Category Archives: Daily Market Update

Daily Market Update – February 25, 2016 (Close)

Yesterday’s turnaround was great, but it was also disturbing and today’s was also great and also disturbing.

But great, too.

It was just more of the stock market blindly following oil.

As oil was sharply lower yesterday morning, so, too, was the stock market. It was threatening to make it 300 points lower at one point in the late morning.

But when oil moved higher, the stock market reversed course and recovered all of that loss and more.

So that wasn’t so good unless you care about your bottom line, so I guess I won’t complain.

Today was more of the same, except that the market was never really down much on the day, but when oil bounced back from being 2% lower, only to see it end 3% higher, stocks followed suit.

If you’re keeping track, it was just another one of those 200 point gain days.

But what left me even more confused as this morning was about to begin was that as a double blow was facing the stock market’s futures traders as Shanghai was about 7% lower and oil was again lower, stocks were basically unchanged, maybe even a bit higher in the early part of futures trading.

With hints that there could finally be a disassociation between stocks and oil then becoming false within a day, it’s hard to have any idea of what any of these things mean.

Things mean even less now,

Tomorrow, with the GDP Report being released, another factor can possibly get thrown into the equation to either soothe, confuse or frighten.

That factor is going to be interest rates.

If the GDP seems to show that the consumer is awakening, when coupled with last week’s CPI, there could be reason for another small interest rate increase when the FOMC meets in a few weeks.

If the initial response to that idea is fear, I don’t think I want to be watching things if, coincidentally oil and Shanghai again decide to go much lower in tandem tomorrow.

With the large loss on Tuesday and the reversal yesterday, I just would be very happy to see some of the confusion take a rest and see some of that consolidation, even if only for a few days or even if only lasting a week.

A little of that consolidation, while volatility induced premiums are still at decent levels, would make it much easier to invest parked cash on a short term basis.

With nothing to expire this week and with no new positions opened, while I do want to see that stability, at the moment I wouldn’t mind some more unbridled and unjustified enthusiasm, though.

I don’t mind seeing the bottom line increase, but would be much happier if that increase also brought some trades along with it to create a cushion, ideally an additive one, to whatever the broader market is doing.

So far this week has a nice cushion already, but I would love to get that cushion even bigger and really back on track to more consistently have relative out-performance, but it generally takes trading to do so and not passivity.

Today saw no consolidation, but at least there was that solitary opportunity to sell some calls and maybe more to come if the market keeps acting irrationally.

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Daily Market Update – February 25, 2016 7:30 AM)

Yesterday’s turnaround was great, but it was also disturbing.

It was just more of the stock market blindly following oil.

As oil was sharply lower in the morning, so, too, was the stock market. It was threatening to make it 300 points lower at one point in the late morning.

But when oil moved higher, the stock market reversed course and recovered all of that loss and more.

So that wasn’t so good unless you care about your bottom line, so I guess I won’t complain.

But that now leaves us even more confused this morning as a double blow is facing the stock market’s futures traders as Shanghai was about 7% lower and oil is again lower this morning and stocks are basically unchanged, maybe even a bit higher in the early part of futures trading.

With hints that there could finally be a disssociation between stocks and oil then becoming false within a day, it’s hard to have any idea of what any of these things mean.

Tomorrow, with the GDP Report being released, another factor can possibly get thrown into the equation to either soothe, confuse or frighten.

That factor is going to be interest rates.

If the GDP seems to show that the consumer is awakening, when coupled with last week’s CPI, there could be reason for another small interest rate increase when the FOMC meets in a few weeks.

If the initial response to that idea is fear, I don’t think I want to be watching things if, coincidentally oil and Shanghai again decide to go much lower in tandem tomorrow.

With the large loss on Tuesday and the reversal yesterday, I just would be very happy to see some of the confusion take a rest and see some of that consolidation, even if only for a few days or even if only lasting a week.

A little of that consolidation, while volatility induced premiums are still at decent levels, would make it much easier to invest parked cash on a short term basis.

With nothing to expire this week and with no new positions opened, while I do want to see that stability, at the moment I wouldn’t mind some more unbridled and unjustified enthusiasm, though.

I don’t mind seeing the bottom line increase, but would be much happier if that increase also brought some trades along with it to create a cushion, ideally an additive one, to whatever the broader market is doing.

So far this week has a nice cushion already, but I would love to get that cushion even bigger and really back on track to more consistently have relative out-performance, but it generally takes trading to do so and not passivity.

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Daily Market Update – February 24, 2016 (Close)

Everyone knows that at some point things are going to change.

Ar some point oil is going to start moving consistently higher.

Also, at some point, the market will stop following oil.

At least it will stop following in the same direction.

The questions are when all of this happens and particularly when does the stock  disassociate itself from its direct relationship to oil?

Hopefully, the answer to that last question is that the stock market makes that disassociation fairly late after oil has started its reversal.

For all anyone knows, today may have marked the reversal in oil as oil reversed its sharp decline and itself closed higher on the day and the market did precisely the same in very impressive fashion.

But if the stock market comes to the realization that an increase in the price of oil is bad for growing consumer participation then we end up with the worst of all worlds.

That would mean that the market followed oil lower and at some point started going lower as oil went higher.

This morning, though, it looked as if the world that we’ve come to know was still intact.

Just as yesterday oil futures carried the market sharply lower, this morning oil futures were again carrying the market sharply lower.

If the early futures trading in oil had held, it would have marked a 2 day decline of nearly 10%. Fortunately, while oil and stocks have been traveling in the same direction for far too long, the magnitudes haven’t been in a one to one relationship.

That mid-day reversal helped both oil and stocks a lot.

After today it looks even more as if this week is going to end up being a very, very quiet one.

Hopes that I had on Monday of being able to sell some calls this week on uncovered positions are getting less and less likely of becoming reality, although the action this afternoon still gives some hope.

But with a little bit of cash in hand, I still don’t feel compelled to put it to work in what appear to be bargains.

At least not until there’s real reason to believe that those bargains are going to be transitory.

The previous week’s worth of gains has by far been the best for the past 3 months, but even weekly options couldn’t have withstood the pressures of the market’s need to return those mid-week gains.

So, for now, it’s more sitting and waiting for some evidence that there is a reason to feel some sense of optimism.

There don’t appear to be any catalysts awaiting, but we also need to get rid of some over hangs, like the fear of another interest rate increase.

Maybe Friday’s GDP release will help us move on.

But I doubt that will be the case so quickly.

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Daily Market Update – February 24, 2016 (7:30 AM)

Everyone knows that at some point things are going to change.

Ar some point oil is going to start moving consistently higher.

Also, at some point, the market will stop following oil.

At least it will stop following in the same direction.

The questions are when all of this happens and particularly when does the stock  disassociate itself from its direct relationship to oil?

Hopefully, the answer to that last question is that the stock market makes that disassociation fairly late after oil has started its reversal.

If the stock market comes to the realization that an increase in the price of oil is bad for growing consumer participation then we end up with the worst of all worlds.

That would mean that the market followed oil lower and at some point started going lower as oil went higher.

This morning, though, it looks as if the world that we’ve come to know is still intact.

Just as yesterday oil futures carried the market sharply lower, this morning oil futures are again carrying the market sharply lower.

If the early futures trading in oil holds, it would mark a 2 day decline of nearly 10%. Fortunately, while oil and stocks have been traveling in the same direction for far too long, the magnitudes haven’t been in a one to one relationship.

It looks as if this week is going to end up being a very, very quiet one.

Hopes that I had on Monday of being able to sell some calls this week on uncovered positions are getting less and less likely of becoming reality.

With a little bit of cash in hand, I still don’t feel compelled to put it to work in what appear to be bargains.

At least not until there’s real reason to believe that those bargains are going to be transitory.

The previous week’s worth of gains has by far been the best for the past 3 months, but even weekly options couldn’t have withstood the pressures of the market’s need to return those mid-week gains.

So, for now, it’s more sitting and waiting for some evidence that there is a reason to feel some sense of optimism.

There don’t appear to be any catalysts awaiting, but we also need to get rid of some over hangs, like the fear of another interest rate increase.

Maybe Friday’s GDP release will help us move on.

But I doubt that will be the case so quickly.

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Daily Market Update – February 23, 2016 (Close)

Yesterday was just like almost all of the rest of the days in 2016 and for many in 2015, too.

Oil went higher.

So stocks went higher.

Why oil went higher is anyone’s guess, as it was actually more than 7% higher at one point yesterday, with absolutely no change in anything in the supply – demand part of the equation.

While precious metals were lower yesterday, there was also a rebound in commodity prices, very notably in copper.

Those commodity price increases, if sustained, could be a big part of a justification to institute another interest rate increase.

Commodity cycles are often where it all begins, but there also has to be consumer demand and consumer ability to actually pay for the things that they demand.

With wages moving higher and unemployment falling and rents rising, you can see a scenario where demand for homes increases and basic building commodities follow.

Ordinarily the stock market would pounce on that kind of early news of an economy heating up, but recent past history says otherwise.

Maybe Friday’s GDP report will shed some light on what the consumer is demanding and paying for.

This morning the market looked as if it is going to give back some of yesterday’s gains, but again, 2 steps back for every 3 forward isn’t a bad way to get up the mountain.

That was the formula used last week and it wouldn’t be a bad idea to do the same this week if the summit is the goal.

While I’m not eager to trade when the market is showing a real move higher and prefer to do so on down days, I wouldn’t mind of few days of consolidation as an alternative and would make trades if some of the recent gains can be digested.

The fact that prices aren’t at the same bargain level that they were at a week ago doesn’t necessarily mean that they still aren’t at bargain levels, but a small sale would still be welcome or at least a slow down in the price increase.

Of course, today wasn’t really a small sale, but the market never had a chance.

Oil fell and the market fell.

It was that simple.

With that in mind, I don’t think that I’ll be doing much tomorrow, either, but I still wouldn’t have minded seeing some of yesterday’s big winners added to some of those gains, just to get a better opportunity to sell some calls on uncovered positions.

There were a number of trades that i was trying or at least hoping to make yesterday, but today wasn’t going to be the day, either.

Maybe tomorrow can become that day?

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