Category Archives: Daily Market Update

Daily Market Update – October 6, 2014 (Close)

What a wild week ahead.

There’s not too much as far as scheduled economic news goes and there may also be some peaceful short term resolution to the protests underway in Hong Kong, but there will be an incredible amount of hot air generated this week.

Today, Secretary of Treasury Jack Lew speaks and on Thursday European Central Bank President Mario Draghi speaks

In-between will be Wednesday’s release of the monthly FOMC Statement and the eager anticipation around the wording used to indicate what we all know is now coming at least one month sooner than we thought last month.

Finally, there are 12 speeches scheduled to be given by members of the FOMC this week, winding up with hawkish member, Richard Fisher, who is able to move markets very much in the same manner that the Chairman, Janet Yellen can do, despite the fact that Fisher has frequently been wrong in his opinions and predictions.

Unfortunately, he speaks just a few hours before the market finishes its trading for the week and he has a habit of sending shares lower when he focuses on the need to increase interest rates sooner.

This morning none of that seemed to matter as the pre-opening futures indicated a moderately higher opening, possibly buoyed by Hewlett Packard’s split into 2 companies. Nonetheless, 28 out of 30 of the DJIA components were higher prior to the bell ringing,

That kind of opening would have been welcome, even though I ordinarily like to see weakness to start the week.

That’s because I generally am looking to replace assigned positions and want to spend money, but don’t want to overspend.

This week, however, is another week that I’m not overly anxious to spend much money. Following 2 weeks of very confusing trading and seeing large moves in both directions with little or no provocation, it seems a little reckless to commit one way or another.

Today really did nothing to get rid of the confusion. After looking as if there might be a possible early triple digit move to the upside the market loss all of it and actually was down as low as about 70 points, only to finish the day virtually unchanged.

Rational thinking might say that there’s more downside than upside, but when has rational thinking really worked terribly well in the markets?  If rational thinking had any role most people would have missed the last couple of thousand of points gain in the DJIA while awaiting the correct
ion that we all knew to be obviously lurking.

With a handful of positions scheduled to expire this week and the same for next week’s monthly cycle end, at the moment, if making any new purchases I’m likely to look to add to this week’s expirations or possibly go out to October 24th.

In addition to the usual considerations whenever buying any new positions this week begins yet another earnings season, so that has to be thrown into the mix.

However, for the first time in a while, I’m actually optimistic about the upcoming earnings. The potential confounder will be the impact of share buy-backs. During the past few quarters those buy-backs have artificially boosted earnings per share, even as revenues were flat or even decreasing.

This time around, I expect revenues to be higher, especial in retail and consumer sections, but expect that buy backs have slowed down. That may result in higher revenues, but not the same pace of share reduction, which could lead to some earnings per share disappointments.

So as the bell was getting ready to ring, I was hoping that the strength would continue, but as we all know those kind of mild to moderate pre-open futures really don’t mean much of anything. Just as so often happens, today’s early jump higher just withered away.

Although there wasn’t much of a net change today, the constant back and forth did end up increasing volatility, which had fallen on Friday’s straight climb higher. That climb wasn’t too much, though, and did nothing really to make finding extended option opportunities any easier. Nonetheless, for now, I’d prefer to see some higher moving prices, even at the expense of volatility, if that meant a greater likelihood of putting some existing stock positions to work.

This week I’d rather see myself producing income in that manner, along with more than the usual number of ex-dividend positions, than through the depletion of cash reserves.

Like last week, it’s very possible that the two early purchases for the week may be as much as will be made, although with any further declines in eBay, Comcast and Walgreen, the stocks assigned this past Friday, it may just be time to buy those back.

Daily Market Update – October 6, 2014 (9:00 AM)

What a wild week ahead.

There’s not too much as far as scheduled economic news goes and there may also be some peaceful short term resolution to the protests underway in Hong Kong, but there will be an incredible amount of hot air generated this week.

Today, Secretary of Treasury Jack Lew speaks and on Thursday European Central Bank President Mario Draghi speaks

In-between will be Wednesday’s release of the monthly FOMC Statement and the eager anticipation around the wording used to indicate what we all know is now coming at least one month sooner than we thought last month.

Finally, there are 12 speeches scheduled to be given by members of the FOMC this week, winding up with hawkish member, Richard Fisher, who is able to move markets very much in the same manner that the Chairman, Janet Yellen can do, despite the fact that Fisher has frequently been wrong in his opinions and predictions.

Unfortunately, he speaks just a few hours before the market finishes its trading for the week and he has a habit of sending shares lower when he focuses on the need to increase interest rates sooner.

This morning none of that seems to matter as the pre-opening futures are indicating a moderately higher opening, possibly buoyed by Hewlett Packard’s possible split into 2 companies. Nonetheless, 28 out of 30 of the DJIA components were higher prior to the bell ringing,

That kind of opening would be welcome, even though I ordinarily like to see weakness to start the week.

That’s because I generally am looking to replace assigned positions and want to spend money, but don’t want to overspend.

This week, however, is another week that I’m not overly anxious to spend much money. Following 2 weeks of very confusing trading and seeing large moves in both directions with little or no provocation, it seems a little reckless to commit one way or another.

Rational thinking might say that there’s more downside than upside, but when has rational thinking really worked terribly well in the markets?  If rational thinking had any role most people would have missed the last couple of thousand of points gain in the DJIA while awaiting the correction that we all knew to be obviously lurking.

With a handful of positions scheduled to expire this week and the same for next week’s monthly cycle end, at the moment, if making any new purchases I’m likely to look to add to this week’s expirations or possibly go out to October 24th.

In addition to the usual considerations whenever buying any new positions this week begins yet another earnings season, so that has to be thrown into the mix.

However, for the first time in a while, I’m actually optimistic about the upcoming earnings. The potential confounder will be the impact of share buy-backs. During the past few quarters those buy-backs have artificially boosted earnings per share, even as revenues were flat or even decreasing.

This time around, I expect revenues to be higher, especial in retail and consumer sections, but expect that buy backs have slowed down. That may result in higher revenues, but not the same pace of share reduction, which could lead to some earnings per share disappointments.

So as the bell rings, I hope that the strength continues and doesn’t do as so often has been the case and just withers away. If that strength does continue and builds on Friday’s close, volatility will move lower and that may make it a little more difficult to find expanded option opportunities. Nonetheless, for now, I’d prefer to see some higher moving prices, even at the expense of volatility, if that meant a greater likelihood of putting some existing stock positions to work.

This week I’d rather see myself producing income in that manner, along with more than the usual number of ex-dividend positions, than through the depletion of cash reserves.

Daily Market Update – October 3, 2014 (8:45 AM)

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

The following outcomes are possible today:

Assignments: EBAY

Rollovers: CMCSA, GM, GPS, WAG

Expirations: ANF, GDX, JOY, WFM

Trades, if any, will be attemopted to be made prior to 3:30 PM EDT.

The following positions were ex-dividend this week: CMCSA (9/29 $0.22), BMY (10/1 $0.36)

The following positions are ex-dividend next week: GPS (10/6 $0.22), CPB (10/8 $0.31), DRI (10/8 $0.55), CHK (10/9 $0.10), FCX (10/10 $0.31)

Daily Market Update – October 2, 2014 (Close)

After yesterday’s 238 point drop and following all of the tumult of the past two weeks, it’s hard to believe that the market is down only about 3% from its peak of just two weeks ago.

For the most part there really hasn’t been much in the way of meaningful news during the past two weeks but the market has certainly taken on a very, very different tone.

Whether the net movement is lower or higher there’s a palpable difference even if you have never heard of the word “volatility.”

For all intents and purposes the market was neither higher nor lower today, but you certainly know that it was volatile, having traded over an 180 point range, having lost 130 points at its lowest point.

When there are no real over-riding economic themes, as there haven’t been of late, you can at least see why the market is like a ping pong ball in active play. The movements of the past two weeks have really been dizzying and there’s no indication of when the next period of stability will be at hand.

The only thing that may return some fundamentals to trading may be the beginning of earnings season next week.

It would be nice to see a market trading on something tangible, such as fundamentals.

It lately has been ignoring geo-political events, which is a good thing, but has also been ignoring the precipitous drop in commodity prices which would ordinarily have a positive impact on growth and discretionary spending.

Of course the results from earnings season could cut both ways, especially as there is an increasing consensus looking for improved numbers. The problem with those kinds of expectations is that there is more possibility for disappointment.

We all know the phenomenon of “good not being good enough,” and that consistently extends to stocks when they report their earnings.

Before next week’s earnings there was still the matter of this morning’s statement from the ECB and tomorrow’s Employment Situation Report.

What may be increasingly noted on the ECB front is that its leader, Mario Draghi may be much better at rhetoric than action.

He has moved global markets on more than one occasion by making comments suggesting that the ECB can and will do whatever it takes to meet the ECB’s single mandate, which is to maintain price stability.

Most recently the expectation has been that the ECB would introduce its version of Quantitative Easing to help keep interest rates low, but it has really done nothing.

That didn’t change this morning as Draghi announced that the ECB will continue to observe the situation. He also lambasted the EU leadership and that pleased no one and may ahve been the ultimate reason for the morning’s weakness.

So that leave’s tomorrow’s Employment Situation Report to offer some respite to the negative trend.

After last month’s disappointment we really don’t need another, but too good of a number will get ebveryone all concerned again about the prospect of rising rates, so it may be another case of bad news better better than good news.

Hopefully, whatever the news , it will be interpreted as good news. If so, it couldn’t come at a better time, but at least today didn’t move positions further, or at least much further from their strike levels. That removes some of the burden from tomorrow’s market and it won’t be requiring an explosively upside move in order to get that desired combination of rollovers and assignments.

Daily Market Update – October 2, 2014 (9:00 AM)

After yesterday’s 238 point drop and following all of the tumult of the past two weeks, it’s hard to believe that the market is down only about 3% from its peak of just two weeks ago.

For the most part there really hasn’t been much in the way of meaningful news during the past two weeks but the market has certainly taken on a very, very different tone.

Whether the net movement is lower or higher there’s a palpable difference even if you have never heard of the word “volatility.”

When there are no real over-riding economic themes, as there haven’t been of late, you can at least see why the market is like a ping pong ball in active play. The movements of the past two weeks have really been dizzying and there’s no indication of when the next period of stability will be at hand.

The only thing that may return some fundamentals to trading may be the beginning of earnings season next week.

It would be nice to see a market trading on something tangible, such as fundamentals.

It lately has been ignoring geo-political events, which is a good thing, but has also been ignoring the precipitous drop in commodity prices which would ordinarily have a positive impact on growth and discretionary spending.

Of course the results from earnings season could cut both ways, especially as there is an increasing consensus looking for improved numbers. The problem with those kinds of expectations is that there is more possibility for disappointment.

We all know the phenomenon of “good not being good enough,” and that consistently extends to stocks when they report their earnings.

Before next week’s earnings there was still the matter of this morning’s statement from the ECB and tomorrow’s Employment Situation Report.

What may be increasingly noted on the ECB front is that its leader, Mario Draghi may be much better at rhetoric than action.

He has moved global markets on more than one occasion by making comments suggesting that the ECB can and will do whatever it takes to meet the ECB’s single mandate, which is to maintain price stability.

Most recently the expectation has been that the ECB would introduce its version of Quantitative Easing to help keep interest rates low, but it has really done nothing.

Tha
t didn’t change this morning as Draghi announced that the ECB will continue to observe.

So that leave’s tomorrow’s Employment Situation Report to offer some respite to the negative trend.

If so, it couldn’t come at a better time, but hopefully today there will still be some reason for the market to move higher and offer opportunities to remove some of the burden from requiring an explosively upside move tomorrow in order to get that desired combination of rollovers and assignments.