Category Archives: Daily Market Update

Daily Market Update – November 11,  2015  (7:30 AM)

For a while, it looked like yesterday might serve to heap on to Monday’s significant loss.

There wasn’t too much of a reason for what was seen on Monday, but by mid-morning of Tuesday the decline seemed to run out of steam.

There wasn’t much reason for it to have continued and there wasn’t much reason for it to have stopped, although some technicians could point to a very minor point of support at about 17663 on the DJIA, although they would be hard pressed to find anything really similar on the S&P 500.

Sometimes things just happen.

This morning, in the early futures trading, it appeared as if the trend higher that started yesterday morning was going to continue, but there’s really nothing to cause any significant kind of move in either direction as we awaited the flow of national retailer earnings that really started this morning with Macy’s.

And is wasn’t good.

What was needed from those retailers is collective optimism and not just cheery optimism regarding the future coming from the more high end among those in that sector.

That definitely wasn’t the way the flow of earnings got off to its start. Macy’s painted a pretty bleak picture for itself and it hit retail across the board.

That cheeriness that I was really expecting to hear couldn’t  be based on higher per share profits, but rather from increasing revenue.

That’s not the picture that was painted today.

Investors might still be willing to accept lower earnings per share if there is some tangible increase on the top line, especially for those companies that can report relatively clean top line numbers and not have to drag currency exchange into the discussion.

For the market to take a cue from retailers offering a positive view of what awaits them in 2016 there has to be some good news across the board, but especially at the middle level retailers.

Maybe Macy’s is just a tad too high in the pecking order and maybe it doesn’t reflect what is really going on.

But it does. At least the market believed so today as it hit that sector so hard after the disappointing news.

In essence, we have to see people demonstrating that they are not only back at work and collecting a paycheck once again, but that they are also confident enough in being able to hold onto that job for a while, so that they could do something with those paychecks other than paying down debt.

That’s something that’s been missing from the equation even as the unemployment rate begins to fall close to the levels that we usually refer to as “structural.”

Following today, it now looks as if it’s definitely going to end up being a very quiet week for personal trading.

With the opportunities for some ex-dividend trades now gone, at this point, if there are going to become actual new position trades, the greatest likelihood is that they would be paired with call sales for Thanksgiving week or beyond.

That theme may continue through next week, with sights being set beyond next week’s monthly expiration and more toward December extended weekly options.

Daily Market Update – November 11,  2015  (7:30 AM)

For a while, it looked like yesterday might serve to heap on to Monday’s significant loss.

There wasn’t too much of a reason for what was seen on Monday, but by mid-morning of Tuesday the decline seemed to run out of steam.

There wasn’t much reason for it to have continued and there wasn’t much reason for it to have stopped, although some technicians could point to a very minor point of support at about 17663 on the DJIA, although they would be hard pressed to find anything really similar on the S&P 500.

Sometimes things just happen.

This morning, in the early futures trading, it appears as if the trend higher that started yesterday morning was going to continue, but there’s really nothing to cause any significant kind of move in either direction as we await the flow of national retailer earnings that really started this morning.

What is needed from those retailers is collective optimism and not just cheery optimism regarding the future coming from the more high end among those in that sector.

That cheeriness also can’t be based on higher per share profits, but rather from increasing revenue. Investors might even be willing to accept lower earnings per share if there is some tangible increase on the top line, especially for those companies that can report relatively clean top line numbers and not have to drag currency exchange into the discussion.

For the market to take a cue from retailers offering a positive view of what awaits them in 2016 there has to be some good news across the board, but especially at the middle level retailers. In essence, people have to demonstrate that they are not only back at work and collecting a paycheck once again, but that they are also confident enough in being able to hold onto that job for a while, so that they could do something with those paychecks other than paying down debt.

That’s something that’s been missing from the equation even as the unemployment rate begins to fall close to the levels that we usually refer to as “structural.”

It looks as if this going to end up being a very quiet week for personal trading.

While there are still some opportunities available with some ex-dividend positions, at this point, if those are going to become actual trades, the greatest likelihood is that they would be paired with call sales for Thanksgiving week or beyond.

If there are no new positions opened today, that theme may continue through next week, with sights being set beyond next week’s monthly expiration and more toward December extended weekly options.

Daily Market Update – November 10,  2015  (Close)

For people who like to track such things, yesterday’s very unexpected and unwarranted market decline brought the DJIA. on a YTD basis to a loss.

The S&P 500 wasn’t very far behind and stood only about 20 points, or 1% away from the flat line, with only about 7 weeks left to go in 2015.

It’s really hard to say what was responsible for yesterday’s sharp decline, which was actually less of a sharp decline after it all settled.

It could be that some finally came to the realization that we’re about to enter into an era that we haven’t seen in about 9 years, as the FOMC has to be getting as ready as it ever has to institute that very first interest rate hike.

However, given the fact that no one believes that rate increase will be more than 0.5%, with most in the 0.25% camp, it’s equally hard to understand what the logical basis is for the belief that even the larger end of that rise would result in any meaningful slowing of any economic expansion.

That’s generally the fear, but it usually only becomes a real issue when in hindsight you come to the realization that the cumulative interest rate hikes over time have tipped the economy.

That’s just not likely to occur with the first in a series, especially when there’s no indication of a really heated up economy that’s in danger of boiling.

Besides, history shows that the early stages of interest rate increases are during a healthy economy and a healthy stock market.

That’s what you would expect if the market is looking at fundamentals and is also discounting the future 6 months, as is widely believed to be the case.

Who knows what accounted for yesterday, but this morning shows some moderation as the futures are trading, although they showed the same thing yesterday and then the bottom just dropped out when the bell finally rang.

With yesterday’s decline I wasn’t as enthused about spending money from cash reserves as I might have been had the decline been more moderate. I just like to have some idea of why a market is climbing strongly or declining strongly, especially the latter.

The exercise of hindsight may demonstrate that it would have been a good idea to dip further into cash reserves, as most declines since the August correction began have represented some good entry points.

The difference here, perhaps, is that even with yesterday’s decline, the S&P 500 is now only down about 3% from its all time highs. That leaves plenty of room for more downside, especially given the uninterrupted climb higher since the beginning of October.

For a little while, at least for the first hour of trading, it looked as if that decline might grow, but then some buying came into play.

Although I was still on the lookout for anything that may seem like a bargain today and would be especially attracted to more dividend paying positions, caution still felt like it would be warranted, although the buying that crept in eventually erased all of the first hour’s loss..

At this point, now coming to the half way point in the week, I’m more concerned with positions expiring next week and am hopeful that among them will be some assignments and rollovers. I don’t really want to add much to that list if buying any other new positions this week and would like to get much better diversified in terms of expiration dates.

That will be played by ear as the week plays itself out.

Daily Market Update – November 10,  2015  (7:30 AM)

For people who like to track such things, yesterday’s very unexpected and unwarranted market decline brought the DJIA. on a YTD basis to a loss.

The S&P 500 isn’t very far behind and stands only about 20 points, or 1% away from the flat line, with only about 7 weeks left to go in 2015.

It’s really hard to say what was responsible for yesterday’s sharp decline, which was actually less of a sharp decline after it all settled.

It could be that some finally came to the realization that we’re about to enter into an era that we haven’t seen in about 9 years, as the FOMC has to be getting as ready as it ever has to institute that very first interest rate hike.

However, given the fact that no one believes that rate increase will be more than 0.5%, with most in the 0.25% camp, it’s equally hard to understand what the logical basis is for the belief that even the larger end of that rise would result in any meaningful slowing of any economic expansion.

That’s generally the fear, but it usually only becomes a real issue when in hindsight you come to the realization that the cumulative interest rate hikes over time have tipped the economy.

That’s just not likely to occur with the first in a series, especially when there’s no indication of a really heated up economy that’s in danger of boiling.

Besides, history shows that the early stages of interest rate increases are during a healthy economy and a healthy stock market.

That’s what you would expect if the market is looking at fundamentals and is also discounting the future 6 months, as is widely believed to be the case.

Who knows what accounted for yesterday, but this morning shows some moderation as the futures are trading, although they showed the same thing yesterday and then the bottom just dropped out when the bell finally rang.

With yesterday’s decline I wasn’t as enthused about spending money from cash reserves as I might have been had the decline been more moderate. I just like to have some idea of why a market is climbing strongly or declining strongly, especially the latter.

The exercise of hindsight may demonstrate that it would have been a good idea to dip further into cash reserves, as most declines since the August correction began have represented some good entry points.

The difference here, perhaps, is that even with yesterday’s decline, the S&P 500 is now only down about 3% from its all time highs. That leaves plenty of room for more downside, especially given the uninterrupted climb higher since the beginning of October.

I’ll still be on the lookout for anything that may seem like a bargain today and would be especially attracted to more dividend paying positions, but caution may still be warranted.

At this point, I’m more concerned with positions expiring next week and am hopeful that among them will be some assignments and rollovers. I don’t really want to add much to that list if buying any other new positions this week and would like to get much better diversified in terms of expiration dates.

That will be played by ear as the week plays itself out.

Daily Market Update – November 9,  2015  (Close)

Last week was another in a series of weeks with the market moving higher as it now seems as if it is fully ready to accept an increase in interest rates, maybe as early as this December.

This week may provide more of the data that the FOMC is seeking in order to justify their decision, but after last week’s Employment Situation Report that came in about 80% higher than what the FOMC indicated would be a level sufficient to warrant such an increase, it seems fairly certain that decision will be made very soon.

The data that’s coming this week will be from a number of national retailers and it will continue through to next week. Very much on an anecdotal level, I went into two big box retailers yesterday and they were packed

Also coming this week, at the very end of the week, will be the official Retail Sales figures. The government’s data never seems to be as compelling as what the CEOs and CFOs of those national big box retailers have to present.

What may really be key this week is not so much the top and bottom lines for retailers, although it would be nice to see some improvement on the top lines and a bottom line that is less manipulated by stock buy backs, but forward guidance. Most retailers tend to move on their forward guidance, which typically compounds the impact of the earnings that were just reported.

Insofar as the data being reported is already at least 3 months old, what may be far more important is what trends those retailers may be seeing in their stores.

They tend not to be overly optimistic when providing guidance, so any positive tone should be a signal that personal spending is finally on the move higher and the FOMC is sure to take note.

What we’re looking for is that inflection point that takes CEOs from cautious to optimistic as they finally see a consumer that feels confident that their new job has some security and now they are willing to make up for lost time not having done much in the way of discretionary spending.

As long as the market is going to continue interpreting good economic news as being good for the market, that should be a signal to move higher.

This morning, the pre-open futures were on the weak side, but only mildly so. Following last week, there was not too much reason to pay attention to the early direction of trading. What wasn’t terribly expected was the ferocity of the sell-off that started right at the opening bell and then lasted until noon.

After a quiet week of adding new positions last week and with no positions expiring this week, I would have liked to take cash reserves and do something with them, but when you see such a sharp decline and for no real reason, it usually doesn’t make too much sense to go on a spending spree.

After 2 assignments last week I’m at my highest cash level in quite a while, although I’d like to see it get even higher. However, that has to be balanced with a desire to generate some weekly income.

With any weakness to open the week, as opposed to last week, I would have been happy to part with some of those cash reserves, but as it would turn out, I was more reluctant than I would have expected.

With volatility remaining at such low levels after another week of the market having moved higher, I’d again like to focus on positions also paying dividends this week or next in an effort to supplement the cash stream in the coming weeks. Today’s new position stayed laser focused.

With a number of positions set to expire next week, the likelihood is that any new purchases this week will continue use either weekly options or seek to bypass the coming week and go straight to the first week of the December 2015 option cycle.

I hope that tomorrow turns out to be another of these week days to let the market take a little bit of a breath after its very impressive gains of the past 5 weeks. Sometimes it has to do s
o in big chunks, though.