Category Archives: Daily Market Update

Daily Market Update – June 13, 2014 (9:00 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:  none

Rollovers:  GME

Expirations:   EBAY, EBAY, HFC, PFE

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

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Daily Market Update – June 12, 2014 (Close)

After a rare triple digit loss and no new record being set, the morning’s market doesn’t appear to be quite ready to follow through with more of the same. It doesn’t really appear to be ready to do much of anything, actually.

There still remains no identifiable catalyst to move the market in either direction and if yesterday’s thesis was correct, that Eric Cantor’s primary election loss was the culprit for the market decline, there’s no real reason for continuing pessimism. Those kind of stories don’t usually have much in the way of lasting power, even if they were accurate in the first place.

On the other hand, it’s the unforeseen that really shake things up and today, the most likely culprit for the market ringing up another triple digit loss is the rapidity of the deterioration in Iraq.

When oil and precious metals start to look appealing that’s not the best of environments of stocks.

While the market has been by and large unexciting and moving in smallish kind of steps, the same can’t be said for individual stocks, especially when earnings are in focus.

Today it’s LuLuLemon.

It started yesterday when its founder, who arguably started a slide in shares months ago when he made comments that were very disparaging of potential and actual customers, decided to pull his support of the current Chairman of the Board, saying that his interests weren’t aligned with the “core values” of the company.

Every time Chip Wilson, the founder, seems to open his mouth, if you’re a shareholder you feel as if your core values were violated.

Yesterday was no different, and came one day before earnings were to be released.

The Board expressed their disagreement with the founder and stemmed yesterday’s loss, but this morning’s diminished guidance is punishing shares and adding to their already depressed levels.

This, without the added drama of an errant founder, has been the story of many stocks the past few earnings seasons.

Despite a market that has been climbing higher many stocks are left behind or sent into tailspins and are taking longer to recover than ever before. as the market moves higher it does so on the backs of stocks rotating in and out of favor rather than pulling most along higher to varying degrees.

While there may be something unhealthy at LuLuLemon a market not trickling down to its component members is also something that may not be as robust as it seem
s.

While the volatility continues to be interpreted as reflecting investor “complacency,” I think that it’s hard to accept that interpretation. Very few are taking anything for granted which is unlike other periods when markets were making new highs. There is much more nervousness than is being acknowledged and that has to include the professional investor community which is reportedly under-performing the broad market.

In the case of hedge fund managers they are lifting some of their traditional hedging techniques in efforts to catch up to the market, while at the same time increasing their exposure to adverse events by having done so.

That should give them plenty of reason to be nervous.

While those make me wary, it doesn’t make me overly nervous.

The lack of enthusiasm for this market has to be taken as some sort of positive sign, but it is still very difficult to justify committing all to the prospect of the crowd being wrong. The way today worked out it may be even more difficult making that commitment, but as is usually the case suddenly some positions start to look more appealing.

Does the situation in Iraq really make Lowes and MasterCard less desirable?

For now, there’s little reason to make a directional bet and little basis for the belief that there will be any kind of clear directional path.

At the moment I’m not willing to bet much new money and may even want to recycle less than the already low levels as assignments occur.

The next two days will be ones looking for the opportunities to rollover stocks, although there aren’t too many for this week and perhaps realize some assignments in preparation for next week’s monthly option cycle end.

Hopefully next Wednesday FOMC statement and ensuing press conference by Janet Yellen won’t disrupt prices too much and leave us in a good position to make some decisions for July 2014.

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Daily Market Update – June 12, 2014 (9:00 AM)

After a rare triple digit loss and no new record being set, the morning’s market doesn’t appear to be quite ready to follow through with more of the same. It doesn’t really appear to be ready to do much of anything, actually.

There still remains no identifible catalyst to move the market in either direction and if yesterday’s thesis was correct, that Eric Cantor’s primary election loss was the culprit for the market decline, there’s no real reason for continuing pessimism. Those kind of stories don’t usually have much in the way of lasting power, even if they were accurate in the first place.

While the market has been by and large unexciting and moving in smallish kind of steps, the same can’t be said for individual stocks, especially when earnings are in focus.

Today it’s LuLuLemon.

It started yesterday when its founder, who arguably started a slide in shares months ago when he made comments that were very disparaging of potential and actual customers, decided to pull his support of the current Chairman of the Board, saying that his interests weren’t aligned with the “core values” of the company.

Every time Chip WIlson, the founder, seems to open his mouth, if you’re a shareholder you feel as if your core values were violated.

Yesterday was no different, and came one day before earnings were to be released.

The Board expressed their disagreement with the founder and stemmed yesterday’s loss, but this morning’s diminished guidance is punishing shares and adding to their already depressed levels.

This, without the added drama of an errant founder, has been the story of many stocks the past few earnings seasons.

Despite a market that has been climbing higher many stocks are left behind or sent into tailspins and are taking longer to recover than ever before. as the market moves higher it does so on the backs of stocks rotating in and out of favor rather than pulling most along higher to varying degrees.

While there may be something unhealthy at LuLuLemon a market not trickling down to its component members is also something that may not be as robust as it seems.

While the volatility continues to be interpreted as reflecting investor “complacency,” I think that it’s hard to accept that interpretation. Very few are taking anything for granted which is unlike other periods when markets were making new highs. There is much more nervousness than is being acknowledged and that has to include the professional investor community which is reportedly under-performing the broad market.

In the case of hedge fund managers they are lifting some of their traditional hedging techniques in efforts to catch up to the market, while at the same time increasing their exposure to adverse events by having done so.

That should give them plenty of reason to be nervous.

While those make me wary, it doesn’t make me overly nervous.

The lack of enthusiasm for this market has to be taken as some sort of positive sign, but it is still very difficult to justify committing all to the prospect of the crowd being wrong.

For now, there’s little reason to make a directional bet and little basis for the belief that there will be any kind of clear directional path.

At the moment I’m not willing to bet much new money and may even want to recycle less than the already low levels as assignments occur.

The next two days will be ones looking for the opportunities to rollover stocks, although there aren’t too many for this week and perhaps realize some assignments in preparation for next week’s monthly option cycle end.

Hopefully next Wednesday FOMC statement and ensuing press conference by Janet Yellen won’t disrupt prices too much and leave us in a good position to make some decisions for July 2014.

.

Daily Market Update – June 11, 2014 (Close)

This morning’s pre-open trading brings something rarely seen lately.

The morning appeared to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels. It actually lasted that way, essentially unchanged from its initial near triple digit drop all throughout the day.

Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary.

That’s a stretch.

Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss.

That sounds reasonable. I’d follow their forecasting to the end of the world.

If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks.

For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets.

As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums.

While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume.

Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change.

Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may have potentially offered some reason to  add new positions, but today it didn’t offer that many reasons.

I wasn‘t really counting on it, so I’m not too disappointed that nothing much happened today.

I don’t know if  Eric Cantor can say the same.

Daily Market Update – June 11, 2014 (9:00 AM)

This morning’s pre-open trading brings something rarely seen lately.

The morning appears to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels.

Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary.

That’s a stretch.

Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss.

That sounds reasonable. I’d follow their forecasting to the end of the world.

If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks.

For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets.

As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums.

While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume.

Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change.

Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may offer some reason to  add new positions.

I’m not counting on it, but of Eric Cantor can lose, then anything may be possible.