Category Archives: Daily Market Update

Daily Market Update – September 2, 2014 (Close)

The big story this morning was that the traders are back now that Labor Day has come and gone.

It’s really not as if anyone went away for the summer, it’s just that they had other things to do besides trading all day long. Market volume was abysmally low during the climb higher and the only really elevation in trading activity came during the very brief decline earlier in the summer.

But this week people start coming back and volume should also be increasing, as if they had absolutely no ability to conduct business from the Hamptons.

For a little while today it seemed as if they were coming back with a chip on their shoulders, as the market took a brief turn downward in the absence of any real catalyst.

Fortunately there was nothing on a geo-political front occurring during this past long holiday weekend to really shake things up, because that could have been a messy way to get a shortened week off to a start. As a result the market looked as if it would get off to a really benign start and with very little scheduled news during the week to create expectations for market reactions in either direction. Why the market took a brief turn downward is anyone’s guess, but despite the comeback it was a fairly dour kind of day.

Although there is the monthly Employment Situation Report on Friday and a number of Federal Reserve Governors will be speaking during the week, including the one most recent dissenting voter, there’s not likely to be much in the way of surprise coming from these scheduled events, although there may be some news coming later in the week from the ECB, particularly regarding their version of qualitative easing and how firmly they may be ready to adopt such policies.

Until that point that, again, puts the spotlight on geo-political events and that could also take markets in either direction, although with the NATO meeting this week it’s hard to see how anything could move the markets higher as a result of those events, unless an acquiescent Putin is the end result. However, if the market has any ability to draw upon its recent past, it will realize that the appearance of any kind of acquiescence or agreeability is just a precursor to another bit of disagreeable action.

But what are you going to do? Wait until something happens? That’s actually not a bad idea, except to predicate everything on waiting is probably not a good way to go, but keeping something back for any kind of surprise isn’t necessarily a bad strategy.

Recycling money from assignments is an intermediate approach to dealing with uncertainty. It’s not really committing new money and it doesn’t have to include all of the recently freed up cash, although it easily could and even more.

As usual, when I have funds from assignments looking to be recycled I like to see the market get off to a weak start for the week, but lately that hasn’t been the case, as August had a four week winning streak, with each week getting off to a good start, so I’m not likely to recycle all of it this week.

However, with only a single position set to expire this week that meant that there is littl
e to be rolled over into next week, which itself has a mere three positions set to expire. That further meant I needed to populate this week’s list of income producing stocks and either create the possibility of freeing up cash for next week or at least creating additional income streams from the rollover of any new positions. As a result I found myself looking for new positions with expirations coming this week rather than thinking about the use of expanded options or the monthly. While I would have liked to focus on dividend paying positions, there aren’t too many worthy ones this week that could be of any use.

With the market appearing to get off to a very flat start there wasn’t much reason to aggressively get into the hunt. Instead, as has been the recent pattern, I expected to wait to see if there was any kind of direction to be established. The downside to that waiting, however, was that premiums were already extremely low thanks to the non-existent volatility and are further driven to their depths by having lost one day of time value with the holiday passed.

As far as a constellation of factors goes, those forming this week aren’t very propitious.

The market is at all time highs,  premiums are at all time lows and we are being held hostage by events external to the market in far off lands.

Not my favorite way to get a week off to a start, but somehow it usually works out anyway.

Admittedly, I was surprised by having opened as many new positions as I did. They may represent the totality of this week’s new position activity, but at least it gives some framework for the rest of the week and perhaps next week as well.

After getting off to a reasonable start for the week I would be very happy to see it gain some strength moving toward the week’s end and the Employment Situation Report. Any opportunity to put some cover on existing positions would be a nice way to mix things up a bit while awaiting some clarity regarding what kind of liabilities await us on the various risk fronts, both inside and outside of the market.

Daily Market Update – September 2, 2014 (8:30 AM)

The big story this morning is that the traders are back now that Labor Day has come and gone.

It’s really not as if anyone went away for the summer, it’s just that they had other things to do besides trading all day long. Market volume was abysmally low during the climb higher and the only really elevation in trading activity came during the very brief decline earlier in the summer.

But this week people start coming back and volume should also be increasing, as if they had absolutely no ability to conduct business from the Hamptons.

Fortunately there was nothing on a geo-political front occurring during this past long holiday weekend to shake things up, because that could have been a messy way to get a shortened week off to a start. As a result the market looks as if it will get off to a really benign start and there’s very little scheduled news during the week to create expectations for market reactions in either direction..

Although there is the monthly Employment Situation Report on Friday and a number of Federal Reserve Governors will be speaking during the week, including the one most recent dissenting voter, there’s not likely to be much in the way of surprise coming from these scheduled events.

That, again, puts the spotlight on geo-political events and that could also take markets in either direction, although with the NATO meeting this week it’s hard to see how anything could move the markets higher as a result of those events, unless an acquiescent Putin is the end result. However, if the market has any ability to draw upon its recent past, it will realize that the appearance of any kind of acquiescence or agreeability is just a precursor to another bit of disagreeable action.

But what are you going to do? Wait until something happens? That’s actually not a bad idea, except to predicate everything on waiting is probably not a good way to go, but keeping something back for any kind of surprise isn’t necessarily a bad strategy.

Recycling money from assignments is an intermediate approach to dealing with uncertainty. It’s not really committing new money and it doesn’t have to include all of the recently freed up cash, although it easily could and even more.

As usual, when I have funds from assignments looking to be recycled I like to see the market get off to a weak start for the week, but lately that hasn’t been the case, as August had a four week winning streak, with each week getting off to a good start, so I’m not likely to recycle all of it this week.

However, with only a single position set to expire this week that means that there is little to be rolled over into next week, which itself has a mere three positions set to expire. That means I do need to populate this week’s list of income producing stocks and either create the possibility of freeing up cash for next week or at least creating additional income streams from the rollover of any new positions. As a result I’ll probably be looking for new positions with expirations coming this week rather than thinking about the use of expanded options or the monthly. While I would have liked to focus on dividend paying positions, there aren’t too many worthy ones this week that could be of any use.

With the market appearing to get off to a very flat start there’s not much reason to aggressively get into the hunt. Instead, as has been the recent pattern, I’ll wait to see if there is any kind of direction to be established. The downside to waiting, however, is that premiums are already extremely low thanks to the non-existent volatility and are further driven to their depths by having lost one day of time value with the holiday passed.

As far as a constellation of factors goes, those forming this week aren’t very propitious.

The market is at all time highs,  premiums are at all time lows and we are being held hostage by events external to the market in far off lands.

Not my favorite way to get a week off to a start, but somehow it usually works out anyway.

Daily Market Update – August 29, 2014 (8:30 AM)

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

Today’s possible outcomes or trades, include:

Assignments: C

Rollovers:  HAL, TMUS, WFM

Expirations: ANF (put), BBY (put), CHK,

The following positions were ex-dividend this week: HAL, HFC (special), HFC, K, LO, and SBGI

The following positions are ex-dividend next week COH (9/5), MOS (9/2)

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

Daily Market Update – August 28, 2014 (Close)

While the market will be closed this coming Monday in celebration of Labor Day, there was a nearly 20 minute period of time yesterday when the S&P 500 stayed in a 0.10 range. You would have been excused for believing that the Labor Day holiday had already arrived.  I actually rebooted my computer twice, because I thought the program had frozen.

Still the S&P 500 was able to set another new record, using every bit of the 0.10 point trading range to close precisely that amount higher.

This morning gave initial appearances of taking a break from the past three weeks of recovery from the transient decline that had everyone preparing for Armageddon and introducing the word “volatility” into their lexicons.

With the release of GDP statistics and Jobless claims a little later in the morning the futures had not changed very much. They continued to point to a lower open, despite some improvement in the GDP, after a couple of very disappointing reports earlier in the year.

With economic news not being much of a factor lately, the only real thing that the market has responded to has been geo-political news and in the past week it seems to have turned a blind eye to events, or at least their reporting, perhaps after having learned from a series of reactions and over-reactions.

Somewhat amazingly the market hasn’t seemed to care about the vary same kind of news that had so consistently upended it in recent weeks, even when there appears to be independent corroboration, thereby elevating the state from that of rumor.. Despite some dour news in the Ukraine – Russia conflict, there appears to be no real reaction, with an apparent expectation that everyone will come out singing praises of peace.

I don’t know how realistic that image is, but as summer ebbs and a Russian winter looms there is certainly bound to be a different kind of offensive that will tax everyone’s credulity regarding Russian intentions and that can only further depress European economies.

On a positive note that could see a shift into US equities, but that’s all in the future and lately the market seems to have stopped discounting the future as it used to do back in the old days.

Other than a shift of money, either from Europe or from the mythical money that may be on the sidelines it’s hard to see what the catalyst will be for the next phase higher. Listening to those who continue to pound on the “historically low P/E multiple,” one has to wonder why they haven’t factored in EPS data that’s been elevated from widespread and aggressive buyback programs that have served to keep that multiple low.

With this week now having entered into that period that I usually start looking for rollover opportunities, but with relatively little to potentially roll over, and still having cash to spend, there is still a possibility of adding some new positions with either a very short term time frame or more likely, with expirations next week, which currently has only a single position set to expire. That was the situation behind today’s sale of Abercrombie and Fitch puts after earnings were released.

Since next week is already a shortened one who knows what opportunities will pop up and just how puny the premiums might be unless those opportunities happen very early in what’s left of the week. So with that in mind, I would like to see that kind of opportunity present itself as this week hasn’t had too much in the way of option income generating activity, although there have been more than the usual number of dividend payers.

The latter, however, doesn’t really count until those funds actually get deposited. For now, they’re only deductions from net asset value, but during a phase of very low option premiums they are more important than ever in trying to develop a predictable stream of income from existing or new assets, as long as their value gets recovered by shares over a short time frame.

Daily Market Update – August 28, 2014 (9:00 AM)

While the market will be closed this coming Monday in celebration of Labor Day, there was a nearly 20 minute period of time yesterday when the S&P 500 stayed in a 0.10 range. You would have been excused for believing that the Labor Day holiday had already arrived.  I actually rebooted my computer twice, because I thought the program had frozen.

Still the S&P 500 was able to set another new record, using every bit of the 0.10 point trading range to close precisely that amount higher.

This morning is giving initial appearances of taking a break from the past three weeks of recovery from the transient decline that had everyone preparing for Armageddon and introducing the word “volatility” into their lexicons.

With the release of GDP statistics and Jobless claims a little later in the morning the futures had not changed very much. They continued to point to a lower open, despite some improvement in the GDP, after a couple of very disappointing reports earlier in the year.

With economic news not being much of a factor lately, the only real thing that the market has responded to has been geo-political news and in the past week it seems to have turned a blind eye to events, or at least their reporting, perhaps after having learned from a series of reactions and over-reactions.

Somewhat amazingly the market hasn’t seemed to care about the vary same kind of news that had so consistently upended it in recent weeks, even when there appears to be independent corroboration, thereby elevating the state from that of rumor.. Despite some dour news in the Ukraine – Russia conflict, there appears to be no real reaction, with an apparent expectation that everyone will come out singing praises of peace.

I don’t know how realistic that image is, but as summer ebbs and a Russian winter looms there is certainly bound to be a different kind of offensive that will tax everyone’s credulity regarding Russian intentions and that can only further depress European economies.

On a positive note that could see a shift into US equities, but that’s all in the future and lately the market seems to have stopped discounting the future as it used to do back in the old days.

With this week now having entered into that period that I usually start looking for rollover opportunities, but with relatively little to potentially roll over, and still having cash to spend, there is still a possibility of adding some new positions with either a very short term time frame or more likely, with expirations next week, which currently has only a single position set to expire.

Since next week is already a shortened one who knows what opportunities will pop up and just how puny the premiums might be unless those opportunities happen very early in what’s left of the week. So with that in mind, I would like to see that kind of opportunity present itself as this week hasn’t had too much in the way of option income generating activity, although there have been more than the usual number of dividend payers.

The latter, however, doesn’t really count until those funds actually get deposited. For now, they’re only deductions from net asset value, but during a phase of very low option premiums they are more important than ever in trying to develop a predictable stream of income from existing or new assets, as long as their value gets recovered by shares over a short time frame.