Category Archives: Daily Market Update

Daily Market Update – March 2, 2015 (8:45 AM)

After a fairly quiet week last week that had movement higher when it was suggested that interest rate increases might be delayed and then a move lower when it was suggested that interest rate increases may be sooner, there’s not too much to change the dynamic this week.

If that’s the case, it may be the kind of quiet week as much of last week turned out to be until those interest rate projections caught everyone’s attention.

The surprise last week was that with all of the retailers who represented a large portion of the consumer market reporting earnings, no one really gave the kind of forward projection that you might have expected with a few months of falling energy prices as a backdrop.

Yet despite expectations for good news, the market didn’t show its disappointment.

Although the past few months have seen people question the validity of the Retail Sales reports the most recent earnings and projections, added to the downwardly revised GDP for the 4th quarter seems to validate the data showing that the consumer isn’t going out and spending those energy savings.

On the one hand that could serve to delay interest rate increases, but on the other hand most everyone believes that some increases are needed and would be a good sign for an economy that is still very slow in its recovery and having a hard time demonstrating that it’s for real.

Maybe it’s that kind of conflict that left the market in a sort of tug of war stalemate. Sometimes it’s hard to know what you really want.

This week doesn‘t have too much to move markets other than Friday’s Employment Situation Report and a number of Federal Reserve Governors looking for audiences. Included in that latter group is Richard Fisher, who is probably the loudest interest rate hawk, but he’s now a non-voting member and will be stepping down soon.

So there’s reason to expect that this week could be quiet, although there still continues to be the issue of the fluctuation and uncertainty in oil prices and the re-emergence of nascent international political and economic issues.

With a little bit of cash injected into the reserve and a decent number of positions already set to expire this week, but none for next week, I’m probably not as motivated to add too many new positions and would likely consider using extended weekly options. The problem, though,  is that those premiums are so low now that volatility has resettled itself following January’s ups and downs.

With lots of ex-dividend positions again this week. even more so than the previous week, some of the need to generate income is diminished, but I don’t think I’m in a position to turn down any opportunities if they were to appear.

This morning’s pre-open futures don’t look as if they’re going to offer too many of those opportunities as the market is wavering around the flat line and oil  is ready to open the week considerably weaker, but still far above where it was just a few weeks ago.

With little indication of where the market will be starting the week and with not as much to spend as I might like, it’s not too likely that I’ll be jumping in very quickly, although the drop in energy prices may offer some opportunity in a sector that is already overloaded in my portfolio, but that may offer the greatest rewards moving forward.

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

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

The following trade outcomes are possible today:

Assignments: American Express

Rollovers:  Marathon Oil, United Continental

Expirations: Las Vegas Sands

The following were ex-dividend this week:   SBGI (2/25 $0.16), LXK (2/26 $0.36), SNDK (2/26 $0.30), ANF (2/27 $0.20)

The following will be ex-dividend next week: HAL (3/2 $0.18), JOY (3/2 $0.20), MOS (3/3 $0.25), BAC (3/4 $0.05), COH (3/4 $0.34), HFC (3/6 $0.32)

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

Daily Market Update – February 26, 2015 (Close)

Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.

While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.

Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.

This morning, ahead of the opening bell, all appearances were for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.

And that was exactly how the entire day unfolded, as the trading range was again a narrow one and there was very little of interest going on anywhere.

As we get set for tomorrow’s GDP release, with a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.

In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected.

You really do have to wonder about that altered guidance that Macys gave about two weeks ago and ask what happened between then and yesterday when they released their earnings and didn’t seem as optimistic about what the near term future was holding for them.

Maybe it was the weather, as it was last year, but so far no one is really pointing a finger in that direction, as everyone instead is blaming currency headwinds, although that shouldn’t be too much of an issue for Macys.

Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.

With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.

Equally possible and as was the case as the afternoon wore on, a sudden drop in oil prices could do something to upset the cart, as well.

At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a perio
d of prolonged quiet the market won’t do what people sometimes do and become overly introspective.

For the most part I like my markets in a state of denial or aimlessly moving ahead.

With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.

Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.

Daily Market Update – February 26, 2015 (7:45 AM)

Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.

While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.

Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.

This morning, ahead of the opening bell, all appearances are for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.

With now a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.

In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected. Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.

With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.

At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a period of prolonged quiet the market won’t do what people sometimes do and become overly introspective.

For the most part I like my markets in a state of denial or aimlessly moving ahead.

With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.

Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.

Daily Market Update – February 25, 2015 (Close)

Yesterday was a very quiet day in the market until Janet Yellen got going in front of her congressional questioners as part of her mandated bi-annual report to them.

Once she got started the overall impression she gave was that her more dovish side had re-taken center stage.after a few months of seemingly being somewhat coy about the timing of any interest rate increases that we all know have to come.

The most recent FOMC report even went to lengths to explain the adverse impact of prolonged low rates.

It doesn’t take a genius to figure out that when you hear that sort of thing you’re being set up to come to some sort of reluctant acceptance of something that you’re being told is good for you, even though it doesn’t feel very good.

But yesterday there was a sense that there was no real rush to get those rates moving higher which is something that typically makes stock people happy and bond people doing whatever they do to send rates lower.

Today was Day 2 of the testimony and we didn’t see her bring a repeat to yesterday’s new closing highs to both the DJIA and S&P 500. Those were the first since Monday or last Friday. I forget, as it’s been so long since that has happened. Today we just had to make do with a new closing high on the DJIA.

With now 2 days of trading still left for the week there’s plenty that can happen, especially with Friday being the release of the latest GDP data.

With yesterday’s 3 rollover trades, a little surprising having come so early in the week, that leaves only 4 positions that could potentially be rolled over or assigned this week and now the same number expiring next week.

That may result in looking at potential rollovers to the March 13, 2015 contract in an effort to get some more time diversification, as long as it doesn’t give up too much in premiums, as volatility is again very low for most positions, with the continuing notable exceptions in energy related stocks.

I made an after-hours trade yesterday, which is something that I very infrequently do, having purchased shares of Hewlett Packard after they tumbled once earnings were released and the conference call was near its conclusion.

Depending on its price behavior this morning and how the option premiums would begin to look I thought that I might make it an OTP trade as well, with its ex-dividend date conveniently and maybe coincidentally enough being on the Monday of the week of the March 13 contracts.

But that didn’t happen as shares traded down even further, which was surprising as shares had closed the previous evening’s after hours session well off the lows following the confere
nce call. However, Meg Whitman’s appearance on CNBC did nothing to inspire confidence, as her responses to questions really seemed muddled and she put far too much empasis on currency issues and future cists associted with the planned breakuo of HP near the end of the year.

Instead, Lexmark, which goes ex-dividend and which was assigned just a week and a half ago at $43 was now on sale, having plunged along with HP, even though Lexmark is no longer in the oprinter business. Somehow smart investors have forgotten that Lexmark has followed in the strategy of its one time parent, IBM, and gone the consulting route.

Other than that additional new position I don’t think there will be too much reason to consider any more new positions for the week, but then again, you never know what the day will hold once the bell rings and people start making believe that they are rational players with perfect vision of what the future will hold.