Daily Market Update – April 1, 2015 (Close)

 

 

 

Daily Market Update – April 1, 2015  (Close)

Yesterday was just another in a series of bad days that lately seem to come whenever there appears to have been some reason to be optimistic. For every really nice day there has been an equally bad day either before or after. That explains why we could have had about 15 days in which the market was 150 points higher or more in 2015 only to find a market that has been virtually unchanged during that period.

Yet despite what a rational person would describe as being a volatile environment, the actual volatility is virtually unchanged over the past 4 weeks. That’s because most days have seen very little variation in direction. They’ve either been good days from the start or bad days from the start. People patiently sitting and waiting for intra-day turnarounds, as is generally very common, have been pretty disappointed over the past month, with the exception of two days of trading.

With an acceleration of selling in the final hour, something that we’ve seen a number of times in the past 2 weeks, the DJIA finally did end up down 200 points and left the market in negative territory to end the quarter.

That hadn’t happened for about 2 years, but it’s time to move on. It’s a new month and it’s a new quarter.

You wouldn’t have known that, though, by the way today went.

Hopefully maybe starting tomorrow, April will follow the alternating pattern of the past 4 months, because that would mean a nicely higher move for the month, as lately they’ve been very neatly bundled packages of good or bad from the outset.

Looking at the futures this morning, which had deteriorated from having been perfectly flat, they were still far better from where they were late last night.

For some reason, not that there has to always be a reason, the futures plunged last night, after also trading flatly after the market close. When you see piling on in the futures after an accelerating negative close, that’s usually a sign of bad things to come.

This time it was a little unusual because there was a few hours of delay before the heavy selling started.

But somewhere along the line overnight whatever it was that upset traders seemed to have taken a break, or better yet, had just gone away.

If only.

This morning had an ADP Employment Report in advance of Friday’s Employment Situation Report.

The ADP Report doesn’t usually get too much of a reaction from markets unless it’s really far from what was expected. This week, however, could have been a little different because with markets closed on Friday there won’t be a chance to trade the Employment Situation Report, so ADP could end up being a proxy for that trade.

After yesterday’s sell off and that quick drop in the futures, it probably wouldn’t take too much to get back on that path. At this point too much of anything, either too many new jobs or too few new jobs could both be construed as bad news.

As it w
ould turn out, despite some disappointing numbers that were lower than expected, the market really did nothing at that point. It was much later that everyone just seemed to give up.

With bond markets open on Friday there could still be some disruption of markets after the more meaningful Employment Situation Report is released, but for equity traders it’s either doing something today or having to waiting until Monday to respond to the data that could be inferred to have implications for the timing of any interest rate increases.

Otherwise, I didn’t think there would be much to do for the remaining 2 days of this week, other than hoping that the market recovers enough to give the few positions that are set to expire this week a chance to either be rolled over or be assigned.

After today’s sharp drop, those hopes are further removed from the realm of the probable.

But we’ll see what tomorrow can bring.

After that and after a 3 day break from markets it will be time to strap on and get ready for what could be an interesting earnings season as it could be anyone’s guess how the balance between currency issues and energy cost savings play out.

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Daily Market Update – April 1, 2015

 

 

 

Daily Market Update – April 1, 2015  (8:00 AM)

Yesterday was just another in a series of bad days that lately seem to come whenever there appears to have been some reason to be optimistic. For every really nice day there has been an equally bad day either before or after. That explains why we could have had about 15 days in which the market was 150 points higher or more in 2015 only to find a market that has been virtually unchanged during that period.

Yet despite what a rational person would describe as being a volatile environment, the actual volatility is virtually unchanged over the past 4 weeks. That’s because most days have seen very little variation in direction. They’ve either been good dqays from the start or bad days from the start. People patiently sitting and waiting for intra-day turnarounds, as is generally very common, have been pretty disappointed over the past month, with the exception of two days of trading.

With an acceleration of selling in the final hour, something that we’ve seen a number of times in the past 2 weeks, the DJIA finally did end up down 200 points and left the market in negative territory to end the quarter.

That hadn‘t happened for about 2 years, but it’s time to move on. It’s a new month and it’s a new quarter.

Hopefully April will follow the alternating pattern of the past 4 months, because that would mean a nicely higher move for the month, as lately they’ve been very neatly bundled packages of good or bad from the outset.

Looking at the futures this morning, which have deteriorated from having been perfectly flat, they are still far better from where they were late last night.

For some reason, not that there has to always be a reason, the futures plunged last night, after also trading flatly after the market close. When you see piling on in the futures after an accelerating negative close, that’s usually a sign of bad things to come.

This time it was a little unusual because there was a few hours of delay before the heavy selling started.

But somewhere along the line overnight whatever it was that upset traders seems to have taken a break, or better yet, has just gone away.

This morning has an ADP Employment Report in advance of Friday’s Employment Situation Report.

The ADP Report doesn’t usually get too much of a reaction from markets unless it’s really far from what was expected. This week, however, may be a little different because with markets closed on Friday there won’t be a chance to trade the Employment Situation Report, so ADP could end up being a proxy for that trade.

After yesterday’s sell off and that quick drop in the futures, it probably wouldn’t take too much to get back on that path. At this point too much of anything, either too many new jobs or too few new jobs could both be construed as bad news.

With bond markets open on Friday there could still be some disruption of markets after the report is released, but for equity traders it’s either doing something today or having to wait until Monday to respond to the data that could be inferred to have implications for the timing of any interest rate increases.

Otherwise, I don’t think there will be much to do for the remaining 2 days of this week, other than hoping that the market recovers enough to give the few positions that are set to expire this week a chance to either be rolled over or be assigned.

After that and after a 3 day break from markets it will be time to strap on and get ready for what could be an interesting earnings season as it could be anyone’s guess how the balance between currency issues and energy cost savings play out

 

 

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Daily Market Update – March 31, 2015 (Close)

 

 

 

Daily Market Update – March 31, 2015  (8:00 AM)

Yesterday was a nice day.

It had been more than a month since the market was able to put two advancing days together and the 263 point advance in the DJIA pretty much assured that the quarter, which ends today, wouldn’t end up being the first losing quarter in quite a while.

This morning, however, the early indication was that the market has changed its mind and wanted to take back a significant portion of what was gained yesterday.

It would take a lot, though, to move the quarter into negative territory, although another day like last Wednesday could do it easily enough.

As today was winding down in its final hour of trading that additional selling push came in turning a moderately negative day into a strongly negative day as the drop doubled in size in the final hour.

By the time it was all done the DJIA ended up with a quarterly loss.

As with yesterday’s gain, it’s not that easy to pinpoint a reason for the triple digit move in the pre-opening futures, nor was there really an obvious reason for the slide later in the session.. Lately reasons haven’t been necessary and have been few and far between. How else could you have the kind of regular alternating up and down pattern that we’ve been seeing?

Yesterday’s gain was just another in a string of very large gains that we’ve seen in 2015 and that get me nervous. We’ve had about 15 gains in the 150 and higher point range and yet the DJIA is up only 153 points for the year.

Actually, that may be good, because historically, when you see really large gains they tend to be associated with bear markets. If that’s the case this time around, at least the bear market hasn’t hit yet and is only sending an early warning signal.

The challenge is what to do about what may be an early warning signal.

Human nature makes it so that when we see a large gain we think that it’s going to be the first of many to come. That’s because sometimes they are. but so often they’re just there to suck people in.

The lesson, though, may simply be that 150 points just isn’t that large of a move anymore, at least in relative terms. It may be that what we really need to see to justify being nervous are more and more of the 250+ kind of higher moves.

In that case, I’m still nervous, because those have definitely been spotted over the past few months, as well.

Ever since reaching its then peak in early December 2014 the market has seen lots of these triple digit moves, with most just working to offset one another. In the nearly 4 months that have passed since that time the DJIA has gone about 76 points higher and I’ve decided not to even try and count the number of triple digit moves, but if you’ve been watching you know that they’ve become fairly commonplace since then.

With a couple of trades yesterday I would have loved to have seen a continuation of yesterday’s gains to be able to sell some more calls on uncovered positions or at least to be in better shape to have some chance for rollovers on Thursday or even, dare I say it, some assignments.

Today made all of those more challenging although as with last week’s early morning futures sell off that eventually reversed itself as the market opened, this morning’s sell-off was getting a little less pronounced, so for what it’s worth, my fingers were crossed.

But obviously it wasn’t worth much.

Last week’s turn-around on that morning was surprising, as it was welcome. I don’t expect the same to happen again this morning, but it would have been even more welcome this week, as there are fewer days to recover from any large decline, as markets are closed on Friday.

Today’s trading helped nothing.

At the very least we can be certain that March is coming to its close today and it will be as good to see it go as it was to see January go. What we don’t know is whether April will be as welcome a breath of fresh air as was February.

Unfortunately, April will have the added challenge of currency challenged earnings that will start in about a week. While you would think that we’re all prepared to deal with the adjustments that may need to be made in earnings expectations and that perhaps lower prices already reflect that reality, there’s bound to be shock and dismay coming.

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Daily Market Update – March 30, 2015 (Close)

 

 

 

Daily Market Update – March 30, 2015  (Close)

This is a holiday shortened trading week, but there’s plenty to push or pull markets.

Lately it doesn’t take very much, at least nothing that can be identified, to make markets move in a meaningful manner.

For starters this week there’s no shortage of Federal Reserve Governors giving speeches, including Stanley Fischer and Janet Yellen.

Interestingly, neither of them moved markets last week in any of the 3 speeches they gave. Yellen’s came during the final 15 minutes of trading last week which could have ended up being very interesting for its timing, but she said little in response to some tepid questioning from her home town crowd in San Francisco.

What may be most interesting is that this week the stock market will be closed when the Employment Situation Report is released on Friday. Lately that report has shown that it still can move markets, but this time the only market that it could possibly move will be the bond market which will be open on Friday.

Stock markets may have some catching up to do if the bond markets decide that the data is interesting enough to warrant a large move, as has been the case lately. Those 10 Year Treasury rates are still below 2%, but they were significantly higher just a few weeks ago and could make that move easily enough with another unexpectedly strong Employment Situation Report

Otherwise, there’s not too much expected this week as much of the country is on spring break or getting prepared to begin their break after a long winter.

With only one assignment last week and another week with just a handful of positions set to expire, the likelihood is that any new positions this week would look at using a weekly option, although their premiums are expected to be proportionately lower as there’s less time value this week.

Still, with cash reserves low, I don’t expect too much activity and would have liked to have seen this morning’s pre-open futures rally continue.

It was a nice change of pace to get something that I had been hoping for.

While the triple digit kind of pre-opening moves tend to replicate themselves once the opening bell rings, I was reminded that last week was an example of one such pre-opening triple digit move that had no legs. Fortunately that was a dive of over 100 points, but it’s always a little disconcerting when patterns are broken.

Today was more true to form, so the hope that the morning’s optimism continued wasn’t in vain.

But just as with last week’s large drop, it wasn’t not too easy to identify a reason for the day’s move although most were looking at some overnight news from China that could be leading toward their own form of Quantitative Easing.

That always makes the move a little more suspect, but if it turns out to be the real thing I would be more than happy to see it put this week’s expiring positions into contention for either rollovers or assignmen
ts and would be perfectly happy if there was a repeat of two weeks ago and plenty of opportunity to sell calls on uncovered positions.

Last week was such a low activity week, despite being able to out-perform the market. That’s rarely something to be happy about when out-performing still represents a decline, even though it is critical to stay ahead, especially during down markets.

For this week it would be nice if we could finally put an end to the March pattern of trading, which was virtually identical to the January trading.

Hopefully April will bring a return to February an some opportunity to both trade and make some money while seeing assets appreciate at the same time.

That would be nice for a change. Today was a good start to usher that change in.

 

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