Category Archives: Daily Market Update

Daily Market Update – November 16,  2015  (Close)

After last week’s terrible showing, the market needs some kind of positive news.

The weekend didn’t bring any happiness on the worldwide front that could spill over to begin the week and only injected more uncertainty into international affairs.

There is lots that could happen this week that hasn’t been discounted by investors and could be market disruptive.

With continuing earnings reports from national retailers this week, there isn’t very much reason to believe that what comes this week will be very different from the disappointments of last week that added onto the disappointment that came from the hawkish tones coming from FOMC members.

Both of last week’s major events were somewhat surprising.

While you could argue that retailer earnings , being backward looking, wouldn’t yet reflect recent improvements in the economy, it’s what came after earnings were reported that brought surprise. The real surprise was that forward guidance continued to be sour, with no suggestion that discretionary spending would pick up.

That didn’t seem to be a likely thing to be heard.

The FOMC, on the other hand, while it obviously will raise interest rates sometime in the future, surprisingly continued its hawkish comments, even will events on the ground didn’t seem to justify those comments.

Whatever wonders the market perceived in October came under assault as soon as November began and the market opens this week almost 6% below its all time high, after having mounted a recovery that brought it back to within about 1.5% of that level.

With such a sharp decline last week you could understand why there might be some kind of recovery this week, but based on the pre-opening futures it appeared to be a fairly feeble attempt.

The only positive you might get from this morning’s open was that the futures did a terrible job last week in predicting market direction and magnitude.

Today turned out to be a great example of that as the market got off to a stumble and for a brief time looked as if it might just continue from where Friday left off, but within about 5 minutes of trading it turned around and then got real and sustained strength 2 hours into trading.

Go figure.

There was no real reason for anything seen today.

With little expectation that the remaining earnings reports are going to buoy the market, the only reasonable possibilities for a rally into the end of the year would likely come from some FOMC decision, rather than continuing indecision.

The market could just as easily climb higher if and when the FOMC raises interest rates or climb higher if the FOMC announces it is delaying that increase until an improvement in the economy sufficient to warrant such an increase would finally occur.

Simply announcing that rates will remain unchanged without indicating a more dovish stance would not mollify investors and would keep them unnecessarily nervous.

The latter of those two FOMC actions might bring some happiness for traders, but it won’t last very long.

Meanwhile, with a number of positions set to expire this week, but with lots of uncertainty from last week, I may not be rushing in to make any new purchases.

I’d be very happy to have some chance to rollover existing positions expiring this week or see them assigned.

I had planned to be watchful this mo
rning, but as has been the recent case, and thought that I might look more at ex-dividend trades and consider expirations of more than a week’s duration, particularly if it looks as if there could be some assignments this week.

Funny how that worked out to.

One new position. Not on the week’s list. No dividend and expiring this week.

Go figure.

Daily Market Update – November 16,  2015  (7:30 AM)

After last week’s terrible showing, the market needs some kind of positive news.

The weekend didn’t bring any happiness on the worldwide front that could spill over to begin the week and only injected more uncertainty into international affairs.

There is lots that could happen this week that hasn’t been discounted by investors and could be market disruptive.

With continuing earnings reports from national retailers this week, there isn’t very much reason to believe that what comes this week will be very different from the disappointments of last week that added onto the disappointment that came from the hawkish tones coming from FOMC members.

Both of last week’s major events were somewhat surprising.

While you could argue that retailer earnings , being backward looking, wouldn’t yet reflect recent improvements in the economy, it’s what came after earnings were reported that brought surprise. The real surprise was that forward guidance continued to be sour, with no suggestion that discretionary spending would pick up.

That didn’t seem to be a likely thing to be heard.

The FOMC, on the other hand, while it obviously will raise interest rates sometime in the future, surprisingly continued its hawkish comments, even will events on the ground didn’t seem to justify those comments.

Whatever wonders the market perceived in October came under assault as soon as November began and the market opens this week almost 6% below its all time high, after having mounted a recovery that brought it back to within about 1.5% of that level.

With such a sharp decline last week you could understand why there might be some kind of recovery this week, but based on the pre-opening futures it appears to be a fairly feeble attempt.

The only positive you might get from this morning’s open is that the futures did a terrible job last week in predicting market direction and magnitude.

With little expectation that the remaining earnings reports are going to buoy the market, the only reasonable possibilities for a rally into the end of the year would likely come from some FOMC decision, rather than continuing indecision.

The market could just as easily climb higher if and when the FOMC raises interest rates or climb higher if the FOMC announces it is delaying that increase until an improvement in the economy sufficient to warrant such an increase would finally occur.

Simply announcing that rates will remain unchanged without indicating a more dovish stance would not mollify investors and would keep them unnecessarily nervous.

The latter of those two FOMC actions might bring some happiness for traders, but it won’t last very long.

Meanwhile, with a number of positions set to expire this week, but with lots of uncertainty from last week, I may not be rushing in to make any new purchases.

I’d be very happy to have some chance to rollover existing positions expiring this week or see them assigned.

I plan to be watchful this morning, but as has been the recent case, may look more at ex-dividend trades and might consider expirations of more than a week’s duration, particularly if it looks as if there could be some assignments this week.

Daily Market Update – November 13,  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:  none

Rollovers:  none

Expirations:  IP

The following were ex-dividend this week:  IP (11/12 $0.48)

The following are ex-dividend next week:  MRO (11/16 $0.05)

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

Daily Market Update – November 12,  2015  (Close)

Well, that was really bad news yesterday.

Macy’s had absolutely nothing good to say about itself nor its prospects for 2016, as it sunk to its lowest level in about 30 months.

It’s not that Macy’s is necessarily the harbinger of things to come or the leader in retail, but in many ways it can be and it is, respectively.

Even if it isn’t either of those, you would never know, based upon how most every other major national retailer followed suit, as Macy’s itself fell about 14%.

There’s still lots more to come from the retail sector, but you would have to think that most are going to follow Macy’s experience, although maybe some other, somewhat lower end retailers don’t count on foreign tourist’s spending quite as much as Macy’s may.

Just ask Nordstrom, which reported after today’s closing bell, and was about 21% lower in the after hours trades.

Still, their gloomy outlook for 2016, even when discounting decreased foreign tourist spending, doesn’t seem to be consistent with the idea of a resurging consumer with more money to spend than has been the case for the past few years.

Maybe they’re just spending it somewhere else, but we’ll find that out soon enough, unless everyone is losing substantial market share to on-line retailers, as Amazon has surprised everyone with profits the past two quarters.

While I ended yesterday thinking that there wasn’t too much likelihood of spending down some of that cash pile with what little remained this week, the sheer size of the decline in Macy’s has to make one at least curious about wondering just how much more short term risk could be involved if entering a position right now.

As it would turn out, just when you thought today’s market may have bottomed out at a 150 loss on the DJIA, that loss settled in at 254 points, with a final wave of selling beginning at 2 PM, although not in a crescendo kind of way.

As mentioned the past couple of days, with already a number of positions set to expire next week as the November 2015 cycle comes to an end, and as this week was nearing its own end, right now any new purchases would be more likely to look at a new definition of what constitutes “short term.” Instead of looking at weekly options, there may be reason to look at those expiring the week after the monthly expiration week.

That would take things to Thanksgiving week and beyond.

Of course, I though that the sale of puts on Seagate Technology might be an exception and went for the November 20 expiration, only to see Seagate follow the rest of the market in the final couple of hours, too.

The original idea was to take enough time to show some recovery, such as in retail, with Macy’s, at a time when even feeble recovery could be sufficient to get a decent return, particularly if also looking just a bit further out in time, as an ex-dividend date is at hand on December 11th, as well.

That was the plan executed with Macy’s today and an out of the money strike was used in an attempt to grab dividend, premium and share profits.

Time will tell, though.

Otherwise, with only a single position set to expire this week, there’s not too much else to be thinking about unless some other great opportunities may seem to pop up and find a way to be convincing enough to part with some cash at a time when the market seems to be pretty tentative and now could easily find a way to give back some more of what it had gained since the beginning of October.

Daily Market Update – November 12,  2015  (7:30 AM)

Well, that was really bad news yesterday.

Macy’s had absolutely nothing good to say about itself nor its prospects for 2016, as it sunk to its lowest level in about 30 months.

It’s not that Macy’s is necessarily the harbinger of things to come or the leader in retail, but in many ways it can be and it is, respectively.

Even if it isn’t either of those, you would never know, based upon how most every other major national retailer followed suit, as Macy’s itself fell about 14%.

There’s still lots more to come from the retail sector, but you would have to think that most are going to follow Macy’s experience, although maybe some other, somewhat lower end retailers don’t count on foreign tourist’s spending quite as much as Macy’s may.

Still, their gloomy outlook for 2016, even when discounting decreased foreign tourist spending, doesn’t seem to be consistent with the idea of a resurging consumer with more money to spend than has been the case for the past few years.

Maybe they’re just spending it somewhere else, but we’ll find that out soon enough, unless everyone is losing substantial market share to on-line retailers, as Amazon has surprised everyone with profits the past two quarters.

While I ended yesterday thinking that there wasn’t too much likelihood of spending down some of that cash pile with what little remained this week, the sheer size of the decline in Macy’s has to make one at least curious about wondering just how much more short term risk could be involved if entering a position right now.

As mentioned the past couple of days, with already a number of positions set to expire next week as the November 2015 cycle comes to an end, and as this week was nearing its own end, right now any new purchases would be more likely to look at a new definition of what constitutes “short term.” Instead of looking at weekly options, there may be reason to look at those expiring the week after the monthly expiration week.

That would take things to Thanksgiving week and beyond.

Perhaps enough time to show some recovery in retail, such as Macy’s, at a time when even feeble recovery could be sufficient to get a decent return, particularly if also looking just a bit further out in time, as an ex-dividend date is at hand on December 11th, as well.

Otherwise, with only a single position set to expire this week, there’s not too much else to be thinking about unless some other great opportunities may seem to pop up and find a way to be convincing enough to part with some cash at a time when the market seems to be pretty tentative and now could easily find a way to give back some more of what it had gained since the beginning of October.