Category Archives: Daily Market Update

Daily Market Update – December 5, 2014 (8:00 AM)

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

Today’s possible outcomes include:

Assignments:  DOW ($48), GPS ($39.50), MOS ($45)

Rollovers: GDX

Expirations:  eBay

The following positions were ex-dividend this week: JOY (12/2 $0.20), HFC (12/2 $0.32), MOS (12/2 $0.25), HAL (12/3 $0.18), COH (12/3 $0.34) NEM (12/3 $0.025)

The following will be ex-dividend next week: GM (12/8 $0.30)

This week, once again, due to the relatively high costs of some rollovers, I may prefer to let contracts elapse and try to simply sell new calls on positions next week.

Daily Market Update – December 4, 2014 (Close)

Ahead of this morning’s scheduled ECB policy statement the market didn’t look as if it was expecting too much.

At some point markets may give up on expecting anything tangible to come from Mario Draghi, but so far, that hasn’t been the case as his assurances have always sent markets higher. If news from the Bank of England this morning would have been any indicator there wouldn’t be any change coming out from the ECB today, either.

As far as predictors go, the Bank of England may be as good as any, at least when the ECB may be involved.

If and when the day comes that some substantive moves toward a European version of Quantitative Easing are actually made there’s going to be a big reaction, but it’s always a question of what direction that reaction will take us. A weak central currency and stalled economic growth would seem like the kind of things that a central bank would want to address with more than just words, but the longer the ECB delays action the better the situation is for the US economy and probably markets, as well.

Today, when it was all settled, turned out to be another quiet day as the ECB did nothing to heat things up and professional traders looked to position portfolios ahead of tomorrow’s Employment Situation Report. That may have explained the larger than usual trading range of late, but there really wasn’t much to explain the market’s early decline and then its subsequent recovery. What there was, was lots of confusion over where Mario Draghi stood, as he seemed to give conflicting messages.

For hedge fund managers the need to position portfolios before potentially important news generally that means to place hedges on portfolios in order to protect gains, but as 2014 is winding down there aren’t too many gains to be seen by those traders and reports are coming that predict a record year for closure of traditional hedge funds.

Yesterday was also another quiet day, coming off the previous day’s surprise move higher. Whatever it was that outgoing voting Federal Reserve Governor Richard Fisher said during his speech yesterday evening, it isn’t getting any media attention and isn’t seeming to have any impact on this morning’s future trading. Fisher may simply be falling into irrelevancy, as this month he will cast his final vote or perhaps he just had nothing to add to the conversation that could shake things up a bit the way he customarily did.

Fortunately, even with a relatively flat day yesterday there were some unexpected opportunities to sell calls and rollover positions and it would certainly have been nice to be able to do the same today and be left in good position to end the week.

Somehow, that’s how today worked out, as from an activity perspective it was almost a replay of yesterday, but also included the surprise of adding a new position in more shares of Sinclair Broadcasting

Unless there is some kind of precipitous move tomorrow the remaining positions expiring this week have reasonable prospects of either assignment or rollover, although I would prefer not to rollover the lone outstanding DOH position and instead see the position expire. As I mentioned yesterday, I’m inclined to prefer rollovers at the moment, and try to accumulate premiums, but still wouldn’t mind adding to cash reserves.

While I initially thought that today might be a day of simply being a passive observer, I’m glad that even in the environment of a stable market, despite further deterioration in the energy sector, there were some opportunities to generate more premiums..

Now with the non-event ECB issue having been moved out of the way early this morning, all that remains for the week is to see how tomorrow morning’s Employment Situation Report is received and to look forward to a weekend as calm as the week preceding it.

Daily Market Update – December 4, 2014 (7:30 AM)

Ahead of this morning’s scheduled ECB policy statement the market doesn’t look as if it is expecting too much.

At some point markets may give up on expecting anything tangible to come from Mario Draghi, but so far, that hasn’t been the case as his assurances have always sent markets higher. If news from the Bank of England this morning will be any indicator there won’t be any change coming out from the ECB today.

If and when the day comes that some substantive moves toward a European version of Quantitative Easing are actually made there’s going to be a big reaction, but it’s always a question of what direction that reaction will take us. A weak central currency and stalled economic growth would seem like the kind of things that a central bank would want to address with more than just words, but the longer the ECB delays action the better the situation is for the US economy and probably markets, as well.

Today, if nothing comes from the ECB to heat things up, it should be another quiet day as professional traders look to position portfolios ahead of tomorrow’s Employment Situation Report.

Generally that means to place hedges on portfolios in order to protect gains, but as 2014 is winding down there aren’t too many gains to be seen by those traders and reports are coming that predict a record year for closure of traditional hedge funds.

Yesterday was also another quiet day, coming off the previous day’s surprise move higher. Whatever it was that outgoing voting Federal Reserve Governor Richard Fisher said during his speech yesterday evening, it isn’t getting any media attention and isn’t seeming to have any impact on this morning’s future trading. Fisher may simply be falling into irrelevancy, as this month he will cast his final vote or perhaps he just had nothing to add to the conversation that could shake things up a bit the way he customarily did.

Fortunately, even with a relatively flat day yesterday there were some unexpected opportunities to sell calls and rollover positions and it would certainly be nice to be able to do the same today and be left in good position to end the week.

Unless there is some kind of precipitous move today or tomorrow positions expiring this week have reasonable prospects of either assignment or rollover. As I mentioned yesterday, I’m inclined to prefer rollovers at the moment, but still wouldn’t mind adding to cash reserves.

Today may be a day of simply being a passive observer and hoping for some stability and maybe even some continued improvement in the energy sector.

Once the ECB issue is moved out of the way early this morning we’ll have a better idea of where markets may be headed on their own and whether that passivity evolves into anything more interesting.

Daily Market Update – December 3, 2014 (Close)

Yesterday was a surprise.

While triple digit moves aren’t as important as they used to be they still get your attention, especially when there’s really not too much to account for the move.

Yesterday was a very quiet day on the news front, but at least there wasn’t any really negative news and there was some acknowledgement by a Federal Reserve Governor that falling energy prices will likely add to the nation’s GDP, as about 70% of it is consumer driven.

That acknowledgement may have been the driving force behind the positive tone to the market.

Today, however, there were to be three more speeches by Federal Reserve Governors that could have their own impacts, including one by the always influential Richard Fisher, although he speaks well after the market’s close and in less than a month he will no longer be a voting member of the FOMC.

In the meantime the ADP Employment Report was released this morning and although it is sometimes a prelude to what is in the Employment Situation Report that follows on Friday, very often it has a lack of concordance. The ADP Report rarely moves markets and lately neither has the Employment Situation Report, so there isn’t very much expectation for known events having too much influence for the remainder of the week.

The remainder of the week looks like it will be one of just simply waiting for any opportunities to pop up, although I wouldn’t mind some passivity, as it comes to assignments. I would like to see some so as to add to cash reserves, but increasingly I want to see rollovers right now in lieu of having to add new positions.

Today’s narrow range trading did at least offer some of those opportunities for rollovers and new cover sales. Unfortunately, some other trades that I tried to make just didn’t execute, such as option sales on General Motors, as the volume is still light and the spreads are still too wide for my liking.

Looking at charts makes it harder and harder to justify purchases at current levels for so many stocks. However, there are still many stocks that are not at their 52 week highs, but it is also increasingly clear that the cycle for many of those stocks to recover their price drops is longer and longer, as the market is less and less forgiving.

Stringing along some positions, sometimes even keeping them via rollover when assignment is likely or possible may be better in some cases rather than taking the assignment, unless you specifically want to add to an unused cash cushion.

For now, I think I want the best of all worlds and still want to add to the cash cushion but may be willing to add less in order to perpetuate the premium stream from current holdings.

This morning appeared as if it would be a very flat open and that there may not be too much excitement nor opportunity to do very much. Again, all eyes were on energy and retail and the thought that lower energy prices should drive more retail purchasing as the holiday season progresses.

What’s still needed are the anecdotal stories to back up the theory behind those expectations, but for now the few reports that have been made haven’t corroborated  the belief that consumers are better poised to be spending this holiday season.

If this December’s market performance is going to be up to par with Decembers past that kind of consumer fuel is really needed as fuel itself becomes less of a burden on household budgets.

The combination of more jobs, better paying jobs and more discretionary cash is a good one to start the new year, but this month would be an especially good time to really get it all started.

Daily Market Update – December 3, 2014 (8:00 AM)

Yesterday was a surprise.

While triple digit moves aren’t as important as they used to be they still get your attention, especially when there’s really not too much to account for the move.

Yesterday was a very quiet day on the news front, but at least there wasn’t any really negative news and there was some acknowledgement by a Federal Reserve Governor that falling energy prices will likely add to the nation’s GDP, as about 70% of it is consumer driven.

That acknowledgement may have been the driving force behind the positive tone to the market.

Today, however, there are three more speeches by Federal Reserve Governors that could have their own impacts, including one by the always influential Richard Fisher, although he speaks well after the market’s close and in less than a month he will no longer be a voting member of the FOMC.

In the meantime the ADP Employment Report is released this morning and is sometimes a prelude to what is in the Employment Situation Report that follows on Friday. The ADP Report rarely moves markets and lately neither has the Employment Situation Report, so there isn’t very much expectation for known events having too much influence for the remainder of the week.

The remainder of the week looks like it will be one of just simply waiting for any opportunities to pop up, although I wouldn’t mind some passivity, as it comes to assignments. I would like to see some so as to add to cash reserves, but increasingly I want to see rollovers right now in lieu of having to add new positions.

Looking at charts makes it harder and harder to justify purchases at current levels for so many stocks. However, there are still many stocks that are not at their 52 week highs, but it is also increasingly clear that the cycle for many of those stocks to recover their price drops is longer and longer, as the market is less and less forgiving.

Stringing along some positions, sometimes even keeping them via rollover when assignment is likely or possible may be better in some cases rather than taking the assignment, unless you specifically want to add to an unused cash cushion.

For now, I think I want the best of all worlds and still want to add to the cash cushion but may be willing to add less in order to perpetuate the premium stream from current holdings.

This morning appears as if it will a very flat open and there may not be too much excitement nor opportunity to do very much. Again, all eyes are on energy and retail and the thought that lower energy prices should drive more retail purchasing as the holiday season progresses.

What’s still needed are the anecdotal stories to back up the theory behind those expectations, but for now the few reports that have been made haven’t corroborated  the belief that consumers are better poised to be spending this holiday season.

If this December’s market performance is going to be up to par with Decembers past that kind of consumer fuel is really needed as fuel itself becomes less of a burden on household budgets.

The combination of more jobs, better paying jobs and more discretionary cash is a good one to start the new year, but this month would be an especially good time to really get it all started.