Author Archives: TheAcsMan

Daily Market Update – March 25, 2014 (9:30 AM)

Following a pretty flat day to start the week the pre-opening futures were pointing toward another in a long series of steps that have taken this market higher.

As with most things in life it may not make sense to try and understand what is behind reality or to try and dissect out the component pieces in order to better understand or predict the future. Sometimes it’s just better to go along with the flow of things and just take credit for what would have happened without you.

With a handful of purchases yesterday I would like to see some more happen today, especially since there is still a little bit of volatility built into premiums for next week that may make it worthwhile to try and populate the coming week with contracts.

Looking into a sea of green in the 30 minutes before trading, however, that doesn’t seem too likely, at least at the open, as I don’t like following strength and chasing after stocks. They rarely get away for good, almost always coming back.

If anything, I like making a purchase as weakness is developing or at least shares are lagging behind on a strong market day.

If you’ve ever gone to a high school reunion or elementary school reunion the phenomenon of “catch up” is clear, as so often the goofiest of kids becomes like everyone else at some point in their adult lives. By the same token, so often the most fit and able in childhood and in the teens  become the most paunchy and tired as adults.

With too much cash still sitting on the sidelines I’d like to add to this week’s positions, but would be happy to simply continue finding cover for under-performing and non-performing shares. My bank account doesn’t really distinguish between the income that comes as a result of having purchased new shares and sold calls or simply sold calls on existing shares.

Following up on some discussion yesterday and in this past week’s “Week in Review”  of seeking to generate some income from those laggards, the best time is when stocks are in an uptrend. There’s no better time to sell calls than into strength and there’s no better time to sell puts than into weakness.

Both of those scenarios are really enhanced when the volatility is, as well.

For those that didn’t see it, I wrote an article last night on margin accounts.

Before anyone gets too excited or rushes out to bury themselves in margin debt, don’t do that.

But if you already have a margin account or are considering getting one, the article contains some ideas of how such an account can be a benefit to a covered option trader, without the level of risk that it conveys upon typical individual investors.

Daily Market Update – March 24, 2014 (Close)

It’s another week that seems to be getting ready to start off with a calm opening, although the past three weeks have been anything but calm when it comes to cumulative activity. After the previous few weeks have been done, all after the initial news of trouble in Crimea, markets have ended strongly lower and strongly higher, despite what appeared to be calm beginnings.

My preference, if there’s going to be some tumult, tends to be a down Monday to start the week, especially after lots of assignments.

All in all, despite a little bit of indecision it did turn out to be a pretty calm day without the slightest shred of  real news coming from any source.

With all of that cash now sitting and waiting to be re-deployed the challenge, as always, is not giving into the temptation to do so all at once. There’s nothing worse than catching the top of a single stock, much less the top of a basket of stocks or an entire market, especially when it can be avoided with just a little bit of self-discipline.

A cash reserve of almost 50% creates lots of opportunity, but not all opportunity is good. It’s been a long time since I’ve gone on a spending spree after a week of lots of assignments and I don’t think I’ll be going on one this week either, but I am willing to get down to a 30% cash level. That would be about 10 new positions, although lately the number has been far less. Today’s four new positions was a start, at least and did create some additional cash flow without too much added risk.

As mentioned at last week’s close I will be increasingly looking at the opportunity to  squeeze premiums out of as many positions as possible that are currently uncovered, through the use of strike levels below cost basis. That means a need for greater maintenance of positions, including the possibility of rollovers at a net debit, as may be appropriate to help work a position back toward an acceptable ROI. Doing so is simply a modification of the DOH strategy. Maybe I’ll call it a “mini-DOH.”

As with the DOH strategy it helps to have volatility showing some increasing level in order to make the premium more closely offset the risk of assignment or rollover at a net debit, so not all positions may be created equally in being candidates, although that could change from week to week. As today wore on volatility decreased, so as it turned out the early in the session trades utilizing the April 4, 2014 expiration were better suited than they would have been at the end of the day.

This week I’m not terribly interested in risk other than possibly taking advantage of any position that takes a sudden hit to price that may appear to be overdone or some potential earnings related trades. Otherwise, I think this may be a week to go with reasonably boring stocks, although even those are often at or near their price peaks.

The market’s pre-open trading seemed to indicate that little of market moving potential outside of the markets themselves are knocking on the door. For know, Crimea is quiet, there’s no additional disappointing news coming from China and the coming week has little in the way of important economic reports.

With earnings season near its end and the new one still a few weeks away it’s almost like being in limbo, but we all know that won’t last. Despite the appearances of quiet and calm the market frequently finds its own reasons for dysfunction and over-reaction.

While I do like to complain about that, it’s that very lack of predictability which creates the volatility that I don’t complain about when it’s developing.

With already eleven positions set to expire this week and having added another two, there is almost nothing thereafter, I would like to populate some of those out weeks with contracts, if only the volatility would make those premiums a little more inviting as the week goes on.

Based on the past year the periodicity between the “mini-VIX” peaks that I pointed out last week to the “maxi peaks” has been about 6 weeks and we just passed a “mini-peak.” If that stays true to form then better premiums may be on the way, but as often is the case, that comes at the expense of better stock prices.

That may re-inforce some caution when looking to spend all of that cash that’s now on the sidelines, although there still may be some time to party between peaks.

It’s those kinds of discussions and analyses that makes me glad I don’t spend more time looking at charts. I couldn’t imagine always talking and thinking like that.

Daily Market Update – March 24, 2014 (9:00 AM)

It’s another week that seems to be getting ready to start off with a calm opening, although the past three weeks have been anything but calm when it comes to cumulative activity. After the previous few weeks have been done, all after the initial news of trouble in Crimea, markets have ended strongly lower and strongly higher, despite what appeared to be calm beginnings.

My preference, if there’s going to be some tumult, tends to be a down Monday to start the week, especially after lots of assignments.

With all of that cash now sitting and waiting to be re-deployed the challenge is not giving in to the temptation to do so all at once. There’s nothing worse than catching the top of a single stock, much less the top of a basket of stocks or an entire market, especially when it can be avoided with just a little bit of self-discipline.

A cash reserve of almost 50% creates lots of opportunity, but not all opportunity is good. It’s been a long time since I’ve gone on a spending spree after a week of lots of assignments and I don’t think I’ll be going on one this week either, but I am willing to get down to a 30% cash level. That would be about 10 new positions, although lately the number has been far less.

As mentioned at last week’s close I will be increasingly looking at the opportunity to  squeeze premiums out of as many positions as possible that are currently uncovered, through the use of strike levels below cost basis. That means a need for greater maintenance of positions, including the possibility of rollovers at a net debit, as may be appropriate to help work a position back toward an acceptable ROI. Doing so is simply a modification of the DOH strategy. Maybe I’ll call it a “mini-DOH.”

As with the DOH strategy it helps to have volatility showing some increasing level in order to make the premium more closely offset the risk of assignment or rollover at a net debit, so not all positions may be created equally in being candidates, although that could change from week to week.

This week I’m not terribly interested in risk other than possibly taking advantage of any position that takes a sudden hit to price that may appear to be overdone or some potential earnings related trades. Otherwise, I think this may be a week to go with reasonably boring stocks, although even those are often at or near their price peaks.

The market’s pre-open trading seems to indicate that little of market moving potential outside of the markets themselves are knocking on the door. For know, Crimea is quiet, there’s no additional disappointing news coming from China and the coming week has little in the way of important economic reports.

With earnings season near its end and the new one still a few weeks away it’s almost like being inlimbo, but we all know that won’t last. Despite the appearances of quiet and calm the market frequently finds its own reasons for dysfunction and over-reaction.

While I do like to complain about that, it’s that very lack of predictability which creates the volatility that I don’t complain about when it’s developing.

With already eleven positions set to expire this week and almost nothing thereafter, I would like to populate some of those out weeks with contracts, if only the volatility would make those premiums a little more inviting.

Based on the past year the periodicity between the “mini-VIX” peaks that I pointed out last week to the “maxi peaks” has been about 6 weeks and we just passed a “mini-peak.” If that stays true to form then better premiums may be on the way, but as often is the case, that comes at the expense of better stock prices.

That may re-inforce some caution when looking to spend all of that cash that’s now on the sidelines, although there still may be some time to party between peaks.

It’s those kinds of discussions and analyses that makes me glad I don’t spoend more time looking at charts.

Daily Market Update – March 21, 2014 (9:00 AM)

The Week in Review will be posted by 6 PM and the Weekend Update will be posted by noon on SUnday.

Today’s possible outcomes include:

Assignment:  ANF, COH, FAST, HFC, INTC, LB ($44), MSFT, TMUS

Rollover:  APC, BBY, LB ($47.40), TWTR (put)

Expiration:  CHK, FDO, GM, LULU, RIG, WFM

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

Daily Market Update – March 20, 2014 (Close)

After yesterday’s late day swoon following some confusion and maybe too much candor from new Federal Reserve Chairman Janet Yellen, it looks as if the market is willing to forget the brief pseudo-panic and move forward.

After a few years of press conferences in which very little was said that surprised anyone or took the markets for a ride, it was an unexpected reminder of how tentative and fickle prices may be at any moment in time.

The market’s initial reaction to yesterday’s confusion was a good example of the perils of trading at or near historical highs even when there is news to support such highs. When the support is less than compelling it probably doesn’t take too much to see a sudden shift in gear.

What you never know and sometimes sit in fear of, is at what point do you reach a breaking point or when frenzy begins to feed upon itself. In the case of a short squeeze most of us like that kind of self-feeding frenzy, but when the market is heading lower it’s a completely different set of emotions.

However, there was never really a true sense of panic at any time during the 56 minutes or so of reaction and the market did recover nearly half of its very quick loss, so the news can’t be all bad.

At least today, after trading was ended, we were moved a bit further away from any mythical breaking point as the market spent most of the day slowly working its way to a 100 point gain until giving a little back b y the close.

When these kind of things happen, as yesterday’s sell-off as one example, it does have to make everyone watching increase their personal level of unease, even if you can put somewhat of a positive spin on the outcome. Even if the phenomenon is short lived it has to leave at least a little bit of an imprint on people’s minds and maybe a little bit of hesitancy regarding increasing risk levels or the kind of risk taken on.

On the flip side you’ll find those who will now say that some of the uncertainty regarding interest rates may now have been removed and that lifting of uncertainty clears the way for the market to move higher.

Today they were right.

The nice thing is that either of those scenarios will eventually come true. One or the other. Unlike 2011 when the market finished unchanged for the year or when green comes up on the roulette wheel, something is likely to happen and one group will be able to point to their visionary prowess while the other will conveniently ignore their position and pretend to be unwounded and just move forward.

What you can be certain of is that some algorithms are being re-tweaked and certain words in official statements, speeches, or off the cuff remarks will be given new weightings based on yesterday’s comments. That’s despite the fact that there is no definitive intent confirmed in yesterday’s comments. Instead, they’ve been interpreted in any number of ways.

For me, my vision runs out at the end of each week. I just want to get to that endpoint and start wiping off the lenses to see what may be on the next near term horizon , which generally happens to be a week or two away. I’m not thinking ahead to this Fall, nor much less to the Fall of 2015, as those focusing on interest rates have suddenly set their sights.

What my vision didn’t foresee was another onslaught on Walter Energy.

Yesterday it was about 8% higher as news came out that it was ready to bring notes to market following news the previous week that it was granted a further lending facility. Shares took a hit after that news and it was nice to see that the actual announcement of the event was met with some kindness. AS with everything else, Walter Energy gave up most of its gains in the final hour of trading after the Federal Reserve “mis-speak.”

This morning, however, I was stunned to see a large decline in the pre-open. What made this different from other large pre-open price indications was that there was actually heavy volume to support that move, as opposed to a transaction of 100 shares at a ridiculous price.

It took a couple of hours before finally finding the reason behind the drop, having received a link from a subscriber regarding a Bank of America downgrade of the sector, with especially haqrsh words for Walter Energy.

By the close of trading its rop was almost as large as the one taken this past June 2013.

The good news is that the last time it recovered that loss by the second day after.

Hopefully history repeats itself, but today was especially discouraging on that front, while the rest of the day turned out to be fairly pleasant.

With the pre-open trading suggesting that a reasonably calm opening looked likely that provided some level of comfort that yesterday’s sell off wouldn’t do irreparable damage to the ability to see respectable numbers of assignments and rollovers tomorrow.

Thankfully, there is more than Walter Energy.

Daily Market Update – March 20, 2014 (9:30 AM)

After yesterday’s late day swoon following some confusion and maybe too much candor from new Federal Reserve Chairman Janet Yellen, it looks as if the market is willing to forget the brief pseudo-panic and move forward.

After a few years of press conferences in which very little was said that surprised anyone or took the markets for a ride, it was an unexpected reminder of how tentative and fickle prices may be at any moment in time.

The market’s initial reaction to yesterday’s confusion was a good example of the perils of trading at or near historical highs even when there is news to support such highs. When the support is less than compelling it probably doesn’t take too much to see a sudden shift in gear.

What you never know and sometimes sit in fear of, is at what point do you reach a breaking point or when frenzy begins to feed upon itself. In the case of a short squeeze most of us like that kind of self-feeding frenzy, but when the market is heading lower it’s a completely different set of emotions.

However, there was never really a true sense of panic at any time during the 56 minutes or so of reaction and the market did recover nearly half of its very quick loss, so the news can’t be all bad.

When these kind of things happen it does have to make everyone watching increase their level of unease, even if you can put somewhat of a positive spin on the outcome. Even if the phenomenon is short lived it has to leave at least a little bit of an imprint on people’s minds and maybe a little bit of hesitancy regarding increasing risk levels or the kind of risk taken on.

On the flip side you’ll find those who will now say that some of the uncertainty regarding interest rates may now have been removed and that lifting of uncertainty clears the way for the market to move higher.

The nice thing is that either of those scenarios will eventually come true. One or the other. Unlike 2011 when the market finished unchanged for the year or when green comes up on the roulette wheel, something is likely to happen and one group will be able to point to their visionary prowess while the other will conveniently ignore their position and pretend to be unwounded and just move forward.

What you can be certain of is that some algorithms are being re-tweaked and certain words in official statements, speeches, or off the cuff remarks will be given new weightings based on yesterday’s comments. That’s despite the fact that there is no definitive intent confirmed in yesterday’s comments. Instead, they’ve been interpreted in any number of ways.

For me, my vision runs out at the end of each week. I just want to get to that endpoint and start wiping off the lenses to see what may be on the next near term horizon , which generally happens to be a week or two away. I’m not thinking ahead to this Fall, nor much less to the Fall of 2015, as those focusing on interest rates have suddenly set their sights.

With a reasonably calm opening looking likely that provides some level of comfort that yesterday’s sell off won’t do irreparable damage to the ability to see respectable numbers of assignments and rollovers tomorrow.

This is looking like another in a recent series of weeks in which relatively few new positions have been opened. Fortunately there have been a number of existing positions finding cover, even if only briefly for “DOH Trades” but that does help add to returns, little by little.

Daily Market Update – March 19, 2014 (Close)

With what appears to be a day of relative quiet coming from Europe and not too much expected from the FOMC minutes the only thing capturing attention today is the prospects of Janet Yellen having a slip of the tongue during her first post-FOMC release press conference.

Although I was listening, I’m not certain of what she said that at 3:04 PM EDT set off a massive sell off. Looking at this minute by minute chart of today’s trading, you don’t see many precipitous drops like the one in the late afternoon.

We’ve started taking these press conferences for granted, but it wasn’t too long ago when we were all shocked when Ben Bernanke announced that he would hold a first ever such press conference. Given the very precise and methodic way in which Bernanke weighed each word, he could have spoken daily without spooking anyone unless that was his intention.

Now there’s clamoring for the press conferences to become a monthly event despite the fact that it hasn’t really yielded much in the way of new or market moving information.

At least if you ignore today.

Although there are people hoping for some new information to be passed along, even if unintentionally, the past hasn’t indicated that to be the case, but the past has only included a single individual in control of the words.

I didn’t expect much different from Janet Yellen. It would be hard to imagine that after so many years of public exposure and lots of opportunities to have provided unintentional information that she would start doing so today. However, her precision in defining the time frame of actions related to interest rates may have caught some by surprise. She put, what some may interpret as a concrete time frame of 6 months for rates to rise after Quantitative Easing ends.

There was confusion regarding her precision and then her imprecision in referring to whether referring to this year’s fall season or next year’s. That’s because QE is likely to end in January 2015 and one would have interpreted her initial words to mean that interest rates would be expected to rise some “considerable time” thereafter. However, she then referred to that time as “this fall,” instead of “next fall.”

That reportedly got traders or their algorithms nervous.

Whatever.

Coming up to the mid-way point of the week I’m not seeing very many more new positions for the week but am hopeful that there are more opportunities for getting new cover and hope to see a reasonable number of assignments as the monthly expiration comes to a close on Friday.

For those having done this long enough you do know that even when there is nothing new in an FOMC release that doesn’t mean that the market will just find itself in a big yawn. Sometimes the reaction is really inexplicable.

Today was just one of those times, but it was pretty orderly, even though it did reflect a nervous market.

What can make those kind of moves especially frustrating and maddening is when that inexplicable reaction occurs just days before that expiration, especially a monthly expiration and serves to steal your fantasies of being awash in assignment cash and rollovers.

Never take anything for granted; don’t count your chickens before they’re hatched; or whatever aphorism you prefer, but there is a lot to be said for that warning.

For that matter that may also apply to the belief that absolutely nothing of news will come from today’s events.

You never do know until it’s all said and done.

Heading into the monthly close I am still optimistic regarding assignments and maybe even some additional rollovers to help next week get off to a decent income flow start. Today turned out to be a quiet day other than for the past 56 minutes.

While the first two days of this week have been a good antidote to the  successive losses of last week, it has removed some of the ability to spend on new positions. Who knows, maybe the final hour’s sell-off created some new opportunities, but I didn’t really have the  desire to test the market.

While still optimistic that the market may go higher, based on the volatility pattern I mentioned earlier in the week, I did take the opportunity yesterday to purchase some portfolio protection in the form of a Volatility ETN.

On the one hand while low volatility causes low option premiums it also makes such insurance relatively inexpensive.

In this case I purchased iShares S&P 500 Short Term Volatility ETN (VXX) at about $44 and sold January 2015 $100 calls.

For those that understand the ETN vehicle, they really aren’t meant for long term holding as they get re-balanced everyday and can lose some value each time. Compound that loss over time and it can add up even if your directional bet is correct.

The Volatility ETN acts as portfolio protection because it tends to move higher when the market moves lower and it tends to do so in a leveraged fashion, so you buy a position that is much less in overall value than your typical new position. For example, a 1% decrease in the market may show a 5% increase in the Volatility ETN. In that case your portfolio will show a smaller loss. How much smaller depends on how convinced you are that insurance will pay off and at what levels you are willing to purchase it.

I didn’t purchase very much but may add even more if volatility gets even cheaper, especially if heading back to about the 2 level on the underlying index.

The use of this kind of portfolio protection is just like any other kind of insurance. Sometimes you’re happier if it never gets used, but it does represent a cost and detracts from your overall ROI if purchased.

Purchasing the protection is an expression of  bearish sentiment, but at some point if shares are inexpensive enough you can dally with it without really making a strong statement regarding your sentiment.

Or you can look at it as simply hedging your hedges and then take it to yet another derivative when you also sell calls on the hedge. Whatever its use, these volatility products are very high maintenance and can lead to disappointment on their own, so know about it, but don’t go rushing in to any of them.

PS: The early morning version of the Daily Market Update referred to Janet Yellen in a gender specific fashion that was pointed out by one reader to have been incorrect. In fact, it is inappropriate to refer to Janet Yellen using the word “his,” although if you do close your eyes she does sound like Woody Allen.

Daily Market Update – March 19, 2014 (9:15 AM)

With what appears to be a day of relative quiet coming from Europe and not too much expected from the FOMC minutes the only thing capturing attention today is the prospects of Janet Yellen having a slip of the tongue during his first post-FOMC release press conference.

We’ve started taking these for granted, but it wasn’t too long ago when we were all shocked when Ben Bernanke announced that he would hold a first ever such press conference.

Now there’s clamoring for it to become a monthly event despite the fact that it hasn’t really yielded much in the way of new or market moving information.

Although there are people hoping for some new information to be passed along, even if unintentionally, the past hasn’t indicated that to be the case, but the past has only included a single individual in control of the words.

I don’t expect much different from Janet Yellen. It would be hard to imagine that after so many years of public exposure and lots of opportunities to have provided unintentional information, she’s probably not going to start doing so today.

Coming up to the mid-way point of the week I’m not seeing very many more new positions for the week but am hopeful that there are more opportunities for getting new cover and hope to see a reasonable number of assignments as the monthly expiration comes to a close on Friday.

For those having done this long enough you do know that even when there is nothing new in an FOMC release that doesn’t mean that the market will just find itself in a big yawn. Sometimes the reaction is really inexplicable.

What can make it especially frustrating and maddening is when that inexplicable reaction occurs just days before that expiration, especially a monthly expiration and serves to steal your fantasies of being awash in assignment cash and rollovers.

Never take anything for granted; don’t count your chickens before they’re hatched; or whatever aphorism you prefer, but there is a lot to be said for that warning.

For that matter that may also apply to the belief that absolutely nothing of news will come from today’s events.

You never do know until it’s all said and done.

Heading into the monthly close I am optimistic regarding assignments and maybe even some additional rollovers to help next week get off to a decent income flow start.

While the first two days of this week have been a good antidote to the  successive losses of last week, it has removed some of the ability to spend on new positions.

While still optimistic that the market may go higher, based on the volatility pattern I mentioned earlier in the week, I did take the opportunity yesterday to purchase some portfolio protection in the form of a Volatility ETN.

On the one hand while low volatility causes low option premiums it also makes such insurance relatively inexpensive.

In this case I purchased iShares S&P 500 Short Term Volatility ETN (VXX) at about $44 and sold January 2015 $100 calls.

For those that understand the ETN vehicle, they really aren’t meant for long term holding as they get re-balanced everyday and can lose some value each time. Compound that loss over time and it can add up even if your directional bet is correct.

The Volatility ETN acts as portfolio protection because it tends to move higher when the market moves lower and it tends to do so in a leveraged fashion, so you buy a position that is much less in overall value than your typical new position. For example, a 1% decrease in the market may show a 5% increase in the Volatility ETN. In that case your portfolio will show a smaller loss. How much smaller depends on how convinced you are that insurance will pay off and at what levels you are willing to purchase it.

I didn’t purchase very much but may add even more if volatility gets even cheaper, especially if heading back to about the 2 level on the underlying index.

The use of this kind of portfolio protection is just like any other kind of insurance. Sometimes you’re happier if it never gets used, but it does represent a cost and detracts from your overall ROI if purchased.

Purchasing the protection is an expression of  bearish sentiment, but at some point if shares are inexpensive enough you can dally with it without really making a strong statement regarding your sentiment.

Or you can look at it as simply hedging your hedges and then take it to yet another derivative when you also sell calls on the hedge.

Daily Market Update – March 18, 2014 (9:15 AM)

Yesterday was a great day in the market and a perfect example of why not to listen to Wall Street adages.

In this case, “buy the rumor and sell the news,” would have led you astray as events in Crimea had come to their initial conclusion and the entire chain of events and speculation started with selling and ended with some kind of jubilation yesterday.

While events were in their nascency there was lots of uncertainty and that’s precisely what the markets were reacting toward. Upon casting the final votes in the referendum at least the first phase of that uncertainty was completed.

This morning’s pre-open showed that the market values words more than actions. The pre-open had been headed lower until Russia’s President Putin addressed his Parliament and seemed to give an indication that Crimea was an endpoint for Russian expansion interests and that there was no interest in dividing Ukraine. He specifically said that no one should believe those who said that Crimea was just the beginning of Russian actions.

At that point the futures turned around and headed higher, despite the fact that this was the same man who a month earlier had denied that Russia had any interests or intended actions in Crimea. World history is filled with those kinds of statements of denial of intent.

But words have value as they point toward the future, while actions are so yesterday.

With actions still to come in response to any steps taken by Russia in the aftermath of the referendum in Crimea, there may still be some short term risk as sanctions, whether meaningful or not are going to be met by a “tit for tat” kind of response so reminiscent of the Cold War.

While the market’s early reaction seems to be one of confidence it just seems hard to put too much faith into the words. It also points out that the market is susceptible to disappointment, having already experienced that kind of disappointment as events began to initially unfold.

Most people don’t like to see the markets being swayed back and forth by external events upon which we have no control. Deciding what side to take is purely one of guesswork, made palatable by the knowledge that every event driven series of events comes to an end sooner or later.

Waiting for a conclusion isn’t necessarily a strategy as a multitude of events in waiting can easily become a streaming source of uncertainty. A few years ago it was Greece, then Spain, then the debt ceiling and on and on.

As always that shouldn’t preclude at the very least consideration of taking new market positions even in the face of an actively developing situation. While the market, as a whole, may have downside risk related to specific events, it’s often very difficult to extend that risk to specific individual stocks, other than what they may experience through some contagion.

Not that Best Buy is a great stock, but what does Best Buy or an investor in Best care about what is occurring in Crimea? T-Mobile? Where is the added risk with an expansion of the Russian Federation?

Increasingly, as the market is working its way higher against common sense both the laggards and the losers have greater appeal for me, particularly after an acute loss.

With a small number of new positions to start the week there’s still some room for more this week even as we wait for international events and Janet Yellen’s first press conference as Chairman of the Federal Reserve. However, following yesterday’s run higher many positions just aren’t as appealing as they had been as the market closed on Friday.

While the pre-open turnaround and move higher hasn’t re-created what seemed to be relative bargains just a few days ago, sometimes the market comes to its senses. Waiting a little while to see whether this morning’s early optimism really has any legs will make some sense, although I wouldn’t mind a repeat of yesterday and the opportunity to just watch exisiing shares go higher.

Daily Market Update – March 17, 2014 (Close)

It was nice seeing the market pointing toward a higher open in the early trading to start the week, despite the fact that I usually like to see a weak start so that there is some opportunity to pick up early bargains.

It was even nicer see it add to that early move higher and never even give the slightest hint of faltering.

In this case, however, after 5 straight losing days, as with any stock that you’re interested in buying after a sustained fall, it’s always nice to see some stability return before making your commitment.

The stability that is appearing this morning is reportedly due to quiet over the weekend from Crimea after the referendum and then no real further news as the day wore on, despite the announcement of some very limited sanctions.

But none of what has transpired over the past couple of days and the US response should have come as a surprise. The result was fully expected as should have been the realization that the Ukrainian people and Army had enough discipline to not so anything stupid while there is a Russian Army looking for the slightest pretext to unleash some force.

In all likelihood the only wild card in the equation is whether there are further unilateral acts by the Russian Army, especially within the borders that are universally recognized as being part of Ukraine, even by Russia.

While the appearance of stability brings with it some comfort, it’s not enough to immediately start with a personal “buy program.” As has been the case the past month the first hour of trading hasn’t necessarily reflected where the rest of the day will go, especially if that first hour has been a move higher.

As may be appropriate at a time when we’re all looking to the East to see what kind of a pall may be cast over the markets, before I’m ready to dip into cash there’s a need to “trust, but verify.”

While there’s no real way to verify that the market means what it appears to be doing, there’s good reason to discount initial appearances for now.

With cash standing at about 36% I am, however, more optimistic than in the past few weeks and am willing to get down to a 20% level.

I doubt that will be the case, but I am looking for volatility to stop its upward movement and along with that there is the expectation that the market itself will equilibrate while events play themselves out.

For today, at least, volatility was stopped dead in its tracks, but I couldn’t justify just chasing anything, although there was enough reason to consider a few purchases as well as some personal put sale trades for the day.

At this point the script still calls for the Russian Parliament to make some decision regarding the fate of Crimea, whether to annex it or have it as an autonomous region. Then comes any further reaction from the United States and, perhaps Europe. With those reactions and counter-reactions may come trickle down to the markets, but I don’t expect that there will be anything of substance. In fact, there is reason to believe that last week’s weakness may already have been the result of selling by Russian nationals looking to remove money from the United States in advance of any potential freeze in the assets.

What I don’t understand is the belief that Europe will not express it’s disapproval in concrete ways because it is beholden to Russia for energy sales. Aafter all, who else is Russia then going to sell to? They need the currency as much as Europe needs the energy. At this time of the year, maybe even more than Europe needs it and China, if it is slowing down, doesn’t need to stock pile energy just to help Russia.

With international events put to the side this week’s FOMC isn’t likely to lead to anything of great substance either, although as we’ve seen in the past the way the market reacts doesn’t necessarily have to be tied to substance.

Those particular series of events in the making don’t have a particular chilling effect on me this week and I plan to use the level of attractiveness of premiums, especially in the outer week as a guide for this week’s purchases, as there are already a fair number of positions expiring this week as the March 2014 cycle comes to its conclusion.

If outer week premiums look promising and provide additional value then there is reason to look for longer time frames. Otherwise, there will be additional positions added to this week’s list of expiring names.

Hopefully this will be a better week than the last even though the overall portfolio outperformed the market. While it’s always nice to beat the competitor, it’s even better when you don’t come out of the match totally battered.

For those who believe that hope isn’t a strategy, it couldn’t hurt.

Daily Market Update – March 17, 2014 (9:00 AM)

It’s nice seeing the market pointing toward a higher open in the early trading to start the week, despite the fact that I usually like to see a weak start so that there is some opportunity to pick up early bargains.

In this case, however, after 5 straight losing days, as with any stock that you’re interested in buying after a sustained fall, it’s always nice to see some stability return before making your commitment.

The stability that is appearing this morning is reportedly due to quiet over the weekend from Crimea after the referendum.

But that shouldn’t have come as a surprise. The result was fully expected as should have been the realization that the Ukrainian people and Army have enough discipline to not so anything stupid while there is a Russian Army looking for the slightest pretext to unleash some force.

In all likelihood the only wild card in the equation is whether there are further unilateral acts by the Russian Army, especially within the borders that are universally recognized as being part of Ukraine, even by Russia.

While the appearance of stability brings with it some comfort, it’s not enough to immediately start with a personal “buy program.” As has been the case the past month the first hour of trading hasn’t necessarily reflected where the rest of the day will go, especially if that first hour has been a move higher.

As may be appropriate at a time when we’re all looking to the East to see what kind of a pall may be cast over the markets, before I’m ready to dip into cash there’s a need to “trust, but verify.”

While there’s no real way to verify that the market means what it appears to be doing, there’s good reason to discount initial appearances for now.

With cash standing at about 36% I am, however, more optimistic than in the past few weeks and am willing to get down to a 20% level.

I doubt that will be the case, but I am looking for volatility to stop its upward movement and along with that there is the expectation that the market itself will equilibrate while events play themselves out.

At this point the script calls for the Russian Parliament to make some decision regarding the fate of Crimea, whether to annex it or have it as an autonomous region. Then comes the reaction from the United States and, perhaps Europe. With those reactions and counter-reactions may come trickle down to the markets, but I don’t expect that there will be anything of substance. In fact, there is reason to believe that last week’s weakness may already have been the result of selling by Russian nationals looking to remove money from the United States in advance of any potential freeze in the assets.

By the same token, this week’s FOMC isn’t likely to lead to anything of great substance either, although as we’ve seen in the past the way the market reacts doesn’t necessarily have to be tied to substance.

Those particular series of events in the making don’t have a particular chilling effect on me this week and I plan to use the level of attractiveness of premiums, especially in the outer week as a guide for this week’s purchases, as there are already a fair number of positions expiring this week as the March 2014 cycle comes to its conclusion.

If outer week premiums look promising and provide additional value then there is reason to look for longer time frames. Otherwise, there will be additional positions added to this week’s list of expiring names.

Hopefully this will be a better week than the last even though the overall portfolio outperformed the market. While it’s always nice to beat the competitor, it’s even better when you don’t come out of the match totally battered.

For those who believe that hope isn’t a strategy, it couldn’t hurt.