Category Archives: Daily Market Update

Daily Market Update – April 6, 2015  (Close)

This morning looked as if it would do what it has to do to make up for lost time when it wasn’t able to react to Friday’s Employment Situation Report.

With the very disappointing numbers, that can still be subject to revision, as they always are, the bond markets and futures markets were open and did what you would probably have expected them to do in light of a very weak report.

Maybe a year ago or even just 6 months ago, the very same kind of weak job growth report would have been met enthusiastically because it would have meant a continuation of Quantitative Easing.

Now, a decline from what’s expected only means that growth is decelerating and that’s not a good thing when you realize how flat the trajectory has been over the past 6 years. It’s not as if there’s been explosive growth that could just as easily fall off of a cliff. The gains in employment and the economic growth have all been hard won, but have only been incremental victories. Even a small step backward may seem overly large or significant.

In the best of the worlds the market will come to the realization that the numbers released on Friday may either be an aberration, perhaps weather related, or be in line for their own revisions. Doing so would require some rational thought regarding the logic or reacting so strongly to data that is subject to revision. In fact Friday’s data included a downward revision to the previous month which had exceptionally strong numbers that started the recent decline seen all through the month of March.

But that’s not likely to happen based on the past. We will still go from number to number. Reacting first and rarely thinking over the logic of the action other than to have an equally illogical reaction.

Yet, it did happen today, as suggested this morning that it might once the need to do something about that gap was requited.

After what turned out to be a really nice day today, tomorrow we start all over again with eyes firmly set on Wednesday.

This week brings another FOMC Statement release and there’s not too much reason to suspect that it will contain anything to move markets. There’s no expectation for a rate increase, nor for change in the language unless there is an acknowledgement that the economy is not growing as much as would have been expected.

The language used, especially if expressing any disappointment at the slower than expected pace of economic expansion, especially in the face of declining energy prices could be one of those things that sends the market higher, as there will be an expectation of  some more time with free and easy money courtesy of the Federal Reserve.

With only a single assignment last week it was at least good to get all expiring positions rolled over. That added to the positions now set to expire this week and next, which marks the end of the monthly cycle.

With volatility so low, despite what seems like a very volatile environment, there’s not much inducement to think about looking very far into the future when it comes to selecting expiration dates. The caveat to that is that earnings season starts this week and for select positions there may be some enhancement of premium due to an upcoming earnings report.

With minimal in cash reserves I still don’t expect very much action this week and find myself again preferring to gene
rate whatever weekly income possible either through rollovers or the sale of calls on existing uncovered positions. There was some limited opportunity today, just not enough.

With the large decline expected this morning it wasn’t too likely that the latter of those preferences would be borne out today, but this kind of day, with the market needing to do some filling in for what was missed on Friday was also the kind of day that has seen a turnaround once that filling in has come to its end.

Luckily, that’s exactly the way the script played itself out and did so quickly. Hopefully the rest of the week will also allow some nice constructive tardes to be made in preparation for the end of the cycle next week.

Daily Market Update – April 6, 2015  (8:30 AM)

This morning looks as if it will do what it has to do to make up for lost time when it wasn’t able to react to Friday’s Employment Situation Report.

With the very disappointing numbers, that can still be subject to revision, as they always are, the bond markets and futures markets were open and did what you would probably have expected them to do in light of a very weak report.

Maybe a year ago or even just 6 months ago, the very same kind of weak job growth report would have been met enthusiastically because it would have meant a continuation of Quantitative Easing.

Now, a decline from what’s expected only means that growth is decelerating and that’s not a good thing when you realize how flat the trajectory has been over the past 6 years. It’s not as if there’s been explosive growth that could just as easily fall off of a cliff. The gains in employment and the economic growth have all been hard won, but have only been incremental victories. Even a small step backward may seem overly large or significant.

In the best of the worlds the market will come to the realization that the numbers released on Friday may either be an aberration, perhaps weather related, or be in line for their own revisions. Doing so would require some rational thought regarding the logic or reacting so strongly to data that is subject to revision. In fact Friday’s data included a downward revision to the previous month which had exceptionally strong numbers that started the recent decline seen all through the month of March.

But that’s not likely to happen. We will still go from number to number. Reacting first and rarely thinking over the logic of the action other than to have an equally illogical reaction.

This week brings another FOMC Statement release and there’s not too much reason to suspect that it will contain anything to move markets. There’s no expectation for a rate increase, nor for change in the language unless there is an acknowledgement that the economy is not growing as much as would have been expected.

The language used, especially if expressing any disappointment at the slower than expected pace of economic expansion, especially in the face of declining energy prices could be one of those things that sends the market higher, as there will be an expectation of  some more time with free and easy money courtesy of the Federal Reserve.

With only a single assignment last week it was at least good to get all expiring positions rolled over. That added to the positions now set to expire this week and next, which marks the end of the monthly cycle.

With volatility so low, despite what seems like a very volatile environment, there’s not much inducement to think about looking very far into the future when it comes to selecting expiration dates. The caveat to that is that earnings season starts this wek and for select positions there may be some enhancement of premium due to an upcoming earnings report.

With minimal in cash reserves I don’t expect very much action this week and find myself again preferring to generate whatever weekly income possible either through rollovers or the sale of calls on existing uncovered positions.

With the large decline expected this morning it’s not too likely that the latter of those preferences will be borne out today, but this kind of day, with the market needing to do some filling in for what was misse
d on Friday is also the kind of day that can see a turnaround once that filling in has come to its end.

Hopefully that turnaround will be quick in the making as after 3 days off I’m anxious to get something constructive done

Daily Market Update – April 2, 2015  (8:15 AM)

The Week in Review will be posted by 6 PM tonight and the Weekend Update will be posted by Sunday at 12 Noon.

The following trade outcomes are possible today:

Assignments:  none

Rollovers:   CSCO, UAL

Expirations:  ATVI, MET

The following were ex-dividend this week:  EMC (3/30 $0.12), CSCO (3/31 $0.21)

The following are ex-dividend next week: GPS (4/6 $0.23), WFM (4/8 $0.13)

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

Daily Market Update – April 1, 2015  (Close)

Yesterday was just another in a series of bad days that lately seem to come whenever there appears to have been some reason to be optimistic. For every really nice day there has been an equally bad day either before or after. That explains why we could have had about 15 days in which the market was 150 points higher or more in 2015 only to find a market that has been virtually unchanged during that period.

Yet despite what a rational person would describe as being a volatile environment, the actual volatility is virtually unchanged over the past 4 weeks. That’s because most days have seen very little variation in direction. They’ve either been good days from the start or bad days from the start. People patiently sitting and waiting for intra-day turnarounds, as is generally very common, have been pretty disappointed over the past month, with the exception of two days of trading.

With an acceleration of selling in the final hour, something that we’ve seen a number of times in the past 2 weeks, the DJIA finally did end up down 200 points and left the market in negative territory to end the quarter.

That hadn’t happened for about 2 years, but it’s time to move on. It’s a new month and it’s a new quarter.

You wouldn’t have known that, though, by the way today went.

Hopefully maybe starting tomorrow, April will follow the alternating pattern of the past 4 months, because that would mean a nicely higher move for the month, as lately they’ve been very neatly bundled packages of good or bad from the outset.

Looking at the futures this morning, which had deteriorated from having been perfectly flat, they were still far better from where they were late last night.

For some reason, not that there has to always be a reason, the futures plunged last night, after also trading flatly after the market close. When you see piling on in the futures after an accelerating negative close, that’s usually a sign of bad things to come.

This time it was a little unusual because there was a few hours of delay before the heavy selling started.

But somewhere along the line overnight whatever it was that upset traders seemed to have taken a break, or better yet, had just gone away.

If only.

This morning had an ADP Employment Report in advance of Friday’s Employment Situation Report.

The ADP Report doesn’t usually get too much of a reaction from markets unless it’s really far from what was expected. This week, however, could have been a little different because with markets closed on Friday there won’t be a chance to trade the Employment Situation Report, so ADP could end up being a proxy for that trade.

After yesterday’s sell off and that quick drop in the futures, it probably wouldn’t take too much to get back on that path. At this point too much of anything, either too many new jobs or too few new jobs could both be construed as bad news.

As it w
ould turn out, despite some disappointing numbers that were lower than expected, the market really did nothing at that point. It was much later that everyone just seemed to give up.

With bond markets open on Friday there could still be some disruption of markets after the more meaningful Employment Situation Report is released, but for equity traders it’s either doing something today or having to waiting until Monday to respond to the data that could be inferred to have implications for the timing of any interest rate increases.

Otherwise, I didn’t think there would be much to do for the remaining 2 days of this week, other than hoping that the market recovers enough to give the few positions that are set to expire this week a chance to either be rolled over or be assigned.

After today’s sharp drop, those hopes are further removed from the realm of the probable.

But we’ll see what tomorrow can bring.

After that and after a 3 day break from markets it will be time to strap on and get ready for what could be an interesting earnings season as it could be anyone’s guess how the balance between currency issues and energy cost savings play out.

Daily Market Update – April 1, 2015  (8:00 AM)

Yesterday was just another in a series of bad days that lately seem to come whenever there appears to have been some reason to be optimistic. For every really nice day there has been an equally bad day either before or after. That explains why we could have had about 15 days in which the market was 150 points higher or more in 2015 only to find a market that has been virtually unchanged during that period.

Yet despite what a rational person would describe as being a volatile environment, the actual volatility is virtually unchanged over the past 4 weeks. That’s because most days have seen very little variation in direction. They’ve either been good dqays from the start or bad days from the start. People patiently sitting and waiting for intra-day turnarounds, as is generally very common, have been pretty disappointed over the past month, with the exception of two days of trading.

With an acceleration of selling in the final hour, something that we’ve seen a number of times in the past 2 weeks, the DJIA finally did end up down 200 points and left the market in negative territory to end the quarter.

That hadn‘t happened for about 2 years, but it’s time to move on. It’s a new month and it’s a new quarter.

Hopefully April will follow the alternating pattern of the past 4 months, because that would mean a nicely higher move for the month, as lately they’ve been very neatly bundled packages of good or bad from the outset.

Looking at the futures this morning, which have deteriorated from having been perfectly flat, they are still far better from where they were late last night.

For some reason, not that there has to always be a reason, the futures plunged last night, after also trading flatly after the market close. When you see piling on in the futures after an accelerating negative close, that’s usually a sign of bad things to come.

This time it was a little unusual because there was a few hours of delay before the heavy selling started.

But somewhere along the line overnight whatever it was that upset traders seems to have taken a break, or better yet, has just gone away.

This morning has an ADP Employment Report in advance of Friday’s Employment Situation Report.

The ADP Report doesn’t usually get too much of a reaction from markets unless it’s really far from what was expected. This week, however, may be a little different because with markets closed on Friday there won’t be a chance to trade the Employment Situation Report, so ADP could end up being a proxy for that trade.

After yesterday’s sell off and that quick drop in the futures, it probably wouldn’t take too much to get back on that path. At this point too much of anything, either too many new jobs or too few new jobs could both be construed as bad news.

With bond markets open on Friday there could still be some disruption of markets after the report is released, but for equity traders it’s either doing something today or having to wait until Monday to respond to the data that could be inferred to have implications for the timing of any interest rate increases.

Otherwise, I don’t think there will be much to do for the remaining 2 days of this week, other than hoping that the market recovers enough to give the few positions that are set to expire this week a chance to either be rolled over or be assigned.

After that and after a 3 day break from markets it will be time to strap on and get ready for what could be an interesting earnings season as it could be anyone’s guess how the balance between currency issues and energy cost savings play out

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