Category Archives: Daily Market Update

Daily Market Update – November 24,  2015  (7:30 AM)

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 are trading moderately lower as we await the GDP release for the 3rd Quarter and any revisions to previous months.

If there are upward revisions, you might think 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.

With 2 new positions opened yesterday and expiring this week, I would really prefer that the market move higher and not take today’s step backward.

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 and watching just what kind of lessons investors have learned as the GDP is released and we all may 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.

Daily Market Update – November 23,  2015  (Close)

After a gain last week of about 3.5%, almost erasing the entirety of the loss in the previous week, this week gots off to a start that had lots of news behind it.

Lots of news, but no real action.

China has doubled its stock margin requirements and a $150 Billion proposed buyout in the pharmaceutical sector are enough to get this trade shortened week started, as earnings are coming to a trickle, at least for systemically important companies.

Ordinarily, we know what the impact is of tightening margin requirements in speculative markets turns out to be and it typically puts lots of additional downward pressure on stocks or commodities, even after the downward slide in price has already been long underway.

But that doesn’t seem to be the story coming out of China as the week begins, as we may have to get used to paradigms not necessarily being paradigms, anymore.

Instead, that market started the week flat, just as our futures market appeared to be doing the same thing, after having come off of that 3.5% gain.

Over the last few weeks the pre-opening numbers have had little to no relationship to what has ended up happening once the day got started for real, but today the range was fairly tight and the market ended up virtually unchanged.

What we haven’t seen over the past few weeks in the pre-opening sessions is the kind of large moves, in either direction, that have been so frequent lately in the regular trading sessions.

With that being the case and with this likely to be a volume deprived week, you can not be excused for believing that just about anything could happen this week.

With a little bit of extra cash to spend, but only two expiring positions for the week, if I do let go of some of the money in the cash reserve, I’d like to think in terms of a weekly option expiration.

The problem is that as a trade shortened week, the option premiums are going to be somewhat less than they would be during the course of a regular week.

The ideal day to make a trade, as far as those premiums would go, is always on a Monday, but even more so this week.

While I was willing to make some trades, my preference, as it almost always is, would be to see some decline to start the day, but I could also be enticed if there is a sense of boredom in the markets, as well.

Since there’s no really big economic news planned for the week. there probably won’t be much to test the market’s seeming support of the FOMC’s recent hawkish tone, so if there are any big moves, and those have been the norm lately, there’s not too much reason to suspect that there would be a rational basis for whatever it is that we see this week, unless what we see is exactly what the futures are suggesting.

I wouldn’t mind a quiet week of consolidation, but I would like to have some opportunity to generate some income, so I was hopeful that some pessimism or profit taking would set in and do so early in the week, but that wasn’t the case today.

Instead, it was the latter of the 2 acceptable scenarios and that was good enough.

Now the hope is that the decline that I would have liked today can wait until next week.

Daily Market Update – November 23,  2015  (9:15 AM)

After a gain last week of about 3.5%, almost erasing the entirety of the loss in the previous week, this week gets off to a start that has lots of news behind it.

China has doubled its stock margin requirements and a $150 Billion proposed buyout in the pharmaceutical sector are enough to get this trade shortened week started, as earnings are coming to a trickle, at least for systemically important companies.

Ordinarily, we know what the impact is of tightening margin requirements in speculative markets turns out to be and it typically puts lots of additional downward pressure on stocks or commodities, even after the downward slide in price has already been long underway.

But that doesn’t seem to be the story coming out of China as the week begins, as we may have to get used to paradigms not necessarily being paradigms, anymore.

Instead, that market started the week flat, just as our futures market appears to be doing the same thing, after having come off of that 3.5% gain.

Over the last few weeks the pre-opening numbers have had little to no relationship to what has ended up happening once the day got started for real.

What we haven’t seen over the past few weeks in the pre-opening sessions is the kind of large moves, in either direction, that have been so frequent lately.

With that being the case and with this likely to be a volume deprived week, you can not be excused for believing that just about anything could happen this week.

With a little bit of extra cash to spend, but only two expiring positions for the week, if I do let go of some of the money in the cash reserve, I’d like to think in terms of a weekly option expiration.

The problem is that as a trade shortened week, the option premiums are going to be somewhat less than they would be during the course of a regular week.

The ideal day to make a trade, as far as those premiums would go, is always on a Monday, but even more so this week.

While I am willing to make some trades, my preference, as it almost always is, would be to see some decline to start the day, but I could also be enticed if there is a sense of boredom in the markets, as well.

Since there’s no really big economic news planned for the week. there probably won’t be much to test the market’s seeming support of the FOMC’s recent hawkish tone, so if there are any big moves, and those have been the norm lately, there’s not too much reason to suspect that there would be a rational basis for whatever it is that we see this week, unless what we see is exactly what the futures are suggesting.

I wouldn’t mind a quiet week of consolidation, but I would like to have some opportunity to generate some income, so I’m hopeful that some pessimism or profit taking sets in, but does so early in the week.

Daily Market Update – November 20,  2015  (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:   MS

Rollovers:   CY, STX (puts)

Expirations:  CSCO, F

The following were ex-dividend this week:

The following will be ex-dividend next week:  MAT (11/23 $0.38), KO (11/27 $0.33)

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

Daily Market Update – November 19,  2015  (Close)

Yesterday was a big surprise.

There were 2 things that happened that made it an impressive day.

The first was the manner in which the market reacted to the release of last month’s FOMC minutes, which indicated a much more hawkish tone and one that made it pretty clear that the intent was to raise interest rates soon.

That the market didn’t run away in terror was a good sign.

There was already some word that would be the news in the minutes and that may have been the reason that the market had opened with some strength heading into the official release at 2 PM.

It was, however, at 2:04 PM that the market really took off and moved higher and higher.

While it may have been the official release of the minutes that was the proximal cause of the further rally, perhaps coincidentally, it occurred just as the DJIA had fallen to and successfully tested the 17600 level, which proved to be a resistance point on Tuesday.

Yesterday, after testing that point for just a moment, and again, perhaps coincidentally, the market turned a decent gain into a really nice one.

With some decent earnings for the week and a more mature look at what interest rate increases might mean at such an early stage, there was some hope that the market would be able to maintain this forward momentum as the monthly option cycle was getting ready to come to its end.

At least things didn’t go downhill today and stay there.

The market finished virtually unchanged and didn’t spend too much time traveling about, either.

With earnings reports for this week and for this current cycle now near the end of the ones that really matter for the broader market, we may begin to fall into that more quiet time of the year when most talk starts centering on retailers and their holiday sales.

Using the past as a guide, that typically means considering adding retailers in advance of the official start of the season and holding on through the end of that season, as the script is usually fairly consistent.

Expectations are usually low and results are usually better than expected.

That tends to be a good formula for buying and selling.

But that might be easier to do if the market maintains its strength this week and allows for some assignments of some existing positions and creating some freed up cash to recycle into that sector, where appropriate.

For today it was just a case of sitting back and taking the time to see where the opportunities might arise.

Tomorrow will hopefully bring those opportunities to life.