Category Archives: Daily Market Update

Daily Market Update -January 4, 2015 (9:00 AM)

They say that the first week of the New Year determines the first month and that the first month determines the outcome for the who year.

Hopefully that’s not going to be the case.

No one really expected to wake up on the first Monday of the New Year to news than Iran and Saudi Arabia were at each other’s throats even more.

If this was 2015, we might have expected that any rise in the price of oil coming from the uncertainty associated with conflict in that region, would have resulted in the US stock market moving higher.

But late last week it seemed as if some normalcy was beginning to return to that relationship and so this morning markets aren’t going up in response.

Maybe, though, they’re just not going down as low as they might ordinarily have done, given what happened overnight in the Shanghai market.

With that market down 7% on halted trading, the contagion spread to Europe this morning.

If our own futures market had followed Germany, instead of looking at a loss of 300 points, we would be about double that amount.

Germany itself was only down about 60% of what transpired in Shanghai, so maybe it is that oil spike that’s giving us some cushion as we get set to begin the day.

Considering that some of our own weaknesses in 2015 were related to earlier sharp declines in Shanghai, there may be very good reason for concern as the year gets underway.

With a little bit of cash and a few positions expiring this week, I’m not too anxious to go and chase the market in what could be a bargain hunter’s delight.

I think that I would much rather sit back and see if there’s any truth to the contention that the year after a flat year is typically a good year.

You wouldn’t know that by the competing contention about the role of the first week of the year and the outcome of the rest of the year.

As the day does progress, if there appears to be some stability, I think that I would still be inclined to sit back and watch.

While in 2015 there were a number of days that large early losses were reversed during the course of the day, that’s not a typical pattern and very often a period of stability is followed by a second leg lower.

I’d rather not get caught in the second leg.

That wouldn’t be the most auspicious way to begin 2016.

While it may be a difficult first day and maybe a difficult first week, my eyes are going to be focused also on a fairly large number of positions that are set to expire next week as the January 2016 cycle comes to an end.

That coincides with the start of earnings season, so there may be lots of things to be thinking about as we try to sort out the international issues.

Daily Market Update – November 27,  2015  (7:30 AM)

The Week in Review will be posted by 76 PM tonight and the Weekend Update will be posted by Noon on Sunday.

The following trade outcomes are possible today:

Assignments:  BBY ($31), PFE

Rollovers:  STX (puts)

Expirations:  BBY ($37)

The following were ex-dividend this week:      MAT (11/23 $0.38), ANF (11/27 $0.20), KO (11/27 $0.33)

The following will be ex-dividend next week:   HAL (12/1 $0.18), MOS (12/1 $0.28), BAC (12/2 $0.05), COH (12/2 $0.34), HFC (12/2 $0.33),  WMT (12/2 $0.49)

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

Daily Market Update – November 25,  2015  (Close)

Yesterday’s comeback by the market was an impressive one and yet another in an increasingly long series that has been demonstrating that the pre-opening futures aren’t doing a very good job of telling us where the market will be headed.

One thing that used to be fairly predictable was when those futures showed a large move.

In such cases you could feel reasonably certain that the same large move would continue into the regular trading session and typically characterize that session for the entire day.

These days, maybe it’s because 100 points isn’t what it used to be, but the predictive value, even when those moves are on the large side, just seems lower and lower.

While yesterday ended the day virtually unchanged, it had to make up significant ground to achieve that accomplishment.

In hindsight, that may have represented another buying opportunity, but with this being a short trading week and really not wanting to use any extended option expirations this week due to the desire to have an opportunity to recycle assigned cash for next week, there wasn’t much drive to open any additional new positions.

The greatest expectation was that today and then Friday, would both be on the quiet side, but you can never tell what kind of artifacts might show up in the event of someone with deep pockets in the face of light volume.

Today, though, wasn’t going to be that day, as the market barely budged at any point of the day.

For my part, my pockets aren’t very deep right now and would simply prefer to see some assignments to end the week and the chance to use that cash to open up some new replacement positions.

I expected that today would be very much like yesterday, although I would have certainly welcomed any other opportunities to either sell new call positions or rollover any of those with extended week expirations and do so early, in order to capitalize on any price strength or upcoming dividends.

But not today.

It was just more of sitting back in the La-Z-Boy and wondering when I’ll be asked to help out in preparations for holiday guests.

I don’t think many are staying over on Friday, but hopefully they will understand if I’m otherwise occupied on Friday, as I would like to be able to capitalize on potential rollovers if those assignments aren’t likely to happen.

Otherwise, if you do read the afternoon version of this, then best wishes once again to all for a Happy and Healthy Thanksgiving and be safe in your travels, if those are in your plans.

Daily Market Update – November 25,  2015  (7:30 AM)

Yesterday’s comeback by the market was an impressive one and yet another in an increasingly long series that has been demonstrating that the pre-opening futures aren’t doing a very good job of telling us where the market will be headed.

One thing that used to be fairly predictable was when those futures showed a large move.

In such cases you could feel reasonably certain that the same large move would continue into the regular trading session and typically characterize that session for the entire day.

These days, maybe it’s because 100 points isn’t what it used to be, but the predictive value, even when those moves are on the large side, just seems lower and lower.

While yesterday ended the day virtually unchanged, it had to make up significant ground to achieve that accomplishment.

In hindsight, that may have represented another buying opportunity, but with this being a short trading week and really not wanting to use any extended option expirations this week due to the desire to have an opportunity to recycle assigned cash for next week, there wasn’t much drive to open any additional new positions.

The greatest expectation is that today and then Friday, should both be on the quiet side, but you can never tell what kind of artifacts might show up in the event of someone with deep pockets in the face of light volume.

For my part, my pockets aren’t very deep right now and would simply prefer to see some assignments to end the week and the chance to use that cash to open up some new replacement positions.

I expect that today will be very much like yesterday, although I would certainly welcome any other opportunities to either sell new call positions or rollover any of those with extended week expirations and do so early, in order to capitalize on any price strength or upcoming dividends.

Otherwise, it will be more of sitting back in the La-Z-Boy and wondering when I’ll be asked to help out in preparations for holiday guests.

I don’t think many are staying over on Friday, but hopefully they will understand if I’m otherwise occupied on Friday, as I would like to be able to capitalize on potential rollovers if those assignments aren’t likely to happen.

Otherwise, if you don’t read the afternoon version of this, then best wishes to all for a Happy and Healthy Thanksgiving and be safe in your travels, if those are in your plans.

Daily Market Update – November 24,  2015  (Close)

Yesterday was another flat day. Lately, those have been coming in-between big days up or big days down, as past weeks have been anything but flat.

What past weeks have done is to demonstrate just how confused everyone has been as the FOMC has been sending all kinds of messages and not really following through with anything. If you cast the FOMC in the role of a wise parent, you know that consistency would be the least you might expect from those who know just how important that is to those prone to infantile behavior.

You can understand why the market would then be very hesitant, especially since it had gotten very used to and comfortable with the FOMC having long given every indication that interest rates would stay low, all while the Federal reserve was helping to depress the competition by buying bonds.

This morning the futures were trading moderately lower as we awaited the GDP release for the 3rd Quarter and any revisions to previous months.

If there are upward revisions, you might have thought that markets would be consistent and then react positively, as their latest position has been to finally accept an impending interest rate increase.

But consistency hasn’t been much of a characteristic displayed by anyone.

If the FOMC can’t be consistent, why would you expect emotion charged investors to be so, even as their trading algorithms are supposed to dispense with those kind of human frailties? Even though software driven, those human written algorithms have to have some component of either fear or greed, or most likely both, contained within them. They may be tempered and relatively reasoned, but they’re still there, somewhere in that code.

So as it would turn out, just prior to the release, the futures started moving more strongly downward in advance of what would turn out to be a stronger than anticipated GDP revision, but the market did the right thing.

It did the adult thing.

It pretty much stayed the course until it decided that the news was really good news and could easily be the sort of thing that would get the FOMC to do the right thing, as well.

With 2 new positions opened yesterday and expiring this week, I would have really preferred that the market moved much higher and not take today’s step backward. But at least it held its ground today.

I would have much preferred a step backward to have happened yesterday, but there still appeared to have been some short term bargains, despite the market not giving back any of last week’s large gains.

With little cash remaining, although I’m willing to dip into my excess reserves and essentially borrow from myself, as had been the case in the past few months on several occasions, now with just 3 days left to the trading week, the returns on weekly options are really going to be smaller and likely too small to be attractive.

So the likelihood is that I’ll be a watcher and be hopeful that there may be some opportunity to either sell calls on uncovered positions or even rollover positions not scheduled for expiration this week, such as was the case yesterday with Holly Frontier, which has become a nice cash cow as it bobs up and down amidst all of the energy sector craziness.

With that kind of a backdrop, there may not be much to do until we get to Friday.

At that point, I hope that some of the expiring positions are in contention for assignment, but as is usually the case, I would also be happy with rollovers, especially if they can be done again and again, as has been the case with Holly Frontier for the past year.

So instead of being an active participant today, my expectation is that I’ll be sitting back tomorrow and watching, just as today, as we saw what kind of lessons investors have learned as the GDP was r
eleased and we all can continue to get a better idea of just what the health of the consumer may be, even as some retailers have painted a pessimistic picture for us.

I suppose that the inconsistency of the data can take some of the blame, too.