Category Archives: Daily Market Update

Daily Market Update – February 3, 2015 (9:00 AM)

Not a single trade yesterday, but at least there was some good news with the market’s turnaround after nearly a 200 point decline early in trading.

While the size of these gains, seeing multiple 200 point advances in the last 6 weeks, and not really seeing the market move any higher, should be good if you like volatility, the problem is the sheer size of those moves.

Granted that 200 points don’t mean as much at these record levels as it would have meant 5 years ago, but unusually large advances are typically seen during bear markets or leading up to them.

That’s part of the reason that I’m not overly anxious to add any new positions and would especially like to add to cash, instead.

Along with that I’d also especially like to simply add the protection that cover gives, as that protection also gets more rewarding as this kind of volatility continues or even increases.

This morning the pre-open futures is indicating some follow-up to yesterday’s large late day gain. That gain was one that just kept picking up steam in the final hour similar to that seen in the mid-afternoon on Friday, except that one ended up waving the white flag when no real reason for the advance in oil prices, which led the market’s advance, could be figured out and seemed to be either rumor driven or hedging driven.

There was no real reason for Monday’s turnaround either, although the good news for the day was that the news continues to not be so bad from the energy sector as they report earnings and the disappointment that’s being provided in forward guidance already seems to be factored in.

This morning the only real economic news of any importance is one that isn‘t generally so important. After the morning’s trades begin Factory Orders are reported and oddly, given that we’re supposed to be in an expanding economy, those factory orders have been down for the past 4 months. Going down for a fifth consecutive month doesn’t really send a signal that the economy is humming along on all cylinders.

After that report is made essentially the rest of the week focuses on jobs, with statistics coming on Wednesday, Thursday and the big Employment Situation Report on Friday.

None of those should really have much of an impact on markets unless they contain some really big surprises.

If the numbers are too big, then the fear of the FOMC increasing interest rates sooner rather than later creeps in, but the bond market, which usually gets things right, is going in the opposite direction.

If the number is too small, or if there are big adjustments downward, there comes the doubts about the story we’ve been all believing and investing in.

So while I would, at least theoretically, like to be participating in whatever rally may come our way this week, if yesterday’s good graces can continue, I’d rather be in a position to take advantage of any moves higher, regardless of for how long they may turn out to last.

AT least while sitting and doing nothing I won’t find reason to complain if some catch up in the bottom line starts occurring, whether there’s a good reason for energy sector positions to be moving higher or not.

Daily Market Update – February 2, 2015 (Close)

It’s good to see January over.

Even if you outperformed the market, the likelihood is that it was still a loss for the month, so that’s not too much solace. Although it’s really important to do better than the market during downturns, most people would still rather see their assets grow, even if lagging the index.

With oil still going to be an ongoing issue, as was clearly the case late Friday afternoon, as some rumors sent oil surging and momentarily took the market with it, right now there’s not much else that’s causing markets to move.

That may change if we ever start getting some evidence that all of the money that’s not being spent on energy is being spent on other things.

So far there hasn’t been too much indication of that as Retail Sales last month were less than expected and Visa and MasterCard are both saying that people are saving more and paying down debt instead of spending their newfound cash.

It will sill be another 3 weeks until the big guns of retail, such as Macys, Kohls and Target report their earnings, although Wal-Mart reports a week earlier. By the time they all report they will have had nearly 2 months of further evidence to help form their guidance for the next quarter, even as their earnings for the previous quarter may not have had much reason to celebrate decreased energy prices.

This week started with the usually unimportant “Personal Income and Outlays Report” that could show what, if any, increased consumer spending has been going on.

It didn’t though.

Consumers aren’t spending.

So all that really leaves this week is Friday’s  Employment Situation Report, although it doesn’t seem as if there’s much reason to expect that those results could send markets much higher at this point. On the other hand, if decreased energy drilling activity is spreading, there could be a much less than expected increase in new jobs creation, which could take markets lower and maybe even interest rates even lower.

With last week being another week of virtually no upward movement, other than a very brief interlude on Thursday, the assignments that I thought were going to happen never did materialize.

That means that I’m not too likely to add much in the way of new positions this week and I was hopeful that the early morning’s mild move higher in the futures translated into something more meaningful. With a handful of positions set to expire this week I would love to see them get assigned, but would still be happy if at least I got to roll them over, as was mostly the case last week.

If making any new purchases this week they are probably going to use this week’s expiration, in order to have a better chance of generating assignments and resultant cash to help fund next week’s potential purchas
es.

For the morning I was prepared to be in a watching mode, but didn’t really expect to be in that mode all day, as the market went back and forth without any real commitment to one side or the other, although it did recover nicely from what had been an early triple digit loss shortly after the open, despite the positive futures.

The rally heading into the close was a nice change from what 2015 has been about so far this year, although it does play into the over-riding theme of going back and forth and having large intra-day swings. The only differences were that this time it was a good swing and that good swing was sustained into the closing bell for a change

 After the past few weeks that have seen a nearly 5% decline despite repeated efforts to rally back, I’m not willing to simply accept that this most recent decline which has taken the S&P 500 below 2000 is going to be just as easily corrected as has been the case over the past month.

Today was one of those days that did attempt to do some repair of the past week and even of today’s earlier trading, but it will take more than today.

Any rally, if it does occur, will hopefully be an opportunity to generate some income from existing positions and keep holding on until that time comes that either energy prices start showing some rebound or GDP really does start moving higher and taking markets with it.

Today turned out to be an alright day, but not the day we were looking for.

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

It’s good to see January over.

Even if you outperformed the market, the likelihood is that it was still a loss for the month, so that’s not too much solace. Although it’s really important to do better than the market during downturns, most people would still rather see their assets grow, even if lagging the index.

With oil still going to be an ongoing issue, as was clearly the case late Friday afternoon, as some rumors sent oil surging and momentarily took the market with it, right now there’s not much else that’s causing markets to move.

That may change if we ever start getting some evidence that all of the money that’s not being spent on energy is being spent on other things.

So far there hasn’t been too much indication of that as Retail Sales last month were less than expected and Visa and MasterCard are both saying that people are saving more and paying down debt instead of spending their newfound cash.

It will sill be another 3 weeks until the big guns of retail, such as Macys, Kohls and Target report their earnings, although Wal-Mart reports a week earlier. By the time they all report they will have had nearly 2 months of further evidence to help form their guidance for the next quarter, even as their earnings for the previous quarter may not have had much reason to celebrate decreased energy prices.

This week does start with the usually unimportant “Personal Income and Outlays Report” that could show what, if any, increased consumer spending has been going on. Otherwise, it’s an Employment Situation week, although it doesn’t seem as if there’s much reason to expect that those results could send markets much higher at this point. On the other hand, if decreased energy drilling activity is spreading, there could be a much less than expected increase in new jobs creation, which could take markets lower and maybe even interest rates even lower.

With last week being another week of virtually no upward movement, other than a very brief interlude on Thursday, the assignments that I thought were going to happen never did materialize.

That means that I’m not too likely to add much in the way of new positions this week and am hopeful that the early morning’s mild move higher in the futures translates into something more meaningful. With a handful of positions set to expire this week I would love to see them get assigned, but would still be happy if at least I got to roll them over, as was mostly the case last week.

If making any new purchases this week they are probably going to use this week’s expiration, in order to have a better chance of generating assignments and resultant cash to help fund next week’s potential purchases.

So for this morning I’m likely to be in a watching mode. After the past few weeks that have seen a nearly 5% decline despite repeated efforts to rally back, I’m not willing to simply accept that this most recent decline which has taken the S&P 500 below 2000 is going to be just as easily corrected as has been the case over the past month.

Any rally, if it does occur, will hopefully be an opportunity to generate some income from existing positions and keep holding on until that time comes that either energy prices start showing some rebound or GDP really does start moving higher and taking markets with it.

Daily Market Update – January 30, 2015 (8:15 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:  none

Rollovers:  GPS, HAL

Expirations:  INTC, MET

The following were ex-dividend this week: FAST (1/28 $0.28)

The following will be ex-dividend next week: INTC (2/4 $0.24), MET (2/4 $0.35)

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

Daily Market Update – January 29, 2015 (Close)

Yesterday was another example of how the pre-opening futures, if they’re not trading with a large move, don’t have much ability to predict what will happen during the real trading session.

Today was another.

Granted that yesterday was an FOMC Statement release day, but lately that too has stopped having much in the way of predictive capability, just as the day before an FOMC has stopped being a profoundly positive day.

For some reason, the market eventually decided that the eventual FOMC Statement was negative and people were talking about how Janet Yellen’s honeymoon was now over.

I’m not certain who they’re referring to, as I don’t know if the stock market has ever had that kind of relationship with a Federal Reserve Chairman, but after a period of not moving very much after yesterday’s release, the market eventually decided something was really rotten and the sell-off really accelerated having taken the DJIA from a nearly 100 point gain at the time of the announcement to a nearly 200 point loss.

That’s volatility and after a brief respite for a day or two, it’s asserting itself again, although still far below fun levels.

While I don’t trade or buy bonds of any kind, it was also hard to not notice how the Treasury market has been reacting lately, as volatility has definitely found its way into there, as well.

While most fears are related to an increase in interest rates and wondering when that would happen, the 10 Year Treasury fell to about 1.72% and the 30 Year hit all time low rate levels.

Considering that many believe that bond traders are the smart ones in the room you would then have to wonder what the stock market is worried about, as history does show that the bond market is pretty good at predicting Federal Reserve  actions and right now they’re not seeing any kind of imminent rate hike.

This morning, maybe helped by some decent earnings from Dow Chemical and others, the market was showing a little bit of a bounce in the pre-market trading, but after the past 2 days of losses, that so far has the S&P 500 down 2.4% for the week, a little bounce isn’t very much, but it turned into much more than that by the time it was all done for the day.

Why it did so is a little bit of a mystery, but as far as mysteries go, it was a good one.

Now, there’s only 1 day to go this week, so I’m still hopeful that there will be some more opportunity to see some assignments. While I was hoping to see all positions set to expire this week, at this point I wouldn’t mind some rollovers as the alternative and looked for any opportunity to do so today, although in general the longer you can wait to do so, the better, as long as the stock price doesn
‘t move too strongly against you.

Again, it’s a telling sign when precious metal stocks are the ones seeing the greatest back and forth moves and accounting for so many of the trades lately. High levels of volatility in precious metals isn’t generally something that should create lots of comfort or security unless you’re over-weighted in those.

Today may have seen some earnings related trading going on as there were some big movers this morning on their news, both good and bad, but it’s probably tomorrow’s GDP that many are waiting for to either confirm or invalidate the belief that the economy will heat up thanks to falling energy prices.

Because of that uncertainty, and so far there hasn’t been too much indication of what seemed to be so obvious, there was some added reason to want to jump the gun and consider rollovers today rather than waiting until tomorrow when those opportunities may end up being more remote, but it was just a good day to see some recovery from the previous two, instead.

Hopefully tomorrow will bring some more of the same.