Category Archives: Daily Market Update

Daily Market Update -January 14, 2016 (7:30 AM)

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.

While there’s absolutely no reason to equate any part of that decline 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 aren’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’s some hope, but the broader market doesn’t necessarily follow the financial sector higher, although it does often follow it lower during earnings season.

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 and chipping away at those mounting paper losses.

Daily Market Update – January 13, 2016 (Close)

Yesterday looked like it might have ended up being just another in a series of disappointments that have so far characterized 2016.

The futures started strongly, then weakened, but then rebounded and the trading session got off to a strong start only to reverse course to a fairly large loss by the late morning,

The surprise is that with about 2 hours left to go in the trading session, the market turned around again.

It did so in a nice fashion, too.

While that happened twice last week, what didn’t happen was seeing any follow through on the following day and the week ended up with about a 6% loss to start the week.

Today, the early futures were actually showing a small gain.

It’s wasn’t much, but it was better than the alternative that we’ve come to know so far this year.

With some potential for nervousness over Iran’s capture of 2 small US Navy vessels and 10 US sailors yesterday, just days before about $100 Billion of their assets are unfrozen, there was certainly lots of potential for this morning to reflect lots of unease about what was going on in that part of the world.

Considering how 2016 has so far been almost exclusively shaped by international events, it definitely would not have been surprising to have seen fear and uncertainty showing up in the futures market this morning.

So far?

Nothing.

With 3 days left to the week, i couldn’t really envision buying anything else. My aspiration was to simply see some opportunity to generate some cash by being able to roll over anything from the list expiring this week.

There are plenty of positions set to expire, but not necessarily plenty of opportunities.

Those opportunities became even fewer today after a real plunge that took the market nearly 400 points lower and closing right near its lows.

With those opportunities likely vanished there was the tiniest bit of solace by having been able to sell some calls on an uncovered position, but that was too little to make up for what we witnessed today.

Maybe there’s some hope of a turnaround surprise coming from earnings as those releases are going to start to speed up over the next 2 weeks.

It wouldn’t take too much of a positive surprise to send markets up sharply, considering that no one is expecting anything good to happen over the next few weeks, but the hole is getting bigger and bigger.

I rarely give up hope and have to think that our current levels a lot of disappointment is already factored into those prices we’re seeing and that only further international uncertainty is going to really depress prices any further in a meaningful way.

As with lots of cycles, the ability to hold your breath really helps.

Daily Market Update -January 13, 2016 (7:30 AM)

Yesterday looked like it might have ended up being just another in a series of disappointments that have so far characterized 2016.

The futures started strongly, then weakened, but then rebounded and the trading session got off to a strong start only to reverse course to a fairly large loss by the late morning,

The surprise is that with about 2 hours left to go in the trading session, the market turned around again.

It did so in a nice fashion, too.

While that happened twice last week, what didn’t happen was seeing any follow through on the following day and the week ended up with about a 6% loss to start the week.

Today, the early futures are actually showing a small gain.

It’s not much, but it’s better than the alternative that we’ve come to know so far this year.

With some potential for nervousness over Iran’s cature of 2 small US Navy vessels and 10 US sailors yesterday, just days before about $100 Billion of their assets are unfrozen, there was certainly lots of potential for this morning to reflect lots of unease about what was going on in that part of the world.

Considering how 2016 has so far been almost exclusively shaped by international events, it definitely would not have been surprising to have seen fear and uncertainty showing up in the futures market this morning.

So far?

Nothing.

With 3 days left to the week, i can’t really envision buying anything else. My aspiration is to simply see some opportunity to generate some cash by being able to roll over anything from the list expiring this week.

There are plenty of positions set to expire, but not necessarily plenty of opportunities.

Hopefully, if those opportunities don’t come, there will at least be some surprise from earnings as those releases are going to start to speed up over the next 2 weeks.

It wouldn’t take too much of a positive surprise to send markets up sharply, considering that no one is expecting anything good to happen over the next few weeks.

I rarely give up hope and have to think that our current levels a lot of disappointment is already factored into those prices we’re seeing and that only further international uncertainty is going to really depress prices any further in a meaningful way.

As with lots of cycles, the ability to hold your breath really helps.

Daily Market Update -January 12, 2016 (Close)

Yesterday morning’s futures offered some promise even as China plunged another 5% and as oil was taking its biggest one day hit in quite a while.

As long as the market continues its odd relationship with the price of oil, that should have been a potent one – two punch, but the futures yesterday morning held dome promise.

Those futures weren’t pointing toward any meaningful kind of rebound, but at least they were showing some strength.

That strength did deteriorate during the latter phases of the futures session and at mid-day there was a substantial loss, but the market did recover and closed near its highs.

The gains yesterday were a little narrow and the S&P 500 was flat, as the DJIA showed that gain, but still, based on the first week of 2016, even flat was good.

This morning again showed some optimism as the early futures were trading, but as with yesterday, the strength was lessening as we got closer to the opening bell.

The difference was that they started a comeback before the opening bell and then continued that comeback to the point that the DJIA was up nearly 200 points before losing it all and another 70 points, until turning it all around again at about 2 PM.

We haven’t had a day like today in a while.

With so many positions set to expire this week, I would have loved to have seen some sustained strength today and even more as we approach Friday, if only to be able to have a chance to get some rollovers done.

I wasn’t not looking for any bargains this morning and as is usually the case, as each passing day hits the books, I’m less inclined to open a new position expiring that week, although the higher volatility can offer what we used to take as a week’s worth of premium, now in only 4 days.

That was the case today, as I finally opened a new position after it looked to be too good at its price and offered a good premium for just 4 days and another $0.27 in share upside, as well.

But as has been the case lately, we’ll just have to see whether it works out according to plan, because predictability hasn’t been the way things have behaved lately.

With no real news yesterday and not much this week, other than perhaps the JOLTS and then the beginning of earnings season tonight, hopefully all of the surprises in store for 2016 already happened last week.

I know that’s not going to be the case, but 2016 got off to a rocky start as far as international news goes and that didn’t help things in our market that was already spooked by two 7% day declines in Shanghai.

Just to show how that’s not going to be the case, there came the news that Iran seized to US naval vessels and was holding 10 sailors.

So we’ll see.

We’ll see.

This morning’s early gains and the later gains didn’t have too much behind them other than perhaps selling weariness, so it’s going to be hard to take the strength as really being reflective of anything.

With the consensus being that earnings this quarter are going to be the second consecutive one of decreasing revenues and earnings, any good news could be the catalyst for a strong jump higher as the momentum has definitely turned negative.

As that turn has gone negative, there are also sectors that are in bear territory and not just energy and materials.

At some point, value investors do come in and they do so in a meaningful way when they think an inflection is upcoming or just been passed.

Nothing would do the trick to get them back in at this point than what has been missing from the market for about 7 years and that’s fundamental growth in revenues and earnings.

For the longest time earnings have been artificially inflated by stock buybacks and we may not be re-entering a phase when those earnings are going to be less and less helped out by shrinking the share base.

Having real earnings would be a great thing and could be just what’s needed to restore some health to energy, materials and commodities.

A little inflationary movement would be a very good thing and during those early phases the stock market’s moves are usually leveraged by economic growth.

We’re still waiting for that kind of growth to become obvious.

I know I am.

Daily Market Update -January 12, 2016 (8:00 AM)

Yesterday morning’s futures offered some promise even as China plunged another 5% and as oil was taking its biggest one day hit in quite a while.

As long as the market continues its odd relationship with the price of oil, that should have been a potent one – two punch, but the futures yesterday morning held dome promise.

Those futures weren’t pointing toward any meaningful kind of rebound, but at least they were showing some strength.

That strength did deteriorate during the latter phases of the futures session and at mid-day there was a substantial loss, but the market did recover and closed near its highs.

The gains yesterday were a little narrow and the S&P 500 was flat, as the DJIA showed that gain, but still, based on the first week of 2016, even flat was good.

This morning again shows some optimism as the early futures are trading, but as with yesterday, the strength is lessening as we get closer to the opening bell.

With so many positions set to expire this week, I would love to see some strength as we approach Friday, if only to be able to have a chance to get some rollovers done.

I’m not looking for any bargains at the moment and as is usually the case, as each passing day hits the books, I’m less inclined to open a new position expiring that week, although the higher volatility can offer what we used to take as a week’s worth of premium, now in only 4 days.

With no real news yesterday and not much this week, other than perhaps the JOLTS and then the beginning of earnings season tonight, hopefully all of the surprises in store for 2016 already happened last week.

I know that’s not going to be the case, but 2016 got off to a rocky start as far as international news goes and that didn’t help things in our market that was already spooked by two 7% day declines in Shanghai.

This morning’s early gains don’t have too much behind them other than perhaps selling weariness, so it’s going to be hard to take the early strength as really being reflective of anything.

With the consensus being that earnings this quarter are going to be the second consecutive one of decreasing revenues and earnings, any good news could be the catalyst for a strong jump higher as the momentum has definitely turned negative.

As that turn has gone negative, there are also sectors that are in bear territory and not just energy and materials.

At some point, value investors do come in and they do so in a meaningful way when they think an inflection is upcoming or just been passed.

Nothing would do the trick to get them back in at this point than what has been missing from the market for about 7 years and that’s fundamental growth in revenues and earnings.

For the longest time earnings have been artificially inflated by stock buybacks and we may not be re-entering a phase when those earnings are going to be less and less helped out by shrinking the share base.

Having real earnings would be a great thing and could be just what’s needed to restore some health to energy, materials and commodities.

A little inflationary movement would be a very good thing and during those early phases the stock market’s moves are usually leveraged by economic growth.

We’re still waiting for that kind of growth to become obvious.

I know I am.