Category Archives: Daily Market Update

Daily Market Update – March 26, 2015  (Close)

Yesterday’s near 300 point sell-off was for no discernible reason and that can never leave you with a good feeling.

It was another example of the disconnect seen over the past month between the pre-open futures trading and the manner in which the day’s trading later on would unfold. Almost without exception the early morning indicators have indicated nothing. Jumping in at the market open hasn’t been a good strategy of late.

This morning may be a counter to that disconnect as the early pre-open futures trading is decidedly negative, approaching a triple digit loss to begin the day, although the gap has been slowly improving.

These days that’s just a moderately negative opening, but the more pronounced the futures trading, whether higher or lower, the more likely you’re going to see it replicated when the regular session opens.

If that’s the case this morning the trend began with Tuesday’s closing as a decent gain heading into the closing hour was all lost and that selling has just continued for now.

As always, just like when you’re a kid, it’s much easier to learn your lesson when there’s a clear explanation available.

But whatever it is that has accounted for the selling pressure the past few days hasn’t been clearly presented.

Based on what little economic data has been released this week it’s hard to make either a bullish or bearish case and it’s hard to adopt a good news is good news or good news is bad news kind of mentality.

Tomorrow still holds the GDP release, but it’s hard to imagine what it would hold that hasn’t already shown up in some other form in such things as Retail Sales Reports, Durable Goods, Home Sales and other measures of the economy.

With the losses of the past few days the prospects of assignments this Friday become more distant so the hope is for rollovers, but even those become increasingly unlikely as the market continues lower.

The one shining light, just as it previously was a beacon of darkness, has been the energy sector this week. If you hold shares in those companies, then your performance this week is better than the averaged are indicating, but those still have a long way to go to start earning some respectability again.

For today, there wasn’t likely to be too much to do as looking at the early numbers.

Despite a very impressive turnaround of about 160 points at the extremes, it still ended up a day of not much to do.

It’s rarely a good idea to get too much ahead of momentum when there’s an entire market behind that move. While I often like to get ahead of momentum on an individual stock those are often easier to halt than when the whole market is on the move.

Any other day and I might want to take a look at a stock like SanDisk, which is again taking a dive due to changing guidance, just as it did prior to its earnings report. But with a weakening market in the background, despite the turnaround and what may be over-done reactions it may be only the beginning, so we sit and watch and may find
ourselves ending up asking “what if?”

Hopefully tomorrow’s GDP and maybe some encouraging words from Stanley Fischer, who’s on center stage again, may at least give investors some reason to believe that a better economy awaits and will be the kind that can sustain moderate growth for a while to come.

Daily Market Update – March 26, 2015  (8:00 AM)

Yesterday’s near 300 point sell-off was for no discernible reason and that can never leave you with a good feeling.

It was another example of the disconnect seen over the past month between the pre-open futures trading and the manner in which the day’s trading later on would unfold. Almost without exception the early morning indicators have indicated nothing. Jumping in at the market open hasn’t been a good strategy of late.

This morning may be a counter to that disconnect as the early pre-open futures trading is decidedly negative, approaching a triple digit loss to begin the day, although the gap has been slowly improving.

These days that’s just a moderately negative opening, but the more pronounced the futures trading, whether higher or lower, the more likely you’re going to see it replicated when the regular session opens.

If that’s the case this morning the trend began with Tuesday’s closing as a decent gain heading into the closing hour was all lost and that selling has just continued for now.

As always, just like when you’re a kid, it’s much easier to learn your lesson when there’s a clear explanation available.

But whatever it is that has accounted for the selling pressure the past few days hasn‘t been clearly presented.

Based on what little economic data has been released this week it’s hard to make either a bullish or bearish case and it’s hard to adopt a good news is good news or good news is bad news kind of mentality.

Tomorrow still holds the GDP release, but it’s hard to imagine what it would hold that hasn’t already shown up in some other form in such things as Retail Sales Reports, Durable Goods, Home Sales and other measures of the economy.

With the losses of the past few days the prospects of assignments this Friday become more distant so the hope is for rollovers, but even those become increasingly unlikely as the market continues lower.

The one shining light, just as it previously was a beacon of darkness, has been the energy sector this week. If you hold shares in those companies, then your performance this week is better than the averaged are indicating, but those still have a long way to go to start earning some respectability again.

For today, there’s not likely to be too much to do as it’s rarely a good idea to get too much ahead of momentum when there’s an entire market behind that move. While I often like to get ahead of momentum on an individual stock those are often easier to halt than when the whole market is on the move.

Any other day and I might want to take a look at a stock like SanDisk, which is again taking a dive due to changing guidance, just as it did prior to its earnings report. But with a weakening market in the background, even what look like over-done reactions may be only the beginning, so we sit and watch and may find ourselves ending up asking “what if?”

Hopefully tomorrow’s GDP and maybe some encouraging words from Stanley Fischer, who’s on center stage again, may at least give investors some reason to believe that a better economy awaits an
d will be the kind that can sustain moderate growth for a while to come.

Daily Market Update – March 25, 2015  (Close)

Yesterday reverted back to recent form after having spent a couple of hours of the trading day looking as if it would simply be as flat as was the pre-open futures.

Instead it was another triple point move. This one was to the downside and was a continuation of the sell-off that happened on Monday afternoon that saw the DJIA give up its gains in the final 15 minutes of trading.

Today did not revert back to form, because if it had, it would have been an up day. Instead, it was an abysmal day that only got worse as it progressed, with the DJIA off almost 300 points.

This morning looked like it will be another flat open as the futures were doing almost nothing despite some excitement from the impending Kraft Foods deal. The fact that interest rates are still so low would make you think that more deals might be on the horizon, although it may be hard to justify the stock prices at these levels. Even for those companies that are sinking below 200 day moving averages are still pretty expensive for those looking for bargains.

That goes even for someone just looking to pick up 100 shares, although most things did get a little less expensive today.

Still, some increased activity would be welcome and they don’t all have to be blockbuster kind of deals, such as with Kraft Foods. Just look at yesterday’s announcement of a relatively tiny $1 Billion deal that Lexmark was undertaking in buying a company that I’d never heard of, but coincidentally also starts with the letter “K.”

Both of those companies appear to be getting pats on the back this morning, so there may be more, especially as Lexmark hasn’t exactly been the kind of company on the acquisitive prowl over the past few years, but opportunity is opportunity.

The real focus for the rest of the week will still be on Friday’s GDP release, although this morning’s Durable Goods could have potentially given the markets either a reason to celebrate or to fear that the news was a harbinger for impending interest rate hikes.

Instead of suggesting that the manufacturing portion of the economy was humming along those Durable Good numbers threw some cold water on the idea of any real economic expansion brewing.

But despite the absence of good news or the presence of bad news, depending on how you interpret the Durable Goods Report, it had no real impact on today’s trading.

At this point we don’t really know whether the market is going to view good news as good news or whether it’s going to take that paradoxical approach that it often does.

As the Durable Goods figures were released the futures did virtually nothing, befitting a market that may still find itself confused over what it wants to hear.

For the rest of the week I don’t see very much in activity, although it ended up being hard to resist a position in Activision which was going ex-dividend tomorrow. Since it has an annual dividend if it can be assigned quickly that will end up being much better than the 1% yield it offers on a yearly basis.

While I wouldn’t completely exclude the possibility of any other purchases of new positions for the rest of the week, it’s probably not too likely and there are only a handful of contracts that are possible rollover candidates this week that require much attention.

While I was wishing that today would be a very passive and watchful day, just like it was yesterday, that obviously wasn’t meant to be.

Hopefully tomorrow will bring something different as time is running out on this week and the chance to roll anything over.

Daily Market Update – March 25, 2015  (8:30 AM)

Yesterday reverted back to recent form after having spent a couple of hours of the trading day looking as if it would simply be as flat as was the pre-open futures.

Instead it was another triple point move. This one was to the downside and was a continuation of the sell-off that happened on Monday afternoon that saw the DJIA give up its gains in the final 15 minutes of trading.

This morning looks like it will be another flat open as the futures are doing almost nothing despite some excitement from the impending Kraft Foods deal. The fact that interest rates are still so low would make you think that more deals might be on the horizon, although it may be hard to justify the stock prices at these levels. Even for those companies that are sinking below 200 day moving averages are still pretty expensive for those looking for bargains.

That goes even for someone just looking to pick up 100 shares.

Still, some increased activity would be welcome and they don’t all have to be blockbuster kind of deals, such as with Kraft Foods. Just look at yesterday’s announcement of a relatively tiny $1 Billion deal that Lexmark was undertaking in buying a company that I’d never heard of, but coincidentally also starts with the letter “K.”

Both of those companies appear to be getting pats on the back this morning, so there may be more, especially as Lexmark hasn’t exactly been the kind of company on the acquisitive prowl over the past few years, but opportunity is opportunity.

The real focus for the rest of the week will still be on Friday’s GDP release, although this morning’s Durable Goods could have potentially given the markets either a reason to celebrate or to fear that the news was a harbinger for impending interest rate hikes.

Instead of suggesting that the manufacturing portion of the economy was humming along those Durable Good numbers threw some cold water on the idea of any real economic expansion brewing.

At this point we don’t really know whether the market is going to view good news as good news or whether it’s going to take that paradoxical approach that it often does.

As the Durable Goods figures were released the futures did virtually nothing, befitting a market that may still find itself confused over what it wants to hear.

For the rest of the week I don’t see very much in activity. While I wouldn’t completely exclude the possibility of any other purchases of new positions for the week, it’s probably not too likely and there are only a handful of contracts that are possible rollover candidates this week that require much attention.

As the day gets ready to begin it doesn’t appear as if there will be too many chances to sell calls on uncovered positions, so it may be a very passive and watchful day today, just like it was yesterday.

Daily Market Update – March 24, 2015  (Close)

Well, at least yesterday came close to being able to put together two consecutive days of gains for the first time in a month.

Up until the last 10 minutes or so it looked as if it would happen.

There was actually some reason to feel optimistic yesterday as the Existing Home Sales were higher and Federal Reserve Vice-Chair Stanley Fischer gave the first of his two talks this week and didn’t shy away from plainly stating that rates were going up.

Perhaps had those events happened a week earlier the market may have taken it as a set of signs that it would be appropriate to take a plunge.

Instead, there was both something refreshing about Fischer actually joking about impending rate increases and the market reacting rationally to news that would have sent it into a panic just days ago.

That may be reason enough to have some optimism as the market continues to be able to find higher ground even as so many stocks are being challenged on a 50 day basis, which many consider to be a bearish signal.

While there’s nothing much else scheduled between today and the end of the week, there’s always Friday and Stanley Fischer has another chance to get people nervous now that he’s softened them up with economic humor.

It will be interesting to hear his comments in light of the GDP statistics that will be released that morning, as most everyone will be  focusing on whether the GDP finally begins to show the consumer led expansion that we’ve now been expecting for about 4 months of lower energy prices.

This morning the Consumer Price Index was up 0.2%, which did nothing to excite the pre-opening futures, which like yesterday were trading fairly flat. That was, however, the first increase seen since October 2014, but it actually reflected higher gas prices seen over the past month. The increase was, though, perhaps an indication that the annual inflation rate may reach the Federal Reserve target of 2% or even beyond, which could give some justification for the first interest rate increase.

In its very early response, though, the bond market was taking rates down ever so slightly. As the day wore on those rates went even lower.

So far there hasn’t been any validation of the thesis that consumer spending was going to increase in a meaningful way as energy prices decreased in a meaningful way. Even retailers that had initially started painting a rosy picture stepped back a little when providing earnings guidance over the past month.

Yesterday, though, most of the day was simply one of trading without any reason to go up nor down, although over the previous week the market hasn’t really needed a reason to make a large move, although each of those moves was in some way erased or mostly erased the following day.

Today, after that flat start in the futures the market hugged the flat line until about noon and then just gave up for the day until finally ending with another triple digit loss, with the selling picking up for real in the final 30 minutes again.

With a couple of new positions opened yesterday there still may be some more for the rest of the week, but there’s no real compelling reason to put more at risk when the market continues to be so directionless. Today w
as a good day to just sit and aimlessly watch and wonder.

If that direction does turn higher at any point this week, it would still be nice to see some very strong moves in that direction, even if they don’t have much in the way of staying power. Those are the kind of moves that can make sale of calls on uncovered positions begin to look appealing. Additionally, those large moves, especially if occurring with lots of intra-day price fluctuation sends premiums higher. Lately we’ve had the large moves, but without the intra-day fluctuation, so the volatility has actually been falling and taking premiums along with it.

As with yesterday and again today, there’s not too much reason to rush into any trades and plenty of reason to simply watch and see where the market may head again tomorrow.