Category Archives: Daily Market Update

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

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

Today’s possible outcomes include:

Assignments: INTC

Rollovers:  BP, LVS, WFM

Expirations: none

The following positions were ex-dividend this week: COH (9/5 $0.34), MOS (9/2 $0.25)

The following positions are ex-dividend next week: GM (9/8 $0.30), NEM (9/9 $0.025)

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

Daily Market Update – September 4, 2014 (Close)

Comparatively speaking, today was a big news day with both the ADP Jobs reports and an announcement from the ECB regarding its forward policies, in addition to comments from its head, Mario Draghi.

As it would turn out, neither would really be very important nor really change anyone’s minds about anything.

Early this morning came the unusual leak of information confirming the initiation of ECB’s version of quantitative easing and placed it at 500 billion Euros, which would be about 7 months worth of Federal Reserve easing, so while sounding like a lot, may be only a down-payment on what may be required to jump start the European economies that are lagging.

The pre-opening market seemed to like the unconfirmed information contained in that leak, but as I mentioned yesterday, that kind of  embracing the ECB decision by US markets may be short lived if it ends up firming up European markets, whose offerings can be in direction competition to our own.

If that’s going to be a problem it will likely be one that gets set into place in relatively slow motion, at least in its early phases. Other than the day when someone finally opines that is going to be the case and the market takes a quick hit, there should be plenty of time to position a portfolio to not get blind-sided.

With Thursday now here, my attention shifted to positioning for next week. That’s far enough into the future to be planning, for now.

With only five positions set to expire this week there’s wasn’t too much to work with, although as Thursday’s trading got ready to begin they were all in striking range of either being rollover candidates or getting assigned. Either of those is acceptable, although, as with most weeks it’s always nice to have a combination.

Surprisingly, there was some opportunity to add another new position as British Petroleum had a horrible day after receiving news of the court’s decision regarding the fine for its role in the Gulf of Mexico spill some 4 years ago. Shockingly, the claim was that British Petroleum put cost savings ahead of safety and for that they have another $17 billion in fines and penalties facing them.

Does anyone remember Anadarko?

In addition to that purchase came some reason to rollover some positions early. One of those, Coach, goes ex-dividend tomorrow and it saw its price run up sharply at about 2 PM, as there were two separate large trades that sent shares sharply higher very quickly. More intriguing were the two very large options trades made a few minutes later after the jump from $37.10 to $37.37.

There was a very aggressive trade for the $37.50 contracts expiring tomorrow, about 800 contracts worth and then an equally sized, but more cautious trade for the $37 September 20th contracts.

I hope that whoev
er made those trades is right, but I did want to keep my dividend, hence the rollover, which as it turned out in the final 10 minutes of trading, may not have been necessary, as shares closed inside of the $37.34 threshold.

Despite some unexpected activity today, what’s still missing this week is the ability to reduce the number of uncovered positions as the market has been fairly milquetoastish during the first couple of days of trading. Ideally, what helps to get a position to leave its uncovered status is a price spurt and there haven’t been too many of those of late.

What I think has been telling of late of the health of the market is that individual stocks seem to be taking longer to recover from any moves lower. Those moves seem to be sharper and more sustained. In a period of low volatility it is then difficult to find an option premium that can justify the trade off of potential future gains.

One can argue that is the case simply because there may be alternative investments and so money flees from a weakened position to others. That’s precisely the same kind of dynamic that could be the undoing of our current market run higher.

While so much has been said of the US equity markets offering the best opportunities, not only in terms of geography, but also in terms of products, such as in comparison to bonds, any perception in that advantage waning will shift investor allegiances.

The micro-economic issues are important, witness this mornings further erosion in YUM Brands, but the various macro-economic issues are all of concern, as well.

For now, it’s just time to take it all in, as the only consistency is inconsistency. Following the ECB statement and comments from Draghi, we may be entering an altered landscape, but one that could be a much more easy one in which to trade if it slows down the rush of US stock markets higher.

Daily Market Update – September 4, 2014 (8:00 AM)

Comparatively speaking, today is a big news day with both the ADP Jobs reports and an announcement from the ECB regarding its forward policies, in addition to comments from its head, Mario Draghi.

Early this morning came the unusual leak of information confirming the initiation of ECB’s version of quantitative easing and placed it at 500 billion Euros, which would be about 7 months worth of Federal Reserve easing, so while sounding like a lot, may be only a down-payment on what may be required to jump start the European economies that are lagging.

The pre-opening market seems to like the unconfirmed information contained in that leak, but as I mentioned yesterday, that kind of  embracing the ECB decision by US markets may be short lived if it ends up firming up European markets, whose offerings can be in direction competition to our own.

If that’s going to be a problem it will likely be one that gets set into place in relatively slow motion, at least in its early phases. Other than the day when someone finally opines that is going to be the case and the market takes a quick hit, there should be plenty of time to position a portfolio to not get blind-sided.

With Thursday now here, attention shifts to positioning for next week. That’s far enough into the future to be planning, for now.

With only five positions set to expire this week there’s not too much to work with, although as Thursday’s trading gets ready to begin they are all in striking range of either being rollover candidates or getting assigned. Either of those is acceptable, although, as with most weeks it’s always nice to have a combination.

What’s still missing this week is the ability to reduce the number of uncovered positions as the market has been fairly milquetoastish during the first couple of days of trading. Ideally, what helps to get a position to leave its uncovered status is a price spurt and there haven’t been too many of those of late.

What I think has been telling of late of the health of the market is that individual stocks seem to be taking longer to recover from any moves lower. Those moves seem to be sharper and more sustained. In a period of low volatility it is then difficult to find an option premium that can justify the trade off of potential future gains.

One can argue that is the case simply because there may be alternative investments and so money flees from a weakened position to others. That’s precisely the same kind of dynamic that could be the undoing of our current market run higher.

While so much has been said of the US equity markets offering the best opportunities, not only in terms of geography, but also in terms of products, such as in comparison to bonds, any perception in that advantage waning will shift investor allegiances.

The micro-
economic issues are important, witness this mornings further erosion in YUM Brands, but the various macro-economic issues are all of concern, as well.

For now, it’s just time to take it all in, as the only consistency is inconsistency. Following the ECB statement and comments from Draghi, we may be entering an altered landscape, but one that could be a much more easy one in which to trade if it slows down the rush of US stock markets higher.

Daily Market Update – September 23 2014 (Close)

If the stakes weren’t so serious this morning’s news from Ukraine would be pretty laughable.

The retraction of a claim that Ukraine had reached a ceasefire agreement with Russia because Russia claims it was never a party to the conflict and because rebel leaders said they were never consulted could never happen in real life, but could be the sort of fork in the road that could take the next step in any direction.

So while awaiting some clarification on what that conflict will mean for us, there is the matter of tomorrow morning’s delayed ADP Report, which comes before Friday’s Employment Situation Report.

Most everyone is expecting another month of 200,000+ job gains and there’s little reason to expect a surprise from either measure of the US economy. The bad news is that because we’re so accustomed to good news on employment bad news would now likely be received very negatively, as no one can reasonably expect the Federal Reserve to back off from its planned end to quantitative easing. Further, really good news would likely also be interpreted as being bad as it could mean an accelerated time table for interest rate increases.

So there’s not much benefit to be gained from the reports and there really hasn’t been much in the way of market reaction through all of 2014, although the Employment Situation Report continues to be strongly associated with both a market advance for the week as well as for the day before the release.

Instead, the real interest will be on tomorrow’s ECB statement and the speculation as to whether they will finally follow the path set by our Federal Reserve and take actions that could add some reason for investment in their own stock markets. However, even in this new inter-connected world, where our greatest companies are now multi-nationals, the shift to a European version of quantitative easing could divert money from our own markets to the new hot markets in Europe.

While any suggestion of quantitative easing in Europe may be made with some initial euphoria, it wouldn’t be too surprising to see a realization that moving in that direction might not be the best thing for our own markets, which have certainly benefited from the flow of money from others around the world.

But that’s an issue for some other day. The delay is also in homage to the deftness with which Mario Draghi, head of the ECB, has done very well speaking a good game, consistently saying that the ECB would do everything in its power, yet has really not done anything other than the obligatory need to lower rates as the world has set the pace in that regard.

Today the market is prepared for a positive open in advance of a quiet day on the news front and after yesterday’s comeback. With a busier day than I initially expected yesterday, I wasn’t expecting to do very much in the pursuit of more new positions and was just hoping that the market is able to maintain at these levels, if not higher, to end out the week.

As usua
l, just as with the Federal Reserve, I have a dual mandate.

I want assignments and I want rollovers. At least yesterday’s surprisingly busy activity opens up the possibility for both this week and with only 4 days in which to act there’s already the need to start thinking about setting up the stage for next week, which is also in need of having it populated with positions set to expire next Friday.

For today, while I didn’t anticipate spending too much  more and definitely don’t want to chase anything down, there was still some hope of finding an isolated opportunity, ideally one that was also dividend related. Those are fairly sparse this week, but among the opportunities appeared to be some going ex-dividend on Monday, which can be an easy way to pick up an additional week’s worth of premium for a very short holding period if all goes as hoped.

Well see.

Daily Market Update – September 23 2014 (8:15 AM)

If the stakes weren’t so serious this morning’s news from Ukraine would be pretty laughable.

The retraction of a claim that Ukraine had reached a ceasefire agreement with Russia because Russia claims it was never a party to the conflict and because rebel leaders said they were never consulted could never happen in real life, but could be the sort of fork in the road that could take the next step in any direction.

So while awaiting some clarification on what that conflict will mean for us, there is the matter of tomorrow morning’s delayed ADP Report, which comes before Friday’s Employment Situation Report.

Most everyone is expecting another month of 200,000+ job gains and there’s little reason to expect a surprise from either measure of the US economy. The bad news is that because we’re so accustomed to good news on employment bad news would now likely be received very negatively, as no one can reasonably expect the Federal Reserve to back off from its planned end to quantitative easing. Further, really good news would likely also be interpreted as being bad as it could mean an accelerated time table for interest rate increases.

So there’s not much benefit to be gained from the reports and there really hasn’t been much in the way of market reaction through all of 2014, although the Employment Situation Report continues to be strongly associated with both a market advance for the week as well as for the day before the release.

Instead, the real interest will be on tomorrow’s ECB statement and the speculation as to whether they will finally follow the path set by our Federal Reserve and take actions that could add some reason for investment in their own stock markets. However, even in this new inter-connected world, where our greatest companies are now multi-nationals, the shift to a European version of quantitative easing could divert money from our own markets to the new hot markets in Europe.

While any suggestion of quantitative easing in Europe may be made with some initial euphoria, it wouldn’t be too surprising to see a realization that moving in that direction might not be the best thing for our own markets, which have certainly benefited from the flow of money from others around the world.

But that’s an issue for some other day.

Today the market is preparing for a positive open in advance of a quiet day on the news front and after yesterday’s comeback. With a busier day than I initially expected yesterday, I’m not expecting to do very much in the pursuit of more new positions and will just be hoping that the market is able to maintain at these levels, if not higher, to end out the week.

As usual, just as with the Federal Reserve, I have a dual mandate.

I want assignments and I want rollovers. At least yesterday’s surprisingly busy activity opens up the possibility for both this week and with only 4 days in which to act there’s already the need to start thinking about setting up the stage for next week, which is also in need of having it populated with position
s set to expire next Friday.

For today, while I don’t anticipate spending too much  more and definitely don’t want to chase anything down, there’s still some chance of finding an isolated opportunity, ideally one that is also dividend related. Those are fairly sparse this week, but may have some  opportunities next week, including some going ex-dividend on Monday, which can be an easy way to pick up an additional week’s worth of premium for a very short holding period if all goes as hoped.

Well see.