Category Archives: Daily Market Update

Daily Market Update – April 9, 2015  (8:45 AM)

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 is winding down, is looking as if it’s going to be another flat open.

What has 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 coming today nor 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.

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Daily Market Update – April 8, 2015  (Close)

Yesterday’s late sell-off prevented a repeat of two consecutive higher closes, so they continue to remain elusive in 2015, but at least this morning wasn’t an assured loser, as the futures were trading flatly to begin the day.

Also on the bright side is that the close yesterday gives the market a chance to digest Monday’s unexpectedly large gains following the turnaround from the morning’s sell-off.

Otherwise, there isn’t too much news for the rest of the week, although the minutes from last month’s FOMC meeting will be released and you can be certain that each and every word will be dissected by lots of people with very different lenses.

There shouldn’t be anything shocking in there, although it could offer some insight into just how concerned the FOMC may be about the strengthening US Dollar and how that may be acting to slow the growth of the economy.

They may also be caught discussing how the drop in energy prices hasn’t yet seem to materialize into the kind of increased consumer activity that just about every economist projected and resulted in a significant upward change to the projected 2015 GDP.

Instead, however, most all attention ended up being diverted by the news of a verdict in the Boston Marathon Bombing trial.

All of that came on the day that earnings season begins after today’s market close.

The only question as we head into the second quarter of earnings, the one in which we were all expecting to hear about increased consumer driven revenues and decreased energy related prices, is how much have we prepared ourselves for currency related issues.

For companies that have lots of exports it may be difficult to deal with the stronger dollar that ends up making those goods more expensive to overseas buyers. However, for those companies that make lots of sales from their direct activities abroad the strengthening US dollar’s impact may only be as much as their currency hedging activities failed to offset.

Companies like Apple, Microsoft and others likely will report decreased earnings from currency shifts, but likely to a much lesser degree because of their hedges, just as some airlines hedged the price of fuel for years to their advantage.

There will still be earnings surprises, but we may be better prepared for the upcoming quarter than expected, as the expectation for currency related charges has now been in the air for quite some time.

However the season begins this afternoon, it will be an interesting few weeks.

For a while it has been hard to identify a possible upside catalyst. Earnings, even if below analysts expectations, may end up being that surprise catalyst.

For the rest of the week I think it will just be a case of sitting back and waiting, while hoping for those opportunities to sell options, rollover or cash out of positions may come along.

Today ended up with a pretty flat close,
although if looking to be very critical you could point to a second consecutive day of a failed rally, as the market was up by triple digits early in the day. Given the very strong downward move by energy stocks today the DJIA and S&P 500 did reasonably well, as the latter is about 20% energy.

So what today may mean, whether in the big picture or just for the day is dubious.

Just more of the same tomorrow and one step closer to seeing this week come to an end, still within striking range of decent outcomes on those positions set to expire.

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

Yesterday’s late sell-off prevented a repeat of two consecutive higher closes, so they continue to remain elusive in 2015, but at least this morning isn’t an assured loser, as the futures are trading flatly to begin the day.

Also on the bright side is that the close yesterday gives the market a chance to digest Monday’s unexpectedly large gains following the turnaround from the morning’s sell-off.

Otherwise, there isn’t too much news for the rest of the week, although the minutes from last month’s FOMC meeting will be released and you can be certain that each and every word will be dissected by lots of people with very different lenses.

There shouldn’t be anything shocking in there, although it could offer some insight into just how concerned the FOMC may be about the strengthening US Dollar and how that may be acting to slow the growth of the economy.

They may also be caught discussing how the drop in energy prices hasn’t yet seem to materialize into the kind of increased consumer activity that just about every economist projected and resulted in a significant upward change to the projected 2015 GDP.

All of that comes on the day that earnings season begins after today’s market close.

The only question as we head into the second quarter of earnings, the one in which we were all expecting to hear about increased consumer driven revenues and decreased energy related prices, is how much have we prepared ourselves for currency related issues.

For companies that have lots of exports it may be difficult to deal with the stronger dollar that ends up making those goods more expensive to overseas buyers. However, for those companies that make lots of sales from their direct activities abroad the strengthening US dollar’s impact may only be as much as their currency hedging activities failed to offset.

Companies like Apple, Microsoft and others likely will report decreased earnings from currency shifts, but likely to a much lesser degree because of their hedges, just as some airliines hedged the price of fuel for years to their advantage.

There will still be earnings surprises, but we may be better prepared for the upcoming quarter than expected, as the expectation for currency related charges has now been in the air for quite some time.

However the season begins this afternoon, it will be an interesting few weeks.

For a while it has been hard to identify a possible upside catalyst. Earnings, even if below analysts expectations, may end up being that surprise catalyst.

For the rest of the week I think it will just be a case of sitting back and waiting, while hoping for those opportunities to sell options, rollover or cash out of positions may come along.

.

Daily Market Update – April 7, 2015  (Close)

Yesterday was as welcome of a reversal as you could have orchestrated.

While I mentioned yesterday morning that the gap between Friday’s futures trading and Monday’s open was the kind of day that could see a reversal once the filling in of the gap had been done, I didn’t expect it to happen so fast.

The reversal started almost immediately following the opening which had gapped down by more than 100 points and had returned the market to the flat line by 10 AM. That was the time that the ISM non-Manufacturing data was released and the market just kept climbing higher and higher. The ISM data got the credit, but the trend was already pretty clear before the data was released.

While the ISM could have added to the gain the likelihood is that some sane minds came to realize that the February job numbers, which were outrageously high and the March numbers, which were outrageously low, may not have been accurate reflections of what is really going on.

The market’s decline leading to an abysmal March all started with the February Employment Situation Report release and we were getting poised to do the same with the new report’s release of the March data.

Maybe not lost on anyone is that April tends to be a really good month and it would be a shame to let history down.

It looks like it was serendipitous that markets were closed for 3 days and had a chance to let things cool down enough to let rational thought take over, although we will likely never learn that even the best of data is subject to revisions that can paint an entirely different picture. The revisions to February’s employment data may have made a big difference if reported as part of the original data and could have avoided us going through a lost month in the market.

This morning the market was very mildly higher and there’s not too much this week to spook or elate markets, other than the release of the FOMC meeting minutes tomorrow, which could provide some insights into the thoughts going on behind closed doors.

Otherwise this morning had a JOLT Survey, which hasn’t gotten anywhere near the attention that Janet Yellen believed it deserved, other than when she first mentioned how she believed that it was an important measure of the health and vibrancy of the labor market.

With little evidence of upward wage pressure it’s not too likely that future JOLT Surveys will indicate the kind of optimism that Janet Yellen had referred to just a few months ago, when it seemed that people were willingly leaving their jobs to pursue better paying ones.

That was so yesterday.

With a single purchase yesterday and cash being at a bare minimum, I don’t anticipate adding many new positions this week. While I’d love to see a repeat of yesterday, the early indications weren’t looking as if that will be the magnitude of any climb higher. But I still am on the lookout for any opportunity to sell calls on any uncovered positions. Upcoming earnings may enhance some premiums, but they are still so very depressed by the low volatility that continues, despite the up and down climbs from day to day.

As with last week, while I’d love to see some assignments in order to free up some cash, I wouldn’t mind if the alternative was to be able to rollover whatever was otherwise scheduled for expiration this week.

I don’t really care how I generate t
he income objectives for the week, as long as it’s legal, but it’s always nice to have a mix of assignments, new calls and rollovers. As long as we can stay away from any of those sharp daily declines, as we’ve had for much of 2015, this could be one of those overdue weeks.

At least today’s market didn’t set things back a step to make Friday’s goals less attainable.

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

Yesterday was as welcome of a reversal as you could have orchestrated.

While I mentioned yesterday morning that the gap between Friday’s futures trading and Monday’s open was the kind of day that could see a reversal once the filling in of the gap had been done, I didn’t expect it to happen so fast.

The reversal started almost immediately following the opening which had gapped down by more than 100 points and had returned the market to the flat line by 10 AM. That was the time that the ISM non-Manufacturing data was released and the market just kept climbing higher and higher. The ISM data got the credit, but the trend was already pretty clear before the data was released.

While the ISM could have added to the gain the likelihood is that some sane minds came to realize that the February job numbers, which were outrageously high and the March numbers, which were outrageously low, may not have been accurate reflections of what is really going on.

The market’s decline leading to an abysmal March all started with the February Employment Situation Report release and we were getting poised to do the same with the new report’s release of the March data.

It looks like it was serendipitous that markets were closed for 3 days and had a chance to let things cool down enough to let rational thought take over, although we will likely never learn that even the best of data is subject to revisions that can paint an entirely different picture. The revisions to February’s employment data may have made a big difference if reported as part of the original data and could have avoided us going through a lost month in the market.

This morning the market is very mildly higher and there’s not too much this week to spook or elate markets, other than the release of the FOMC meeting minutes tomorrow, which could provide some insights into the thoughts going on behind closed doors.

Otherwise this morning has a JOLT Survey, which hasn’t gotten anywhere near the attention that Janet Yellen believed it deserved, other than when she first mentioned how she believed that it was an important measure of the health and vibrancy of the labor market.

With little evidence of upward wage pressure it’s not too likely that the JOLT Survey will indicate the kind of optimism that Janet Yellen had referred to just a few months ago, when it seemed that people were willingly leaving their jobs to pursue better paying ones.

That was so yesterday.

With a single purchase yesterday and cash being at a bare minimum, I don’t anticipate adding many new positions this week. While I’d love to see a repeat of yesterday, the early indications aren’t looking as if that will be the magnitude of any climb higher. But I still am on the lookout for any opportunity to sell calls on any uncovered positions. Upcoming earnings may enhance some premiums, but they are still so very depressed by the low volatility that continues, despite the up and down climbs from day to day.

As with last week, while I’d love to see some assignments in order to free up some cash, I wouldn’t mind if the alternative was to be able to rollover whatever was otherwise scheduled for expiration this week.

I don’t really care how I generate the income objectives for the week, as long as it’s legal, but it’s always nice to have a mix of assignments, new calls and rollovers. As long as we can stay away from any of those sharp
daily declines, as we’ve had for much of 2015, this could be one of those overdue weeks.