Category Archives: Daily Market Update

Daily Market Update – January 26, 2015 (Close)

The morning, although appearing to be ready to get off to a lower start was far better than the overnight futures were indicating, after the larger than expected victory of the opposition party in Greece’s election.

After last week’s trading though, the pre-open futures should have meant nothing for the way the rest of the day would go, as 3 of the 4 trading days last week had very significant turnarounds from the early numbers in less than an hour after the opening bell.

Today was no different, except that there was no decisive character to the day, despite the turnaround from the early losses, as the market just meandered around the unchanged line for most of the day.

While the Greek election results may be a big story, even despite the ECB actions of last week that temporarily lifted the markets, the European economy may largely become irrelevant for us, other than the fact that it helps to prop up the strength of the US dollar.

For now, as opposed to a couple of years ago when the very existence of the EU was being threatened by a possible chain reaction of defaults among some members along its southern frontier, it doesn’t seem as if anyone is really worried about the spread of market contagion to our shores.

As with most things our crystal ball is always very cloudy and even the obvious is often far from assured, so we just wait and watch things unfold as the stronger states in the European Union figure out how to deal with the weaker ones and see their joint currency get devalued in the process, which may be the best solution to get the cycle moving back in their favor again.

This week, after the Greek news, there is actually very little scheduled economic news, but what there is could be of real importance.

The 2 big events are the FOMC Statement release and another set of GDP figures.

The latter may give us an idea of whether the logical increase in consumer spending that we all believed would come from the severely declining energy prices has actually started to happen yet. After the surprise of the Retail Sales report f a couple of weeks ago that showed no such increase, but was widely questioned by many, the GDP report could let us know whether the economy is heating up.

It’s that heating up that could be the cause of the FOMC beginning the process of raising interest rates, as we all have come to expect will happen sooner rather than later.

Those interest rates, especially in the past 2 weeks have been really volatile.

That combination of increasing interest rates, devaluation of the Euro and the ECB pumping lots of liquidity into their bond markets shouldn’t be good for US equity markets, but that’s also an example of trying to apply logic.

This week, with a little replenishment of cash, I was looking forward to spending some of it on new positions. However, because there are only 3 positions set to expire this week, despite all 3 being in a position to be assigned, thereby creating new funds for the following week, the likelihood is that I’ll be looking first at new positions with options to expire this week.

As it turned out, today started exactly like last week did, except that I didn’t add shares of Best Buy again, but did find reason to go the Intel and MetLife route again, at slightly lower prices than last week. It has been a long time since being able to do that and it felt good. Hopefully, it will continue feeling good about this time on Friday, too.

After a brief buying spree, very brief and not much f a spree, I’m content to just watch, as long as that’s watching things move higher,

As has frustratingly been the case for far too long, this week, again my preference is to be able to sell calls on existing positions in order to generate the cash stream for the week and hopefully there will be some good news coming on Wednesday from the FOMC and then again on Friday.

More importantly, if there is good news coming, we won’t revert back to that annoying “good news is bad news” kind of thinking that has been happily absent for a while.

Daily Market Update – January 26, 2015 (8:30 AM)

The morning, although appearing to be ready to get off to a lower start is far better than the overnight futures were indicating, after the larger than expected victory of the opposition party in Greece’s election.

After last week’s trading though, the pre-open futures may mean nothing for the way the rest of the day goes, as 3 of the 4 trading days last week had very significant turnarounds from the early numbers in less than an hour after the opening bell.

While the Greek election results may be a big story, even despite the ECB actions of last week that temporarily lifted the markets, the European economy may largely become irrelevant for us, other than the fact that it helps to prop up the strength of the US dollar.

For now, as opposed to a couple of years ago when the very existence of the EU was being threatened by a possible chain reaction of defaults among some members along its southern frontier, it doesn’t seem as if anyone is really worried about the spread of market contagion to our shores.

As with most things our crystal ball is always very cloudy and even the obvious is often far from assured, so we just wait and watch things unfold as the stronger states in the European Union figure out how to deal with the weaker ones and see their joint currency get devalued in the process, which may be the best solution to get the cycle moving back in their favor again.

This week, after the Greek news, there is actually very little scheduled economic news, but what there is could be of real importance.

The 2 big events are the FOMC Statement release and another set of GDP figures.

The latter may give us an idea of whether the logical increase in consumer spending that we all believed would come from the severely declining energy prices has actually started to happen yet. After the surprise of the Retail Sales report f a couple of weeks ago that showed no such increase, but was widely questioned by many, the GDP report could let us know whether the economy is heating up.

It’s that heating up that could be the cause of the FOMC beginning the process of raising interest rates, as we all have come to expect will happen sooner rather than later.

Those interest rates, especially in the past 2 weeks have been really volatile.

That combination of increasing interest rates, devaluation of the Euro and the ECB pumping lots of liquidity into their bond markets shouldn’t be good for US equity markets, but that’s also an example of trying to apply logic.

This week, with a little replenishment of cash, I’m looking forward to spending some of it on new positions. However, because there
are only 3 positions set to expire this week, despite all 3 being in a position to be assigned, thereby creating new funds for the following week, the likelihood is that I’ll be looking first at new positions with options to expire this week.

As has frustratingly been the case for far too long, this week, again my preference is to be able to sell calls on existing positions in order to generate the cash stream for the week and hopefully there will be some good news coming on Wednesday from the FOMC and then again on Friday.

More importantly, if there is good news coming, we won’t revert back to that annoying “good news is bad news” kind of thinking that has been happily absent for a while.

Daily Market Update – January 23, 2015 (8:00 AM)

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

The following trade outcomes are possible today:

Assignments: INTC, MET

Rollovers:  BBY

Expirations:  BAC, EMC

There were no ex-dividend positions this week.

FAST will be ex-dividend next week (1/28 $0.28)

The following positions will be reporting earnings next week:

COH (1/27), FCX (1/27), LXK (1/27), EMC (1/28), LVS (1/28), BX (1/29), DOW (1/29), MAT (1/29), PBR (1/30)

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

Daily Market Update – January 22, 2015 (Close)

All eyes were on this morning’s announcement from the European Central Bank regarding an initiation of its version of Quantitative Easing.

Over the past few months as all eyes had previously been focused on the ECM in expectation of the very same announcement, there had been nothing but disappointment, as Mario Draghi, the President of the ECB talked a great game and occasionally spoke with a John Wayne like swagger and confidence, but delivered on none of it.

This morning, although this has been said before, had the appearances of being different.

The reason it was being given some greater likeliness of finally really be different was because of a credible leak yesterday that gave details of the monthly size of the ECB bond buybacks. The figures suggested seemed to be right along the lines of what many believed it needed to be and was received warmly, although with nowhere near the enthusiasm of previous  well placed source leaks or educated guesses regarding the FOMC’s upcoming actions, from the Wall Street Journal’s Jon Hilsenrath.

Yesterday’s leak may have been what was responsible for the market’s decisive turnaround shortly after the opening bell.

This morning, ahead of the expected announcement the futures were just mildly higher, so it remained to be seen what effect, if any and in what size the reaction might be and, of course, for how long that reaction would last.

About an hour before the official announcement came word that European interest rates would remain unchanged and even though that was not a surprise it gave a small bump to the futures.

Later, when Draghi spoke, not only confirming that action was going to begin, he indicated that the size of the monthly European bond buyback would be 20% larger than thought and would last longer than anyone thought and in fact would be open-ended, lasting until at least September 2016.

The initial response was ebullient in the futures market, but did calm down a little.

In fact, shortly after the opening bell the market actually turned negative, but somewhere along the line, about 45 minutes after the open, the market took off, having really embraced the news.

While the news may be beneficial for European stock markets in the longer term, there’s really no reason to think that it will be the kind of news or provide the kind of fuel needed to send US markets higher for anything much more than a day or so, but it was certainly good to see, even if it is short lived.

The real impetus for further increases could still be upcoming earnings, although thus far, they haven’t been very impressive, although we really haven’t heard anything yet from those businesses that would reasonably be expected to benefit from a severe drop in energy prices.< /span>

Interestingly, in an interview yesterday, the CEO of Dow Chemical, which has small oil holdings as part of a Kuwaiti partnership and has seen its shares drop sharply in concert with oil prices, said that the net result of energy price declines was very good for Dow Chemical, because it is a far greater user of energy than it is a producer of energy. That’s something that hasn’t really been factored in yet and Dow Chemical reports its earnings next week.

As with many companies, the earnings may be of interest, but it’s the future guidance that may hold the key.

Hopefully this morning’s ECB announcement will bring some happy news to the US markets as that would be a good way to bring a shortened trading week to its end.

With a few positions set to expire tomorrow, I’d like to see them positioned to either be assigned or rolled over and a couple of good days in succession would really help.

So, Mario, we wanted to know “What’s it going to be?” and this time you didn’t disappoint, but what have you done for us lately?