest of the market thrive. However, that was the case in the final quarter of 2014, when the relatively disappointing earnings reports from the banks didn’t drag markets lower.

So it could happen.

This time around there aren’t really great expectations for the banks and instead most attention is going to be focused on those companies that may have significant currency exposure, such as Intel, which also reports this week.

We’ve been talking and fretting for so long about currency impact that you would have to think that it would have to be much worse than expected for the actual reports to bring stocks down very much. You might also think that companies with lots of cash overseas and earning lots of money overseas are involved in fairly sophisticated currency hedging that would finally start to pay off.

However, coming off a relatively strong 2 weeks to start April after a really disappointing March, there’s room to give up some of those recent gains. On the other hand, though, April is just an historically strong month for markets and our lowered expectations for earnings may be just the environment necessary for the next phase higher.

Each of those is reasonable and we’ll find out soon enough whether there is enough contained in the upcoming earnings reports to push markets higher, as we’re running out of other reasons to see growth.

At this point it looks as if we’re going back to good old fundamentals, which normally would be a good thing, unless some one comes up with the realization that current levels are just artificially so high and to a degree are based on engineering of EPS data through years of buy backs that have probably now seen their peak.

Just look at the performance of GE today, just a day after its 10% gain following announcement of a $50 Billion buyback that will be funded from selling its non-industrial pieces. Never mind that those pieces were now making money.

That GE buyback may truly have been the peak of the corporate strategy that has been soaking up shares and helping to create an illusion of greater comparative earnings.

GE actually reports earnings this week, too. That could be interesting.

With only a single assignment last week I’m not expecting to be very actively looking for new positions this week, just as last week was restrained.

With a number of positions set to expire this Friday as the monthly cycle comes to its end, I’d be very happy to have a repeat of last week. Being able to get rollovers done and execute the sale of some calls on existed uncovered positions would satisfy my need to generate income for the week.

However, as much as I was happy with last week, this week I would like to see some more emphasis on the assignment side of the equation.

At the moment a number of positions are candidates for assignment but it’s not a done deal until the final closing bell rings on Friday and even then it’s not really a done deal until as much as another 90 minutes passes.

So I won’t be making too many plans with all of that money from assignments that still may not ever become reality until they do.

However, with the likelihood of at least some and with the additional likelihood of at least being able to get some rollovers accomplished, any new positions may equally look at expirations this Friday or in some future weeks.

With volatility getting lower and lower and bringing premiums down, as well, there’s not too much attraction for looking at the extended weekly options unless earnings come into play and help to boost up some premiums.

The market appeared to be getting ready to open the week on a flat note, so the early direction could have then gone anywhere, but it ended up getting progressively weaker as the day wore on, in the complete absence of news.

For whatever there was today the week won’t begin for real until tomorrow morning when JP Morgan and Wells Fargo get it all going.

Daily Market Update – April 13, 2015  (7:30 AM)

While there are some economic reports of interest this week they’re not likely to be anywhere near as important as the real beginning of earnings season this week.

It may have started with Alcoa last week, but tomorrow begins the series of reports from the major money center banks.

While they can do well and not bring the rest of the market higher with it, it’s not to common for those banks to report disappointing earnings and then to see the rest of the market thrive. However, that was the case in the final quarter of 2014, when the relatively disappointing earnings reports from the banks didn’t drag markets lower.

So it could happen.

This time around there aren’t really great expectations for the banks and instead most attention is going to be focused on those companies that may have significant currency exposure, such as Intel, which also reports this week.

We’ve been talking and fretting for so long about currency impact that you would have to think that it would have to be much worse than expected for the actual reports to bring stocks down very much. You might also think that companies with lots of cash overseas and earning lots of money overseas are involved in fairly sophisticated currency hedging that would finally start to pay off.

However, coming off a relatively strong 2 weeks to start April after a really disappointing March, there’s room to give up some of those recent gains. On the other hand, though, April is just an historically strong month for markets and our lowered expectations for earnings may be just the environment necessary for the next phase higher.

Each of those is reasonable and we’ll find out soon enough whether there is enough contained in the upcoming earnings reports to push markets higher, as we’re running out of other reasons to see growth.

At this point it looks as if we’re going back to good old fundamentals, which normally would be a good thing, unless some one comes up with the realization that current levels are just artificially so high and to a degree are based on engineering of EPS data through years of buy backs that have probably now seen their peak.

With only a single assignment last week I’m not expecting to be very actively looking for new positions this week, just as last week was restrained.

With a number of positions set to expire this Friday as the monthly cycle comes to its end, I’d be very happy to have a repeat of last week. Being able to get rollovers done and execute the sale of some calls on existed uncovered positions would satisfy my need to generate income for the week.

However, as much as I was happy with last week, this week I would like to see some more emphasis onthe assignment side of the equation.

At the moment a number of positions are candidates for assignment but it’s not a done deal until the fiunal closing bell rings on Friday and even then it’s not really a done deal until as much as another 90 minutes passes.

So I won’t be making too many plans with all
of that money from assignments that still may not ever become reality until they do.

However, with the likelihood of at least some and with the additional likelihood of at least being able to get some rollovers accomplished, any new positions may equally look at expirations this Friday or in some future weeks.

With volatility getting lower and lower and bringing premiums down, as well, there’s not too much attraction for looking at the extended weekly options unless earnings come into play and help to boost up some premiums.

For now, the market appears to be getting ready to open the week on a flat note, so the early direction can be anywhere, as can the opportunities, but the week may not begin for real until tomorrow morning when JP Morgan and Wlls Fargo get it all going.

Daily Market Update – April 10, 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: Halliburton

Rollovers:  Coca Cola, The Gap

Expirations:  Market Vectors Gold Miners ETF, Whole Foods

The following positions were ex-dividend this week:  The Gap (4/6 $0.23), Whole Foods (4/8 $0.13)

The following positions will be ex-dividend next week:  AbbVie (4/13 $0.51), Chesapeake Energy (4/13 $0.09), Freeport McMoRan (4/13 $0.05)

Trades, if any, will be attempted to be made by 3:30 PM

Daily Market Update – April 9, 2015  (Close)

Yesterday’s was another day of a failed rally, as the market squandered another triple digit gain, although it did manage to stay above water. In fact, when you consider the huge drop taken by oil prices yesterday and the portion of the S&P 500 comprised by energy positions, the market actually did fairly well for the day.

This morning, as this news-free week was winding down, is looked as if it’s going to be another flat open, but when the day came to its end, nothing was squandered. It wasn’t a terribly exciting day, but it worked for me. It was a day that was different from those recently preceding it in that it stayed on the same mellow course all through the session.

What had distinguished this week a little has been the occasional change in direction during the trading day, instead of simply alternating from day to day. For the most part, that’s not something that we had seen in more than a month. During that time, while we’ve seen a lot of flat openings being portended by the futures market, that hasn’t been the way the market has actually traded for much of that period.

For most of that time there’s been very little reason to account for the switch in magnitude seen so often, just as there’s been very little reason to explain the switch in direction from day to day, that had really been a hallmark of March, while April continues to look for its own character.

That character may get formed over the next week as earnings season got underway yesterday. At some point we will have heard from enough companies with large interests abroad to get a feeling for just how much earnings will be depressed and just how much they may be expected to impact earnings for the coming quarter.

For all of the emphasis that’s put on EPS growth from comparable periods, the suggestion that EPS growth is decelerating isn’t the sort of thing that investors are happy to hear about. They so much like to hear about accelerating EPS data, that they’re completely willing to overlook how it happened, such as through large buyback programs.

So these coming weeks may be interesting. Maybe even more so than with the usual beginning of earnings season

With just two days left to go for the week my eyes are set on whatever opportunities there may still be for rollovers and a hope that at least some of the positions will get a chance to be assigned.

That’s pretty much the hope for every week, where it doesn’t get better than when you have a nice combination of opening positions, rollovers, assignments and sales on uncovered positions.

With only one new position opened this week and only two new sales of previously uncovered positions, that leaves rollovers and assignments for this week and at least those still look like possibilities, as long as the market can stay in the game. With no real news today and none due tomorrow, it would be easy to think that there’s nothing to know the market off of its perch, but we all know how quickly the mood can change even when there’s no apparent catalyst.

Every now and then that mood becomes buoyant, but there’s been a definite lack of optimism being expressed lately.

But who knows, that may be the most positive thing of all.

Maybe the more people warn of calamity or pulling your wagons together, the better things may be in the coming week as things ma
y end up not being as bad as we’ve been coming to expect.