Author Archives: TheAcsMan

Daily Market Update – October 13, 2014 (9:00 AM)

After 3 weeks of triple digit moves that seem to be getting bigger, the volatility has really climbed and is now at a two year high level, although still not terribly high by historical standards.

There isn’t very much happening this week as far as economic reports go, but lately it has been the injudicious use of words that have made markets move as nerves may be more frayed than is healthy.

This week there aren’t too many scheduled speeches, talks or conferences, so it’s possible that the market may actually focus on fundamentals, like earnings, which start going in full force this week.

For more than a year each quarterly earnings season has been lead off by strong earnings from the financial sector, especially the big money center banks, but the rest of teh market hasn’t necessarily kept up, especially on the retail side.

This year, the laggard is likely to be the energy sector and their forward guidance may be especially critical, while retail may be expected to do better than in the past.

If the focus does turn to earnings this week should be one with much less volatility, but predicting what may happen coming after the past three weeks is probably not a good idea.

This week, with less cash than I would like to have, but still uncertain about whether there i still more declines ahead, I’m not eager to spend much money.

As mentioned in the Weekend in Review, I may be more inclined to look at put sales as a means of entering positions and creating the week’s revenue streams.

However, based on where premiums were headed as the market came to its close on Friday, the volatility may be at that level where it may become possible to start thinking increasingly about DOH trades.

Doing so, though, requires some more nimbleness, in the event that an unwanted assignment looks as if iy may occur.

While I generally look at DOH trades as being short term, depending on where those premiums are and whether they extend to forward week contracts, there may be reason to consider their use in some out of the money expanded contracts.

Further, as earnings season is now also a factor, selective positions may also have their premiums enhanced by earnings, so there may be opportunity for the DOH trades to encompass the earnings enhancement and also take advantage of volatility enhanced time premium.

So this week the trading may be of a very different nature, although as always, once the opening bell rings, all of those well laid out plans may get scuttled.

The real challenge ahead is trying to discern between what seems to be a sea of value from the value traps that just want to suck up your investment dollars.

There’s certainly no reason to rush in to commit cash reserves at this point, especially resisting the temptation to get lured in by any single day’s strong move higher, as those tend to occur with great frequency during downtrends and just serve to have you buy at artificially higher prices.

Instead, I would be very happy to create the week’s income from simply selling as many calls as possible on existing positions and would certainly welcome a one day pop higher as the stimulus to do so.

This morning’s pre-opening futures are showing recovery from last nights early trading and the volatility is heading lower, but it’s not too likely that will impact option premiums that at Friday’s close were exceptionally high for a number of out of favor stocks in equally out of favor sectors.

So this morning may be a good one to sit back and see how the trading evolves after the opening bell, while assuming a defensive posture for the rest of the week.

MONDAY:  A generally quiet week, but lately words have been mopre meaningful than actual data. Strong earnings reports starting this week with banks could be the thing the markets need.

TUESDAY:     A very disappointing market day yesterday and, as a result, not a single trade to show for the effort. The effort to move higher lasted about 20 minutes and quickly gave way to uncertainty, before completely falling apart in the final hour. This morning seems tentative, at best.

WEDNESDAY: Despite yesterday’s decent finish to trading and Intel’s decent earning’s report, the market looks to be back to the path it had established nearly 4 weeks ago and is headed toward another triple digit down day, based on the opening futures.

THURSDAY:   Yesterday’s attempt to rally going into the close was a positive sign, but this morning’s futures point to another triple digit move lower. Even Goldman Sachs’ better than expected earnings are met with an initial sharp move lower this morning and does nothing to buoy markets.

FRIDAY:   Hang on, as the fourth week of triple digit moves comes to its end. FInally. But who knows what next week brings. For one, I’d like to see some sanity, which is marked by normal sized moves in either direction, rather than the “new normal” sized moves and give traders a chance to more rationally look at their positions.







Daily Market Update – October 10, 2014 (8:30 AM)

The Week in Review will be posted by 6 PM tonight and the Weekend Update will be posted by Noon on Sunday.

The following are possible outcomes for today:

Assignments:  none

Rollovers:  EMC

Expirations: WFM, DOW, GPS, HAL

The following were ex-dividend this week: GPS (10/6 $0.22), CPB (10/8 $0.31), DRI (10/8 $0.55), CHK (10/10 $0.09), FCX (10/10 $0.31)

There are currently no ex-dividend positions for next week

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

Daily Market Update – October 9, 2014 (Close)

It’s almost a little eerie when one day can go down 272 points and the next day can go up 274 points.

Of course when the third day see prospects of a 300 point decline it gets a little tiresome. Even if you do like the idea of volatility rising the process can really be painful.

While yesterday’s rebound was definitely welcome there’s still no escaping the historical significance of such large upward moves. They tend to occur during market downtrends and aren’t generally parts of the building blocks that take markets higher in a sustained fashion.

The October 2007 to March 2009 period was filled with those kind of days and if you can remember back to those days how many times did you think “finally, we’re done with all of the selling”?

There was a lot of talk about how yesterday represented a “key reversal” day.

That’s one where the market opens lower than the previous day, then moves to a new low, before reversing course to close higher than the previous day’s high.

There was a lot of talk about it because many see it as a very bullish sign, although like so many such signs it’s not as valid as many would like to believe. In fact, Thomas Bulkowski, who extensively studies chart patterns has reported that about 51% of the time that a key reversal occurs during a market downtrend, such as we’re currently experiencing, the trend continues downward after the  key reversal.

I don’t know if he’s right, but somebody is wrong when it comes to the significance of the exalted key reversal.

Still, yesterday was welcome as we head into the final days of the week and always hopeful for some combination of assignments and rollovers.

One of those hopes, The Gap, got dashed yesterday after the close, as its CEO unexpectedly announced hos retirement, saying he was unable to commit anew to the time being asked of him.

That’s a very bizarre reason, but more bizarre has been the immediate reaction to the announcement, particularly considering that there was nothing terribly spectacular about the CEO or his performance. If anything, during his reign, The Gap has been incredibly inconsistent in its performance and certainly not a stellar retail performer.

The market may be reacting to uncertainty over the real reasons for his sudden departure. The after hours response came before The Gap released its monthly same store sales, which were flat, but did indicate an increase in expenses, which ordinarily would probably have caused some drop in shares in the aftermarket. However, in the past, The Gap has typically made initial 5% moves in either direction upon same store sales, although often quickly reversing the initial reactions. This time, it’s a 10% move in the absence of significant same store sales news.

So that will be one to watch and weather as we await the real story.

For the morning there didn’t appear to be a follow through forthcoming to yesterday’s gains, although precious metals were showing a large bounce after prolonged selling. As often is the case, there’s no readily apparent reason for doing so other than the possibility that those inclined to trade precious metals suddenly believe that the selling was overdone, perhaps buoyed a bit by yesterday’s FOMC.

While I would have liked to see the same thing in today’s equity market, it’s a good thing that I didn’t hold my breath. I would have been happy with some stability in  prices and simply a little respite from a large move opposite to yesterday’s in an effort to see those positions set to expire tomorrow either be assigned or rolled over.

That wasn’t asking for too much, but today’s sell off was really over the top and again had no real reason for being, no matter how much people point once again at Martio Draghi for calling for economic reform from European leaders.

So while I was hoping to get some rollovers either done today or be in better position to do so, it was a repeat of last Thursday when the possibility was also made less likely.

Last week Friday’s strong gain salvaged the week, but I’m not so positive about the same happening tomorrow, as today was beginning to feel a little more like a blow off kind of sale, but still didn’t reach that level.

As far as rollovers go,  you may have noticed that with, what may be a temporary increase in volatility, I’ve taken the opportunity to take advantage of some improving premiums in forward weeks by rolling over to periods other then the next coming week. That offers a little extra bit of diversification and reduces dependency on a single week, which can easily be subject to a sudden adverse price movement.

With a few positions already set to expire next week, I may look for tomorrow’s rollover opportunities beyond that monthly cycle end date to further add to that spreading of risk, if possible.

December anyone?

Daily Market Update – October 9, 2014 (8:30 AM)

It’s almost a little eerie when one day can go down 272 points and the next day can go up 274 points.

While yesterday’s rebound was definitely welcome there’s still no escaping the historical significance of such large upward moves. They tend to occur during market downtrends and aren’t generally parts of the building blocks that take markets higher in a sustained fashion.

The October 2007 to March 2009 period was filled with those kind of days and if you can remember back to those days how many times did you think “finally, we’re done with all of the selling”?

There was a lot of talk about how yesterday represented a “key reversal” day.

That’s one where the market opens lower than the previous day, then moves to a new low, before reversing course to close higher than the previous day’s high.

There was a lot of talk about it because many see it as a very bullish sign, although like so many such signs it’s not as valid as many would like to believe. In fact, Thomas Bulkowski, who extensively studies chart patterns has reported that about 51% of the time that a key reversal occurs during a market downtrend, such as we’re currently experiencing, the trend continues downward after the  key reversal.

I don’t know if he’s right, but somebody is wrong when it comes to the significance of the exalted key reversal.

Still, yesterday was welcome as we head into the final days of the week and always hopeful for some combination of assignments and rollovers.

One of those hopes, The Gap, got dashed yesterday after the close, as its CEO unexpectedly announced hos retirement, saying he was unable to commit anew to the time being asked of him.

That’s a very bizarre reason, but more bizarre has been the immediate reaction to the announcement, particularly considering that there was nothing terribly spectacular about the CEO or his performance. If anything, during his reign, The Gap has been incredibly inconsistent in its performance and certainly not a stellar retail performer.

The market may be reacting to uncertainty over the real reasons for his sudden departure. The after hours response came before The Gap released its monthly same store sales, which were flat, but did indicate an increase in expenses, which ordinarily would probably have caused some drop in shares in the aftermarket. However, in the past, The Gap has typically made initial 5% moves in either direction upon same store sales, although often quickly reversing the initial reactions. This time, it’s a 10% move in the absence of significant same store sales news.

So that will be one to watch and weather as we await the real story.

For the morning there doesn’t appear to be a follow through forthcoming to yesterday’s gains, although precious metals are showing a large bounce after prolonged selling. As often is the case, there’s no readily apparent reason for doing so other than the possibility that those inclined to trade precious metals suddenly believe that the selling was overdone, perhaps buoyed a bit by yesterday’s FOMC.

While I’d like to see the same thing in today’s equity market, I’m not going to hold my breath. Instead, I’d be happy with some stability in  prices and a little respite from a large move opposite to yesterday’s in an effort to see those positions set to expire tomorrow either be assigned or rolled over.

As far as rollovers go,  you may have noticed that with, what may be a temporary increase in volatility, I’ve taken the opportunity to take advantage of some improving premiums in forward weeks by rolling over to periods other then the next coming week. That offers a little extra bit of diversification and reduces dependency on a single week, which can easily be subject to a sudden adverse price movement.

With a few positions already set to expire next week, I may look for today and tomorrow’s rollover opportunities beyond that monthly cycle end date to further add to that spreading of risk, if possible.

Daily Market Update – October 8, 2014 (Close)

There are lots of people who are dismayed to see the market pointing mildly higher this morning. Imagine how they must feel as it came to its unlikely close this afternoon.

That’s because they believe that after a 272 point sell off the real healthy market action would be to have a blow out kind of selling environment. That is thought to be akin to “getting it all out of your system” and then being in a position to start all anew.

Instead, thanks mostly to a dovish FOMC Statement that took notice of European weakness, the market erased yesterday’s loss and even had one of those “key reversals” that get mentioned every now and then.

Thoose are supposed to be very, very positive signals.

The “blow out” theorists do seem to have history on their side, but it tends to be the sort of thing that you see during a protracted market decline and has more false positives than you might want to know about if you believed in that theory. Just look at the period of time between October 2007 and March 2009 and you’ll see lots of declines that could have qualified as “blow outs,” but were predictive of nothing.

Before getting too smug about what means what, those key reversals aren’t perfect, either.

On the other hand, there’s probably nothing terribly wrong with creating another one of these 5% declines that seem to occur every two months. We’re less than 1.5% away from having done that and if the past two years is any guide, after having done so it’s off to more new records.

That pattern will remain to be a valid one until it’s broken and it’s anyone’s guess whether we are on a path to break the pattern now, but we should know soon, as the peak to trough back to peak over the past two years has generally been on the order of less than 3 weeks.

Did today break reconfirm that pattern?

Well, maybe, but you would have been prematurely optimistic if saying the same thing last Friday on a similar kind of day.

But with today being an FOMC Statement release day there may be a little more riding on it than usual. Always something that the market finds a reason to react to, today any change that could be construed as indicating interest rate hikes coming sooner than expected could really tip the already nervous market into something of a blow off kind of selling pattern.

That’s true even though we all know that with each passing month that interest rate hike becomes a case of “sooner rather than later.”

Yesterday’s sell-off in advance of today’s FOMC was surprising and again, there really wasn’t very much of substance to support that kind of selling, although fingers were pointed at Europe. However, the market which had already opened gapped down from the previous day’s close took a real drop sometime after 2 PM without any new news to account for that sell off.

This kind of back and forth alternation between losses and gains, especially in the magnitude of the changes is different from the 5% corrections that we’ve gotten accustomed to seeing. Those have been more based on smaller, but sustained movements lower, just as the bounces higher had also not been characterized by explosive movements.

What that means is also anyone’s guess. In the past 5 years it has both meant a highly tumultuous market with a large net decline, as well as a market that essentially was treading water.

Volatility, as the day was getting ready to begin trading, was at the same level it was at its peak during the last market mini-correction, when the S&P 500 stood at 1925, which was 10 points below yesterday’s close.

In the past year volatility hit its peak in February, approximately 25% higher than it currently sits and the S&P 500 was then at 1741, which would represent a very sizeable drop from the current level.

However, even that February volatility peak is fairly low by historical standards, so there’s some reason to be concerned, but only if there is a breech of the usual 10% correction threshold.

For those that have cash reserves, despite what appears to be some bargain prices, I would still be reluctant to do much shopping, although an occasional purchase can still be a timely one.Today’s surge after the FOMC report was interesting to watch, but other than looking for some opportunities to sell calls, it wasn’t very enticing as far as making me part with any more money.

If you’ve been sitting back, today was a good day to continue inactivity and tomorrow may be the same. If the market is destined to go higher after today’s key reversal, let it do so and let it do the hard lifting. If it results in some assignments, that would be just fine by me.

Daily Market Update – October 8, 2014 (9:00 AM)

There are lots of people who are dismayed to see the market pointing mildly higher this morning.

That’s because they believe that after a 272 point sell off the real healthy market action would be to have a blow out kind of selling environment. That is thought to be akin to “getting it all out of your system” and then being in a position to start all anew.

The “blow out” theorists do seem to have history on their side, but it tends to be the sort of thing that you see during a protracted market decline and has more false positives than you might want to know about if you believed in that theory. Just look at the period of time between October 2007 and March 2009 and you’ll see lots of declines that could have qualified as “blow outs,” but were predictive of nothing.

On the other hand, there’s probably nothing terribly wrong with creating another one of these 5% declines that seem to occur every two months. We’re less than 1.5% away from having done that and if the past two years is any guide, after having done so it’s off to more new records.

That pattern will remain to be a valid one until it’s broken and it’s anyone’s guess whether we are on a path to break the pattern now, but we should know soon, as the peak to trough back to peak over the past two years has generally been on the order of less than 3 weeks.

But with today being an FOMC Statement release day there may be a little more riding on it than usual. Always something that the market finds a reason to react to, today any change that could be construed as indicating interest rate hikes coming sooner than expected could really tip the already nervous market into something of a blow off kind of selling pattern.

That’s true even though we all know that with each passing month that interest rate hike becomes a case of “sooner rather than later.”

Yesterday’s sell-off in advance of today’s FOMC was surprising and again, there really wasn’t very much of substance to support that kind of selling, although fingers were pointed at Europe. However, the market which had already opened gapped down from the previous day’s close took a real drop sometime after 2 PM without any new news to account for that sell off.

This kind of back and forth alternation between losses and gains, especially in the magnitude of the changes is different from the 5% corrections that we’ve gotten accustomed to seeing. Those have been more based on smaller, but sustained movements lower, just as the bounces higher had also not been characterized by explosive movements.

What that means is also anyone’s guess. In the past 5 years it has both meant a highly tumultuous market with a large net decline, as well as a market that essentially was treading water.

Volatility is now at the same level it was at its peak during the last market mini-correction, when the S&P 500 stood at 1925, which is 10 points below yesterday’s close.

In the past year volatility hit its peak in February, approximately 25% higher than it currently sits and the S&P 500 was then at 1741, which would represent a very sizeable drop from the current level.

However, even that February volatility peak is fairly low by historical standards, so there’s some reason to be concerned, but only if there is a breech of the usual 10% correction threshold.

For those that have cash reserves, despite what appears to be some bargain prices, I would be reluctant to do much shopping, although an occasional purchase can still be a timely one.

If you’ve been sitting back, today seems to be a good day to continue inactivity.

Daily Market Update – October 7, 2014 (CLose)

It’s hard to say whether yesterday was a disappointment or not.

While it’s true that the early morning gain never quite survived, neither did it give way to any kind of tangible profit taking.

But even if you had doubts about yesterday, there can’t be any about today.

This morning appeared ready to start exactly where yesterday left off. The market was pretty ambivalent yesterday and had a hard time deciding whether to finish higher or lower. This morning it looked as if there would be a mildly lower opening with no real news to fuel anything.

That changed, but without any real obvious reason and the market ended with another of these 200+ point moves, but in the wrong direction, unless you’re really into volatility.

Even I’m not that into volatility.

While yesterday had the Hewlett Packard news which by all appearances was a dizzying spin of why the split up was a reflection of Hewlett Packard’s success, today had nothing.

Other than all of the scheduled speakers this week and tomorrow’s FOMC Statement release, that pretty much describes the rest of the week.

In the meantime the market had been sitting just short of the mid-way point for its 2 year pattern of mini-corrections. It was getting ready to start the morning about 2.3% below its high from a few weeks ago, so it was really anyone’s guess where the next stop would be be.

Tomorrow morning the only thing to guess is whether we will see the market takes us to and perhaps beyond that 5% mini-correction level that we last saw at the very end of July, as the market ended today about 3.6% below its high.

Tomorrow comes the next challenge.

With the anticipation for the last FOMC Statement being so focused on the phrase “considerable time,” as it was being used to describe when the increase in interest rates would start, somewhere along the line will come the realization that with each passing month, by definition that “considerable time” has been shortened by a month.

Sooner or later there will be no time left and rates will go higher.

Although it shouldn’t come as a surprise, you can be reasonably assured that the market will react as if it was a surprise and then will bounce back from the shock that should never have been a shock.

But that scenario may not have to play out for some considerable time.

What will play out almost immediately will be earnings, that really get going tomorrow, even though the traditional leader of the season, Alcoa is no longer in the DJIA.

This earnings period will be interesting because the likelihood is that retail will have some good news, but energy will have some bad news, especially as it gives forward guidance.

If you asked anyone what the future would hold for the energy sector, given all of the geo-political risk, they would have had to have been crazy to not believe that the future for profits was incredibly bright. But this period in time is markedly different, as even with all of the world’s craziness energy prices (and precious metals) are plummeting.

They will surely go up at some point, but as the expression goes “if not now, when?”

After a couple of purchases yesterday, I wouldn’t have minded adding some others for the week, but am still not committed to it. If anything, I may be interested in buying back some of last week’s assigned positions, but I’m not too convinced that I’ll have much interest to break out beyond those names at the moment. As the afternoon progressed and there was a sell-off on top of the already weak numbers, there was even less reason to make those purchases.

As has become the pattern of late, unless there’s a spike higher to open a session, giving an opportunity to sell calls, the likelihood is that sitting back and watching to see how that early trading evolves is the way to go. That was definitely the way to go today and it was also a good idea to resist anything looking like a value.

With the exception of last Friday when the market indicated higher and stayed that way, these early morning trading patterns have had very poor predictive value. Lower opening trading hasn’t offered much in the way of value and higher opens haven’t led to higher closes, for the most part.

I had suspected that the typical FOMC pattern would be in play today, unless, as last month, someone thought to have an inside track, such as the Wall Street Journal’s Jon Hilsenrath, offers an opinion on what tomorrow will bring. Otherwise, there was very little reason to suspect any kind of accentuated movement in either direction, as most traders are playing very conservatively now.

Most of the time that’s not too bad of an idea.

Today, though, they were neither conservative nor in panic, but maybe a blow off from some kind of panic is better than this seemingly unwarranted syncopated sell-off that has been going on for the past three weeks.

But who knows, maybe Janet Yellen will give us a brief respite tomorrow.

Daily Market Update – October 7, 2014 (9:15 AM)

It’s hard to say whether yesterday was a disappointment or not.

While it’s true that the early morning gain never quite survived, neither did it give way to any kind of tangible profit taking.

This morning appears ready to start exactly where yesterday left off. The market was pretty ambivalent yesterday and had a hard time deciding whether to finish higher or lower. This morning it looks as if there will be a mildly lower opening with no real news to fuel anything.

While yesterday had the Hewlett Packard news which by all appearances was a dizzying spin of why the split up was a reflection of Hewlett Packard’s success, today has nothing.

Other than all of the scheduled speakers this wek and tomorrow’s FOMC Statement release, that pretty much describes the rest of the week.

In the meantime the market is sitting just short of the mid-way point for its 2 year pattern of mini-corrections. It is currently about 2.3% below its high from a few weeks ago, so it really is anyone’s guess where the next stop will be.

With the anticipation for the last FOMC Statement being so focused on the phrase “considerable time,” as it was being used to describe when the increase in interest rates would start, somewhere along the line will come the realization that with each passing month, by definition that “considerable time” has been shortened by a month.

Sooner or later there will be no time left and rates will go higher.

Although it shouldn’t come as a surprise, you can be reasonably assured that the market will react as if it was a surprise and then will bounce back from the shock that should never have been a shock.

But that scenario may not have to play out for some considerable time.

What will play out almost immediately will be earnings, that really get going tomorrow, even though the traditional leader of the season, Alcoa is no longer in the DJIA.

This earnings period will be interesting because the likelihood is that retail will have some good news, but energy will have some bad news, especially as it gives forward guidance.

If you asked anyone what the future would hold for the energy sector, given all of the geo-political risk, they would have had to have been crazy to not believe that the future for profits was incredibly bright. But this period in time is markedly different, as even with all of the world’s craziness energy prices (and precious metals) are plummeting.

They will surely go up at some point, but as the expression goes “if not now, when?”

After a couple of purchases yesterday, I wouldn’t mind adding some others for the week, but am not committed to it. If anything, I may be interested in buying back some of last week’s assigned positions, but I’m not too convinced that I’ll have much interest to break out beyond those names at the moment.

As has become the pattern of late, unless there’s a spike higher to open the session, giving an opportunity to sell calls, the likelihood is that sitting back and watching to see how that early trading evolves is the way to go.

With the exception of last Friday when the market indicated higher and stayed that way, these early morning trading patterns have had very poor predictive value. Lower opening trading hasn’t offered much in the way of value and higher opens haven’t led to higher closes, for the most part.

I suspect that the typical FOMC pattern will be in play today, unless, as last month, someone thought to have an inside track, such as the Wall STreet Journal’s Jon Hilsenrath, offers an opinion on what tomorrow will bring. Otherwise, there’s very little reason to suspect any kind of accentuated movement in either direction, as most traders are playing very conservatively now.

Most of the time that’s not too bad of an idea.

Daily Market Update – October 6, 2014 (Close)

What a wild week ahead.

There’s not too much as far as scheduled economic news goes and there may also be some peaceful short term resolution to the protests underway in Hong Kong, but there will be an incredible amount of hot air generated this week.

Today, Secretary of Treasury Jack Lew speaks and on Thursday European Central Bank President Mario Draghi speaks

In-between will be Wednesday’s release of the monthly FOMC Statement and the eager anticipation around the wording used to indicate what we all know is now coming at least one month sooner than we thought last month.

Finally, there are 12 speeches scheduled to be given by members of the FOMC this week, winding up with hawkish member, Richard Fisher, who is able to move markets very much in the same manner that the Chairman, Janet Yellen can do, despite the fact that Fisher has frequently been wrong in his opinions and predictions.

Unfortunately, he speaks just a few hours before the market finishes its trading for the week and he has a habit of sending shares lower when he focuses on the need to increase interest rates sooner.

This morning none of that seemed to matter as the pre-opening futures indicated a moderately higher opening, possibly buoyed by Hewlett Packard’s split into 2 companies. Nonetheless, 28 out of 30 of the DJIA components were higher prior to the bell ringing,

That kind of opening would have been welcome, even though I ordinarily like to see weakness to start the week.

That’s because I generally am looking to replace assigned positions and want to spend money, but don’t want to overspend.

This week, however, is another week that I’m not overly anxious to spend much money. Following 2 weeks of very confusing trading and seeing large moves in both directions with little or no provocation, it seems a little reckless to commit one way or another.

Today really did nothing to get rid of the confusion. After looking as if there might be a possible early triple digit move to the upside the market loss all of it and actually was down as low as about 70 points, only to finish the day virtually unchanged.

Rational thinking might say that there’s more downside than upside, but when has rational thinking really worked terribly well in the markets?  If rational thinking had any role most people would have missed the last couple of thousand of points gain in the DJIA while awaiting the correction that we all knew to be obviously lurking.

With a handful of positions scheduled to expire this week and the same for next week’s monthly cycle end, at the moment, if making any new purchases I’m likely to look to add to this week’s expirations or possibly go out to October 24th.

In addition to the usual considerations whenever buying any new positions this week begins yet another earnings season, so that has to be thrown into the mix.

However, for the first time in a while, I’m actually optimistic about the upcoming earnings. The potential confounder will be the impact of share buy-backs. During the past few quarters those buy-backs have artificially boosted earnings per share, even as revenues were flat or even decreasing.

This time around, I expect revenues to be higher, especial in retail and consumer sections, but expect that buy backs have slowed down. That may result in higher revenues, but not the same pace of share reduction, which could lead to some earnings per share disappointments.

So as the bell was getting ready to ring, I was hoping that the strength would continue, but as we all know those kind of mild to moderate pre-open futures really don’t mean much of anything. Just as so often happens, today’s early jump higher just withered away.

Although there wasn’t much of a net change today, the constant back and forth did end up increasing volatility, which had fallen on Friday’s straight climb higher. That climb wasn’t too much, though, and did nothing really to make finding extended option opportunities any easier. Nonetheless, for now, I’d prefer to see some higher moving prices, even at the expense of volatility, if that meant a greater likelihood of putting some existing stock positions to work.

This week I’d rather see myself producing income in that manner, along with more than the usual number of ex-dividend positions, than through the depletion of cash reserves.

Like last week, it’s very possible that the two early purchases for the week may be as much as will be made, although with any further declines in eBay, Comcast and Walgreen, the stocks assigned this past Friday, it may just be time to buy those back.

Daily Market Update – October 6, 2014 (9:00 AM)

What a wild week ahead.

There’s not too much as far as scheduled economic news goes and there may also be some peaceful short term resolution to the protests underway in Hong Kong, but there will be an incredible amount of hot air generated this week.

Today, Secretary of Treasury Jack Lew speaks and on Thursday European Central Bank President Mario Draghi speaks

In-between will be Wednesday’s release of the monthly FOMC Statement and the eager anticipation around the wording used to indicate what we all know is now coming at least one month sooner than we thought last month.

Finally, there are 12 speeches scheduled to be given by members of the FOMC this week, winding up with hawkish member, Richard Fisher, who is able to move markets very much in the same manner that the Chairman, Janet Yellen can do, despite the fact that Fisher has frequently been wrong in his opinions and predictions.

Unfortunately, he speaks just a few hours before the market finishes its trading for the week and he has a habit of sending shares lower when he focuses on the need to increase interest rates sooner.

This morning none of that seems to matter as the pre-opening futures are indicating a moderately higher opening, possibly buoyed by Hewlett Packard’s possible split into 2 companies. Nonetheless, 28 out of 30 of the DJIA components were higher prior to the bell ringing,

That kind of opening would be welcome, even though I ordinarily like to see weakness to start the week.

That’s because I generally am looking to replace assigned positions and want to spend money, but don’t want to overspend.

This week, however, is another week that I’m not overly anxious to spend much money. Following 2 weeks of very confusing trading and seeing large moves in both directions with little or no provocation, it seems a little reckless to commit one way or another.

Rational thinking might say that there’s more downside than upside, but when has rational thinking really worked terribly well in the markets?  If rational thinking had any role most people would have missed the last couple of thousand of points gain in the DJIA while awaiting the correction that we all knew to be obviously lurking.

With a handful of positions scheduled to expire this week and the same for next week’s monthly cycle end, at the moment, if making any new purchases I’m likely to look to add to this week’s expirations or possibly go out to October 24th.

In addition to the usual considerations whenever buying any new positions this week begins yet another earnings season, so that has to be thrown into the mix.

However, for the first time in a while, I’m actually optimistic about the upcoming earnings. The potential confounder will be the impact of share buy-backs. During the past few quarters those buy-backs have artificially boosted earnings per share, even as revenues were flat or even decreasing.

This time around, I expect revenues to be higher, especial in retail and consumer sections, but expect that buy backs have slowed down. That may result in higher revenues, but not the same pace of share reduction, which could lead to some earnings per share disappointments.

So as the bell rings, I hope that the strength continues and doesn’t do as so often has been the case and just withers away. If that strength does continue and builds on Friday’s close, volatility will move lower and that may make it a little more difficult to find expanded option opportunities. Nonetheless, for now, I’d prefer to see some higher moving prices, even at the expense of volatility, if that meant a greater likelihood of putting some existing stock positions to work.

This week I’d rather see myself producing income in that manner, along with more than the usual number of ex-dividend positions, than through the depletion of cash reserves.