Category Archives: Daily Market Update

Daily Market Update – January 16, 2015 (8:30 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:  DNKN, LULU

Rollovers:  none

Expirations:  AZN, DOW, MAT, SBGI

The following positions were ex-dividend this week:  CHK (1/13 $0.19), FCX (1/13 $0.31), WFM (1/14 $0.14)

Currently, no positions are scheduled to be ex-dividend next week.

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

Daily Market Update – January 15, 2015 (Close)

This morning brought more bad news, at least in the financial sector, as Citigroup and Bank of America added to yesterday’s disappointments from JP Morgan and Wells Fargo.

That’s a very tough way to get an earnings season underway. If the financial sector, specifically the major banks aren’t healthy, that casts a shadow on everything else, even if the lower revenues may be related to lower and lower interest rates, which may in turn be good for consumers and businesses.

But even as that significant bad news hit the wires this morning, the futures were still trading higher and it appeared as if this morning would be different from the rest of this week’s openings.

The difference may simply be that oil was trading higher this morning after suddenly have turned higher late in yesterday’s session as energy options were expiring.

The question that was posed yesterday was whether that late climb would be lasting or whether it was due solely to those option expirations.

Funny thing about that, though.

The same thing happened today, except in the other direction, with the oil reversal to a lower level being one of the largest intra-day moves traders could seem to remember.

And the markets followed today, just as they followed the reversal yesterday.

Those energy prices in the morning were just a little bit higher and that may have been enough to prop the market up a little, as it has had three very bad days, despite yesterday’s oil related recovery late in the afternoon.

With the adverse reversal and the move of the broader market lower, and unable to avoid another triple digit loss, all that leaves for this week is to now try and dispose of whatever positions are set to expire this week, as getting prepared for the February 2015 option cycle.

In hindsight, it has helped.that of the 12 originally set to expire this week, 5 have already been rolled over and one assigned. That leaves this Friday as somewhat less important or critical if subject to the kind of declines as we’ve seen in the past three days, that would have put more positions out of contention for expiration or assignment.

Still, it would have been nice to have seen some recovery today and to have taken a break from the really terrible trading of the past three days.

If considering o
nly the past 3 years, these past few days have brought about yet another sharp decline, in just the past month. Instead of what we have become used to, that is seeing a 5% decline every 2 months, we’ve now seen 3 of these declines in the past month, with the market now about 4% off from its high just 3 weeks ago.

In the meantime while the US economy seems to be improving, this week’s data suggesting that the improvement wasn’t resulting in more retail sales, added to falling energy and commodity prices points to a world economy that isn’t necessarily doing that well.

As long as this now remains an international effort, US companies and their stocks rely on more than the US economy to thrive, so while no one necessarily wants to pay more for oil or copper, it may be the key to the next catalyst to drive share prices higher if consumer spending doesn’t kick in soon.

Daily Market Update – January 15, 2015 (8:30 AM)

This morning brought more bad news, at least in the financial sector, as Citigroup and Bank of America added to yesterday’s disappointments from JP Morgan and Wells Fargo.

That’s a very tough way to get an earnings season underway. If the financial sector, specifically the major banks aren’t healthy, that casts a shadow on everything else, even if the lower revenues may be related to lower and lower interest rates, which may in turn be good for consumers and businesses.

But even as that significant bad news hits the wires this morning, the futures are still trading higher and it appears as if this morning will be different from the rest of this week’s openings.

The difference may simply be that oil is trading higher this morning after suddenly have turned higher late in yesterday’s session as energy options were expiring.

The question that was posed yesterday was whether that late climb would be lasting or whether it was due solely to those option expirations.

So far this morning those energy prices are again a little bit higher and that may be enough to prop the market up a little, as it has had three very bad days, despite yesterday’s oil related recovery late in the afternoon.

All that’s left for this week is to now try and dispose of whatever positions are set to expire this  week as getting prepared for the February 2015 option cycle.

In hindsight, it has helped.that of the 12 originally set to expire this week, 5 have already been rolled over and one assigned. That leaves this Friday as somewhat less important or critical if subject to the kind of declines as we’ve seen in the past three days, that would have put more positions out of contention for expiration or assignment.

Hopefully today will bring a break to the really terrible trading of the past three days that, if considering only the past 3 years, has brought about yet another sharp decline, in just the past month. Instead of what we have become used to, that is seeing a 5% decline every 2 months, we’ve now seen 3 of these declines in the past month, with the market now about 4% off from its high just 3 weeks ago.

In the meantime while the US economy seems to be improving, this week’s data suggesting that the improvement wasn’t resulting in more retail sales, added to falling energy and commodity prices points to a world economy that isn’t necessarily doing that well.

As long as this now remains an international effort, US companies and their stocks rely on more than the US economy to thrive, so while no one necessarily wants to pay more for oil or copper, it may be the key to the next catalyst to drive share prices higher if consumer spending doesn’t kick in soon.

Daily Market Update – January 14, 2015 (Close)

This morning was already getting off to a bad start as last night’s futures trading had the DJIA down nearly 100 points. Given the kind of reversal that we saw yesterday, the continuing weakness in the after hours futures market wasn’t very good.

This morning, when we could have expected a little bit of help from the earnings reports of both JP Morgan and Wells Fargo, that help didn’t come.and the market sold off even more.

Then came news of the Retail Sales Report, which isn’t usually that big of a deal, but this time it was.

That’s because people were expecting to see some evidence of increased consumer spending as people were supposed to be feeling richer from the drop in oil prices and then converting that feeling into spending.

I know that I was.

But according to those retail sales figures that wasn’t the case. That’s even though yesterday’s JOLT Survey showed that the majority of the new jobs created in 2014 were at wages that were above the average of all wages in the US, meaning that it was higher paying jobs that were being created and not just more burger flipper jobs.

But this morning the interpretation of all of that news was decidedly negative, as oil fell a bit more, as well, to start the trading day.

With today’s expected downturn, it was reasonable to believe that this may have ended up being the lightest trading week in a long while, as the added downturn, after the first two weak days already encountered, made the ability to rollover positions more out of reach and also made it less likely that new call positions will be sold on existing uncovered positions.

It’s not lost on me that it has been the Gold Miners ETF (GDX) options that have seen a lot of trading activity lately. That’s generally not a very healthy sign when you see that proxy for precious metals bouncing back and forth. Certainly that kind of bouncing has also been seen in the broader market, but when you see it in that very speculative sector it demonstrates lots of uncertainty among those that generally thrive in uncertainty and chaos.

I actually tried to get yet another rollover in those shares done today, trying to match last week’s two rollovers of that position.

The market opened really weakly this morning as the preliminary earnings from JP Morgan and Wells Fargo were disappointing. You generally need strong performance from the financial sector to have a strong market. Those two banks represent very different markets and so together they send a powerful message when reporting in tandem. That message can be one speaking of a strong economy or one of a weak one.

Today it was on the weak side.

But later this week we also hear from Goldman Sachs and they could offer some saving grace.

Daily Market Update – January 14, 2015 (9:00 AM)

This morning was already getting off to a bad start as last night’s futures trading had the DJIA down nearly 100 points. Given the kind of reversal that we saw yesterday, the continuing weakness in the after hours futures market wasn’t very good.

This morning, when we could have expected a little bit of help from the earnings reports of both JP Morgan and Wells Fargo, that help didn’t come.and the market sold off even more.

Then came news of the Retail Sales Report, which isn’t usually that big of a deal, but this time it was.

That’s because people were expecting to see some evidence of increased consumer spending as people were supposed to be feeling richer from the drop in oil prices and then converting that feeling into spending.

But according to those retail sales figures that wasn’t the case. That’s even though yesterday’s JOLT Survey showed that the majority of the new jobs created in 2014 were at wages that were above the average of all wages in the US, meaning that it was higher paying jobs that were being created and not just more burger flipper jobs.

But this morning the interpretation of all of that news is decidedly negative, as oil falls a bit more, as well, to start the trading day.

With today’s likely downturn, this may end up being the lightest trading week in a long while, as the added downturn, after the first two weak days already encountered, makes teh ability to rollover positions more out of reach and also makes it less likely that new call positions will be sold on existing uncovered positions.

It’s not lost on me that it has been the Gold Miners ETF (GDX) options that have seen a lot of trading activity lately. That’s generally not a very healthy sign when you see that proxy for precious metals bouncing back and forth. Certainly that kind of bouncing has also been seen in the broader market, but when you see it in that very speculative sector it demonstrates lots of uncertainty among those that generally thrive in uncertainty and chaos.

The preliminary earnings from JP Morgan and Wells Fargo are disappointing, as you generally need strong performance from the financial sector to have a strong market. Those two banks represent very different markets and so together they send a powerful message when reporting in tandem.

Later this week we also hear from Goldman Sachs and they could offer some saving grace.

It will still be a few weeks before we start to hear from the major retailers, but today’s Retail Sales Report makes it less likely that they will be able to report earnings that reflect any significant increase in consumer spending. However, they will have had the advantage of seeing a few weeks of data after the close of the quarter that may indicate whether any trend in increased spending is developing
.

If it is and ends up being part of a more optimistic pattern of forward guidance, the market may respond very positively.

In the meantime, if those sales aren’t there and there is no upward pressure on prices, the likelihood of an interest rate coming from the FOMC is reduced, and that can be a positive for the markets.

For the rest of the week, though, it may be a case of strapping in and hanging on to see whether fear or opportunism takes hold.