Category Archives: Daily Market Update

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Daily Market Update – February 5, 2014 (Close)

This morning the ADP Employment numbers were released.

Ever since they started doing so there’s been lots of disagreement over how accurately ADP’s numbers parallel the government’s Non-farm Payroll statistics that come out two days later. Regardless of the validity of the ADP Report it still has the capability of moving markets.

After last month’s disappointing official numbers the ADP number was pretty much on target for expectations but the market showed some mild disappointment in the pre-open trading, however, it got over that disappointment very quickly.

At this point we’ll have to wait until Friday to have it settled and to see how the market reacts.

About 2 weeks ago I collected some data looking at the relationship, if any, between the Employment Situation Report and market performance. Watching the release of that most recent report and seeing the market react to very disappointing numbers by pushing the market higher got me thinking that it seemed as if the market always went higher with the announcement of those official numbers.

Who knew that in the comfort of my retirement I would actually once again find myself running t-tests?

Looking at 3 years of statistics there was no association between the reporting of data, regardless of its content and how the market did, neither in the week leading up to the report nor the week following. Neither did the day before the report release have any predictive value.

That is unless you looked at the past 18 months.

During that time period there was a statistically significant likelihood that on the week preceding the report and the day preceding the report that the market would move higher.

For those interested in such things the chance that the market went randomly higher on the day of the Employment Situation Report release was less than 4% and less than 2% when considering the prior week.

While that seemed compelling, as with all statistics it helps to look beyond the numbers and try to have an understanding of possible confounders or environmental factors that may have played a role.

Perhaps coincidentally the past 18 months reflected the beginning of the third and final phase of Quantitative Easing.

Because of that possibility I wasn’t terribly excited about being further long the market in anticipation of an additional Employment Situation Report fueled run higher, considering that there appears to also be an association between the announcement of the taper and the market’s fortunes.

In hindsight, starting the week with a 325 point loss seemed to indicate that playing the market for Friday’s report wouldn’t have been a very good idea.

However, about half of the weekly gains seen in Employment Situation Weeks came on the day of the report, suggesting that there might be some advantage to adding long positions prior to Thursday’s close.

While I generally don’t consider index ETF trading, I may look at the possibility of purchasing some SPDR S&P 500 Trust shares with the anticipation of closing the position at the end of Friday’s trading by selling slightly out of the money call options on the position, as premiums are beginning to reflect increasing volatility.

Otherwise, I’m expecting little activity for the remainder of the week, while remaining hopeful that the market shows some stability and even strength as the week comes to a close, as it would be nice to get back to seeing assignments and rollovers just like the old days.

Today was just that kind of day as the market traded in a tight range, something that it had done for most of 2013, but very little of 2014, thus far.

A little telling is that even with today’s very muted action the short term volatility continues to rise and is nearing the October high, which itself was a low high as far as highs go. So the market is still nervous and waiting for any kind of meaningful and sustained move, regardless of direction.

For my part, I hope that this Friday’s performance breaks that recent pattern of downward moving weekly closes and I wouldn’t mind seeing the market take a little r
est at this level, particularly if volatility can stay here or even move a little higher.

There’s nothing wrong with wishing for the best of all worlds. We’ve had it before, why not again?

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 4, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 5, 2014 (9:30 AM)

This morning the ADP Employment numbers were released.

Ever since they started doing so there’s been lots of disagreement over how accurately ADP’s numbers parallel the government’s Non-farm Payroll statistics that come out two days later. Regardless of the validity of the ADP Report it still has the capability of moving markets.

After last month’s disappointing official numbers the ADP number was pretty much on target for expectations but the market showed some mild disappointment in the pre-open trading, however, it got over that disappointment very quickly.

At this point we’ll have to wait until Friday to have it settled and to see how the market reacts.

About 2 weeks ago I collected some data looking at the relationship, if any, between the Employment Situation Report and market performance. Watching the release of that most recent report and seeing the market react to very disappointing numbers by pushing the market higher got me thinking that it seemed as if the market always went higher with the announcement of those official numbers.

Who knew that in the comfort of my retirement I would actually once again find myself running t-tests?

Looking at 3 years of statistics there was no association between the reporting of data, regardless of its content and how the market did, neither in the week leading up to the report nor the week following. Neither did the day before the report release have any predictive value.

That is unless you looked at the past 18 months.

During that time period there was a statistically significant likelihood that on the week preceding the report and the day preceding the report that the market would move higher.

For those interested in such things the chance that the market went randomly higher on the day of the Employment Situation Report release was less than 4% and less than 2% when considering the prior week.

While that seemed compelling, as with all statistics it helps to look beyond the numbers and try to have an understanding of possible confounders or environmental factors that may have played a role.

Perhaps coincidentally the past 18 months reflected the beginning of the third and final phase of Quantitative Easing.

Because of that possibility I wasn’t terribly excited about being further long the market in anticipation of an additional Employment Situation Report fueled run higher, considering that there appears to also be an association between the announcement of the taper and the market’s fortunes.

In hindsight, starting the week with a 325 point loss seemed to indicate that playing the market for Friday’s report wouldn’t have been a very good idea.

However, about half of the weekly gains seen in Employment Situation Weeks came on the day of the report, suggesting that there might be some advantage to adding long positions prior to Thursday’s close.

While I generally don’t consider index ETF trading, I may look at the possibility of purchasing some SPDR S&P 500 Trust shares with the anticipation of closing the position at the end of Friday’s trading by selling slightly out of the money call options on the position, as premiums are beginning to reflect increasing volatility.

Otherwise, I’m expecting little activity for the remainder of the week, while remaining hopeful that the market shows some stability and even strength as the week comes to a close, as it would be nice to get back to seeing assignments and rollovers just like the old days.

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 4, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 4, 2014 (Close)

A couple of years ago the last time we really had a market that was going through some corrections the United States stock markets were in an unusual position.

Rather than leading the world we were being wagged and our markets were following in response to European and Asian markets that were struggling with their own issues, particularly currency and monetary policy related.

We’re not used to following.

In addition to those kinds of woes the United States markets have continually fallen under the pressures of the Chinese markets, especially when it appeared as if the data was truthful.

Over the past 18 months or so the US markets have not been held hostage by events in other markets, although Chinese economic news has still been impactful.

Yesterday, however, there was some widespread belief that our own markets, which were already teetering a little, were sent over the cliff as the Nikkei and Russian stock markets gave the push, as they officially entered correction territory.

With the Nikkei dropping another 4% in its trading overnight it’s comforting to see that our own markets are resisting, thus far, following that path lower.

The word this morning was that the start to February was the worst seen since 1982. For his part, Peyton Manning says he’s seen worse starts, but for those that remember, 1982 was the beginning of the re-awakening of the stock market and the beginning of a 5 year bull market, until shortly after Alan Greenspan became Chairman of the Federal Reserve.

If that’s what it takes to ignite a fire I’m all for it. Besides you really don’t appreciate the heights until you’ve seen the depths.

The market crash in 1987 came just 2 months after Greenspan took office. The market decline in 2007 started almost 2 years after Bernanke took office. On the other hand, Janet Yellen’s first day was greeted with a 325 point loss, but today looks to be more hospitable.

For those that were daring and made some of the new trades yesterday, i don’t think there will be many more this week, although I’m not closed to the idea, but am not drinking any Kool-Ade if the market enjoys some kind of substantive bounce back.

Before making too much of an additional commitment I want to have some level of comfort that I’ll be seeing some assignments this week, but as we’ve seen the past few weeks it doesn’t take much to change everything. One day will do it, especially if it’s a Friday and the clock runs out on you.

After yesterday’s fall there’s a lot of ground that needs to be recovered, but at least we do have a few days to do so, although Friday’s Employment Situation Report brings a new challenge.

In the meantime it’s time for all of those who have been saying that they would be buyers on any dips to come and put their money where their mouths are. Instead many are seemingly busy either re-writing their personal history or patting themselves on the back for having predicted a correction consistently over the course of the past year.

Like me.

At least I did my part and opened some new positions.

As the market came to a close it didn’t come even close to erasing yesterday’s loss. However, on a very positive note despite several attempts to pare back the gains today the market fought back, even though the opposition may have been taking a rest after all of its efforts yesterday. Most impressive was that it did so one last time during the final hour of trading.

During the course of the day there were a number of trades that I had entered, including new positions in Intel, International Paper and Eli Lilly, but then canceled the orders, as I still had some doubts about today’s initial reaction to the stresses in the market and also mindful of the potential stress to come on Friday with the Employment Situation Report.

I’d love to see tomorrow be another day like much of today even if only to have opportunity to pick up cover for some positions, as nothing beats selling calls into price strength. Hopefully, the Nikkei futures which are spiking 3% higher as our own markets come to a close will provide some leadership for us tomorrow.

Sometimes it’s nice to be wagged for a change.

  Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of February 4, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – February 4, 2014 (9:30 AM)

A couple of years ago the last time we really had a market that was going through some corrections the United States stock markets were in an unusual position.

Rather than leading the world we were being wagged and our markets were following in response to European and Asian markets that were struggling with their own issues, particularly currency and monetary policy related.

We’re not used to following.

In addition to those kinds of woes the United States markets have continually fallen under the pressures of the Chinese markets, especially when it appeared as if the data was truthful.

Over the past 18 months or so the US markets have not been held hostage by events in other markets, although Chinese economic news has still been impactful.

Yesterday, however, there was some widespread belief that our own markets, which were already teetering a little, were sent over the cliff as the Nikkei and Russian stock markets gave the push, as they officially entered correction territory.

With the Nikkei dropping another 4% in its trading overnight it’s comforting to see that our own markets are resisting, thus far, following that path lower.

The word this morning was that the start to February was the worst seen since 1982. For his part, Peyton Manning says he’s seen worse starts, but for those that remember, 1982 was the beginning of the re-awakening of the stock market and the beginning of a 5 year bull market, until shortly after Alan Greenspan became Chairman of the Federal Reserve.

If that’s what it takes to ignite a fire I’m all for it. Besides you really don’t appreciate the heights until you’ve seen the depths.

The market crash in 1987 came just 2 months after Greenspan took office. The market decline in 2007 started almost 2 years after Bernanke took office. On the other hand, Janet Yellen’s first day was greeted with a 325 point loss, but today looks to be more hospitable.

For those that were daring and made some of the new trades yesterday, i don’t think there will be many more this week, although I’m not closed to the idea, but am not drinking any Kool-Ade if the market enjoys some kind of substantive bounce back.

Before making too much of an additional commitment I want to have some level of comfort that I’ll be seeing some assignments this week, but as we’ve seen the past few weeks it doesn’t take much to change everything. One day will do it, especially if it’s a Friday and the clock runs out on you.

After yesterday’s fall there’s a lot of ground that needs to be recovered, but at least we do have a few days to do so, although Friday’s Employment Situation Report brings a new challenge.

In the meantime it’s time for all of those who have been saying that they would be buyers on any dips to come and put their money where their mouths are. Instead many are seemingly busy either re-writing their personal history or patting themselves on the back for having predicted a correction consistently over the course of the past year.

Like me.

At least I did my part and opened some new positions

.

  Access prior Daily Market Updates by clicking here

 
OTP Sector Distribution* as of February 3, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle