Category Archives: Daily Market Update

Daily Market Update – November 24, 2014 (8:15 AM)

There’s not a single Federal Reserve Governor scheduled to speak this week as it will be a very quiet and short trading week.

While there will be a GDP release and some Jobless number statistics, unless there is another big revision to GDP, as we have already had twice this year, I don’t expect too much impact from the abbreviated schedule of economic announcements for the week, particularly as reports will be crammed into a shorter reporting period and may simply cancel one another out if offering conflicting views or interpretations over what is going on.

While many will begin the Thanksgiving holiday early and trading will be very light, the Thanksgiving Week sometimes starts off the final 5 weeks of a traditional rally for the year, as the November – December period usually out-performs the rest of the year.

Most of the focus shifts to retail and the script is usually the same. After the first couple of days of mega-sales, which are now being disclosed as perhaps not the great shopping bargains that everyone has been led to believe, the initial reports are usually of disappointing early sales.

The concerns about slow sales generally continues as people are led to believe that desperate retailers will lower prices even more.

Then, when it’s all said and done it’s revealed that sales for the holiday season were better than expected.

For the next five weeks prepare for an onslaught of these retail centric stories and constant talk about sales levels.

With consumer optimism rising and the holidays finally here, anything less than a really robust holiday sales season would have to be very disappointing, but we may have to prepare ourselves for the same weather related calamities lots of retailers faced last year, if the early indications are any predictor of what’s to follow.

This week with more cash in hand than has been the case for a while and with already some reasonable distribution of expirations for the December 2014 option cycle, I’m approaching this week with a very open mind.

While I’m not too likely to go wild with all of that cash, I’m not at all adverse to adding new positions. However, after 5 consecutive weeks of gains a low volume trading week can result in any kind of exaggerated movement. Also, plowing too much back in as the market is again at new highs should probably be questioned.

This week already has a number of ex-dividend positions so some income is already there for the week. Given that premiums will not only be light due to the extremely low volatility but also due to only having 3 1/2 days of time value, there may be some reason to look beyond this week’s expiration and perhaps to the December 12, 2014 expiration, which currently has no positions set to expire on that date.

I would like to add to both the health and technology sectors and had been considering Microsoft this week, following its downgrade on Friday, but didn’t include that in this week’s Weekend Update, but would be happy to add that on
any weakness.

Otherwise, it’s just another Monday to sit and see where sentiment take us to begin the week. The difference is that there isn’t too much time to make decisions and still get any kind of reasonable premiums as time will be running out very quickly this week.

Daily Market Update – November 21, 2014 (8:00 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by 12:00 Noon on Sunday.

The following trade outcomes are possible:

Assignments:  BMY,  CPB, CY, DRI, LO, SBGI

Rollovers:  LVS

Expirations:  BBY (puts), FAST, PBR

Again, with ask prices relatively high when seeking to close out positions as part of rollover trades, there may be reason to allow expiration, rather than rolling contracts over, due to the unnecessary additional expense involved.

This week’s ex-dividend position was TGT (11/17 $0.52)

Next week’s ex-dividend positions are:  MAT (11/24 $0.38), HFC (11/25 $0.50 Special Dividend), K (11/26 $0.49), SBGI (11/26 $0.16), LO (11/26 $0.62)

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

Daily Market Update – November 20, 2014 (Close)

Yesterday’s FOMC Statement release turned out to be a non-event and was so for the second consecutive month.

Most every month there is some discussion of the nuances contained in the statement and the differences between it and the previous month. Adjectives and adverbs are dissected for their meaning and importance and algorithms pore over the frequency the keywords are used and make instantaneous trading decisions based on words, often without context being a factor.

This time around there wasn’t very much to talk about and there wasn’t very much for algorithms to ponder.

Maybe that reflects some adult like behavior in that a reasonable response was the outcome of not being faced with any surprises. The lack of any new information contained in the statement normally would be irrelevant to traders and the markets would respond wildly, most recently higher, after the initial knee-jerk reaction.

This time there was no knee-jerk, nor was there a delayed reaction.

While the day after the FOMC is frequently a day for significant movement, often opposite the movements of the previous day, it doesn’t appear as if today will require much in the way of correction, as there wasn’t any kind of an over-response yesterday.

Instead, the market simply looks as if today will begin with a moderately lower opening, but with no real cause to account for the weakness.

By the time the day would come to an end it was at least sporting a move that was double that of the daily moves of much of the past week. having moved 0.2% higher on the day.

Given the past week’s malaise, it would be nice to see any kind of movement and any kind of expression of sentiment to take the market decidedly in any direction. Although the streak of 5 consecutive days of not having moved more than 0.1% is now over, there hasn’t been much of a difference between the days that added to that record and the days that snapped the record.

Today may have been double that 0.1% threshold, but it sure didn‘t feel twice as active.

While there was a chance that today could have been a breakout as the pre-open futures were unfolding, the fact that there was no reason for a sell-off or a buying spree probably fell on newly rational ears. With  6 upcoming speeches by Federal Reserve Governors that could shed some additional light on what is really going on in the closed meeting room that guides the nation’s economic policy, there’s still some chance for some surprises.

But I doubt that anything substantive is going to come from any of those speeches, particularly as the market doesn’t seem overly nervous, although individual stocks are often very tentative and quickly cast out for the slightest disappointments, as the market continues to be one that is characterized by sector rotation and a general trend higher and higher.

For the rest of the week the challenge is to rollover, sometimes, avoid rollover, as in the case of DOH Trades, seek new cover and get assignments.

At least today offered some opportunity to get some additional cover on some laggards, but those premiums are still so woefully low that it’s hard to justify the risk – reward propositions.

For now, at least, the initial concern that a real adverse reaction to the FOMC would diminish chances of assignment aren’t as keen, but it would still be nice to finish the week wit
hout any surprises and be able to set up the December 2014 cycle with enough cash in hand to be able to take advantage of anything that may come along.

Daily Market Update – November 20, 2014 (8:30 AM)

Yesterday’s FOMC Statement release turned out to be a non-event and was so for the second consecutive month.

Most every month there is some discussion of the nuances contained in the statement and the differences between it and the previous month. Adjectives and adverbs are dissected for their meaning and importance and algorithms pore over the frequency the keywords are used and make instantaneous trading decisions based on words, often without context being a factor.

This time around there wasn‘t very much to talk about and there wasn‘t very much for algorithms to ponder.

Maybe that reflects some adult like behavior in that a reasonable response was the outcome of not being faced with any surprises. The lack of any new information contained in the statement normally would be irrelevant to traders and the markets would respond wildly, most recently higher, after the initial knee-jerk reaction.

This time there was no knee-jerk, nor was there a delayed reaction.

While the day after the FOMC is frequently a day for significant movement, often opposite the movements of the previous day, it doesn’t appear as if today will require much in the way of correction, as there wasn’t any kind of an over-response yesterday.

Instead, the market simply looks as if today will begin with a moderately lower opening, but with no real cause to account for the weakness.

Given the past week’s malaise, it would be nice to see any kind of movement and any kind of expression of sentiment to take the market decidedly in any direction. Although the streak of 5 consecutive days of not having moved more than 0.1% is now over, there hasn’t been much of a difference between the days that added to that record and the days that snapped the record.

Today may change that and there are also 6 upcoming speeches by Federal Reserve Governors that could shed some additional light on what is really going on in the closed meeting room that guides the nation’s economic policy.

I doubt that anything substantive is going to come from any of those speeches, particularly as the market doesn’t seem overly nervous, although individual stocks are often very tentative and quickly cast out for the slightest disappointments, as the market continues to be one that is characterized by sector rotation and a general trend higher and higher.

For the rest of the week the challenge is to rollover, sometimes, avoid rollover, as in the case of DOH Trades, seek new cover and get assignments.

For now, at least, the initial concern that a real adverse reaction to the FOMC would diminish chances of assignment aren’t as keen, but it would still be nice to finish the week without any surprises and be able to set up the December 2014 cycle with enough cash in hand to be able to take advantage of anything that may come along.