Category Archives: Daily Market Update

Daily Market Update -January 20, 2016 (7:30 AM)

Yesterday was just another in a series of nothing but disappointments in 2016.

What looked like it might be a good gain for the day, with the market following oil decidedly higher, turned into wasting a 200 point gain as oil decided to turn lower.

While the DJIA closed up slightly higher, it was clear that it wasn’t done following the path of oil, which has had nothing to make anyone think that it was going to head higher anytime soon.

With Iranian oil now coming on line and no one looking as if they’re going to cut back on production, there is really going to be a glut of the stuff and no one’s economy is stepping in to use the cheap stuff as an excuse to ramp up anything.

This morning, as oil is again down sharply, it’s not too surprising that the market is continuing in the same path.

This morning, the futures are down nearly 300 points and just adding more misery to what 2016 has already been for most everyone.

Yesterday’s turnaround was pretty stunning. It’s getting hard to envision what, besides a sustained increase in the price of oil could lead to an equally sustained move higher in US stock markets.

With China still continuing to be a mess and with no one really knowing what the depth of that mess really is and with some of the belief that our own market could have another 10% downside ahead of it and could be a harbinger for some layoffs, you really have to wonder what the FOMC is thinking and what they will do, if anything.

While most came to the realization that having an interest rate increase would be a good thing, as it would have reflected the need to gently tap the brakes on a growing economy, now comes the realization that maybe the FOMC should have waited for some real tangible evidence of that growth.

With market psyches so fragile, it’s not to certain that they could then see an FOMC action to again reduce rates as anything but really bad news for the economy and therefore for company earnings and stock valuations.

Most people, even those who may be value hunters haven’t been biting at stocks at these lower price levels.

Yesterday was another good example of why it has been a mistake to do so as the market was headed higher. Those climbs have been very transitory for the past 2 months and have only led to more disappointment except for those who may have been very, very short term oriented,

The moves have been on a dime, as yesterday showed and even when thinking that a new position was in the clear, all it has taken is to turn away from the screen for a few minutes and to see that optimism get replaced by gloom.

That’s not a very healthy market and it seems so bizarre to want to see the price of oil climb higher and to want to see interest rates do the same.

When was the last time you lived in a world like that?

Daily Market Update -January 19, 2016 (Close)

A holiday shortened trading week was incredibly welcome this week after how the first two weeks of 2016 treated most everybody very shabbily..

As the third week gets set to begin trading we were greeted with another Chinese economic report that was met with lots of skepticism, as despite the obvious growth having had taken place in China, there may be figurative smoke to go along with all of the real smoke choking off the major cities.

But the real story was the sharply higher price of crude oil this morning. Then, the real story became the sharply lower price of crude later in the day.

Along with those bits of news were stocks going much higher in the morning and then losing it all by the close, as the strange alliance with oil continued.

Oil goes down and stocks go down. Oil goes higher and stocks go higher as people are left scratching their heads wondering why no one pays homage to the historical relationship.

S&P 500 futures were up very sharply this morning, but taken in context, the 250 or so point gain being seen in the DJIA is just about enough, if coupled with one of last week’s 250 point gains, to offset only one of the losses seen last week.

Of course, after today’s mere 28 points higher on the DJIA, we’re reminded that the S&P 500 futures had been trading up by more than that amount just hours earlier.

With the S&P 500 down about 8% in 11 trading days to start the week, it’s going to take quite a bit to begin to offset those losses and the promise of today’s early start was a broken one, at best.

With so many expirations last week that couldn’t get rolled over, I’m not terribly interested in looking for more places to park what little is sitting in the cash reserve. I would much rather look for any opportunity to find a call sale that could be made to generate the income that I want and need for the week..

In looking for those opportunities I would look to try and take advantage of any bump in volatility that we’ve had over the past 2 weeks and maybe even look at some longer term expirations.

The other factor that may get woven into the decision process is just where earnings are going to be reported. The earnings will also give a bump to premiums.

There isn’t too much in the way of economic reports this week nor in Federal Reserve Governors speaking, so it may again be a week dictated by oil and the occasional international surprise, such as has been the case for 2016, to date.

While some prices looked very appealing when the market closed on Friday, this morning’s attempt at a strong gain took away some of that appeal, but staying power hasn’t necessarily been a characteristic of the market over the past 2 months whenever it has put together a nice day, so it’s very unlikely that I would find myself biting at anything today. 

Turns out that was a good thing and even with the give back later in the day, there’s still not too much reason to think that bottom fishing is in order.

I otherwise expect this to be another quiet week of trading, but I’d be happy to see some of the reversal of fortunes, even at the expense of giving up on some of the volatility induced premiums.

Those premiums aren’t very helpful if the trades can’t be made.

Daily Market Update -January 19, 2016 (7:30 AM)

A holiday shortened trading week was incredibly welcome this week after how the first two weeks of 2016 treated most everybody very shabbily..

As the third week gets set to begin trading we were greeted with another Chinese economic report that was met with lots of skepticism, as despite the obvious growth having had taken place in China, there may be figurative smoke to go along with all of the real smoke choking off the major cities.

But the real story was the sharply higher price of crude oil this morning.

Along with it are going stocks in the early futures trading as they continue the strange alliance with oil.

Oil goes down and stocks go down. Oil goes higher and stocks go higher as people are left scratching their heads wondering why no one pays homage to the historical relationship.

S&P 500 futures were up very sharply this morning, but taken in context, the 250 or so point gain being seen in the DJIA is just about enough, if coupled with one of last week’s 250 point gains, to offset only one of the losses seen last week.

With the S&P 500 down about 8% in 10 trading days to start the week, it’s going to take quite a bit to begin to offset those losses.

With so many expirations last week that couldn’t get rolled over, I’m not terribly interested in looking for more places to park what little is sitting in the cash reserve. I would much rather look for any opportunity to find a call sale that could be made to generate the income that I want and need for the week..

In looking for those opportunities I would look to try and take advantage of any bump in volatility that we’ve had over the past 2 weeks and maybe even look at some longer term expirations.

The other factor that may get woven into the decision process is just where earnings are going to be reported. The earnings will also give a bump to premiums.

There isn’t too much in the way of economic reports this week nor in Federal Reserve Governors speaking, so it may again be a week dictated by oil and the occasional international surprise, such as has been the case for 2016, to date.

While some prices looked very appealing when the market closed on Friday, this morning’s attempt at a strong gain takes away some of that appeal, but staying power hasn’t necessarily been a characteristic of the market over the past 2 months whenever it has put together a nice day, so it’s very unlikely that I would find myself biting at anything today.

I otherwise expect this to be another quiet week of trading, but I’d be happy to see some of the reversal of fortunes, even at the expense of giving up on some of the volatility induced premiums.

Those premiums aren’t very helpful if the trades can’t be made.

Daily Market Update -January 15, 2016 (7:30 AM)

The Week in Review will be posted by 10 PM and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments:  TWTR (puts)

Rollovers:  none

Expirations: BAC, BBY, CSCO, CY, DOW, GM, HFC, INTC, WY

The following were ex-dividend this week:  WY (1/13 $0.135)

The following are ex-dividend next week:  none

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

Daily Market Update -January 14, 2016 (Close)

With people looking for something resembling a capitulation, yesterday wasn’t that day, despite a nearly 400 point loss.

Yesterday deteriorated quickly as oil continued its steep decline. Today, as oil rose, the market did just the opposite, moving sharply higher and also did it quickly

While there’s absolutely no reason to equate any part of that decline yesterday with an economic slowdown in the United States, it hasn’t mattered to investors, who are still struggling to understand this new paradigm,

Everyone has always understood that a portion of the S&P 500 would go lower as the energy sector was being hammered, but the traditional market has always looked at a weaker energy sector as being a big positive for the market, so long as weaker energy wasn’t related to weaker demand.

At least in the US demand isn’t weaker, but while we may still be the #1 economy in the world, our role is a smaller and smaller component of the pie.

Still, looking at worldwide economies and worldwide stock markets, historically, the US stock market would have been a place of refuge for overseas money at times like this and would have supported our own markets, even in the face of broader weakness.

None of those things is happening and 2016 just keeps getting worse and worse.

This morning’s futures weren’t showing any respite, but the first important S&P 500 company, JP Morgan reported earnings this morning and could be a key to giving investors a reason to consider buying, instead of what they’ve been doing all through the early days of 2016.

The financial sector, along with everything else took it on the chin yesterday, performing even worse than the S&P 500, which was down 2.5%.

JP Morgan’s earnings report this morning was a significant beat on the top and bottom lines, so there was some hope, but the broader market doesn’t necessarily follow the financial sector higher, although it does often follow it lower during earnings season.

Instead, it was all about oil and it didn’t hurt that Shanghai was nicely higher, too.

It’s hard to know whether traders are now going to be even more nervous as earnings are released, especially since the expectations have already been low, or whether they may see some value.

Much of that may depend on what the companies themselves see as their future, as they will start providing guidance.

It’s hard, though, to imagine any company giving anything resembling optimistic guidance, if only to protect themselves from even more disappointment when the April earnings season is getting ready to begin.

Seeing some of the losses being sustained by some of the most prominent hedge funds is an indication of just how unexpected some of the recent moves have been.

Whether its Bill Ackman or Carl Icahn, there have been some really high profile examples of mi-reading both the market and individual stocks, just like most everyone else.

In a small way, that’s encouraging, if only to think that a downward market is an equal opportunity offender and that the biggest of investors don’t always have the kind of advantage, that many think they unfairly possess.

I don’t really care about those things. I just want to have a chance to generate some income from my holdings and that is getting more difficult.

At some point, however, the volatility may start making it more reasonable to start again thinking about making some of those “DOH” call sales by using “Deep in the Hole” strike prices in an effort to start amassing some premium an
d chipping away at those mounting paper losses.