Category Archives: Daily Market Update

Daily Market Update – September 3,  2015  (Close)

Yesterday’s nearly 300 point gain was nice, but it still wasn’t enough. The net result coming after a 469 point loss is still nothing to dance about, unless you’re celebrating the fact that it could have been worse.

While I like it when things do get worse, as that tends to lift volatility, I also like stability and certainty. Settling at a lower point and trading within a range can be a nice way to spend some time while waiting for the next leg up as long as the volatility can stay elevated, which it typically does at those lower levels.

Additionally, at some point volatility won’t offset loss in portfolio value or the decrease in income generated if you’re still unable to get call contracts sold.

This morning the pre-opening futures were moderately higher. They doubled, however, when news was released that the number of Jobless Claims increased.

That seems to look as if we are going to be in a “bad news is good news” frame of mind when the Employment Situation Report is released tomorrow. Sending stock futures higher on what can only be interpreted as a negative reflection on the economy can only mean that people interpret it as another reason for the FOMC to not raise interest rates at their upcoming September meeting.

Why there’s still worry about that is one of life’s great mysteries. Most people are probably happy to see that issue leave the scene and stop sucking up so much intellectual capital, allowing us to focus on other things for a change.

But that “bad news is good news” feeling may be the tone for the week. The ADP Report on Wednesday was a little bit lower than expected, but following that large loss the previous day, it’s hard to know whether yesterday’s gain was just a bounce from Tuesday or whether the celebrating of the mildly bad news had already started.

We began this morning without the Chinese stock market’s overnight shenanigans to lead us.

Their markets are closed in celebration of the end of World War II, although it does appear as if the government is trying to send some message to the rest of the world, at the same time.

So we were left to our own devices for two days without worrying about what may be happening in their markets or what new actions their government of central bank may be imposing.

While there may be some comfort in that, there’s usually some kind of a price to be paid when getting a temporary free pass.

That price may come when we wake up next Tuesday morning after our markets had been closed for the Labor Day Holiday to see that the Chinese markets, now once again having opened, went into a Sunday and Monday night meltdown.

Instead, having been left to our own devices today, somehow we ended up squandering what started out as a 200 point gain and after slowly watching that gain erode, it completely disappeared until the final 10 minutes of trading when it recovered some respectability.

Some, but still not enough.

Over the final 2 days of the week I would have loved to have seen any opportunity to sell calls on uncovered positions, but I would especially have liked to see some assignments, particularly as I’ve been borrowing from myself to open some new positions this week. I’d have loved to repay myself or at least continue to have the opportunity to selectively buy on the dip.

That’s a lot of love to spread, but I may be capable of all of it over the final day of the week if I can get what I want. After today, though, it does look less likely.

Thanks for nothing my own devices.

Daily Market Update – September 3,  2015  (9:00 AM)

Yesterday’s nearly 300 point gain was nice, but it still wasn’t enough. The net result coming after a 469 point loss is still nothing to dance about, unless you’re celebrating the fact that it could have been worse.

While I like it when things do get worse, as that tends to lift volatility, I also like stability and certainty. Settling at a lower point and trading within a range can be a nice way to spend some time while waiting for the next leg up as long as the volatility can stay elevated, which it typically does at those lower levels.

Additionally, at some point volatility won’t offset loss in portfolio value or the decrease in income generated if you’re still unable to get call contracts sold.

This morning the pre-opening futures were moderately higher. They doubled, however, when news was released that the number of Jobless Claims increased.

That seems to look as if we are going to be in a “bad news is good news” frame of mind when the Employment Situation Report is released tomorrow. Sending stock futures higher on what can only be interpreted as a negative reflection on the economy can only mean that people interpret it as another reason for the FOMC to not raise interest rates at their upcoming September meeting.

Why there’s still worry about that is one of life’s great mysteries. Most people are probably happy to see that issue leave the scene and stop sucking up so much intellectual capital, allowing us to focus on other things for a change.

But that “bad news is good news” feeling may be the tone for the week. The ADP Report on Wednesday was a little bit lower than expected, but following that large loss the previous day, it’s hard to know whether yesterday’s gain was just a bounce from Tuesday or whether the celebrating of the mildly bad news had already started.

We begin this morning without the Chinese stock market’s overnight shenanigans to lead us.

Their markets are closed in celebration of the end of World War II, although it does appear as if the government is trying to send some message to the rest of the world, at the same time.

So we are left to our own devices for two days without worrying about what may be happening in their markets or what new actions their government of central bank may be imposing.

While there may be some comfort in that, there’s usually some kind of a price to be paid when getting a temporary free pass.

That price may come when we wake up next Tuesday morning after our markets had been closed for the Labor Day Holiday to see that the CHinese markets, now once again having opened, went into a SUnday and Monday night meltdown.

Over the next 2 days, I would love to see any opportunity to sell calls on uncovered positions, but I would especially like to see some assignments, particularly as I’ve been borrowing from myself to open some new positions this week. I’d love to repay myself or at least continue to have the opportunity to selectively buy on the dip.

That’s a lot of love to spread, but I may be capable of all of it over the next two days if I can get what I want.

Daily Market Update – September 2,  2015  (Close)

Yesterday’s 469 point decline was just another in a series of unusually large moves that have come in both directions, that can’t really be called unusual anymore.

For those who look at charts, the market had done very well at defending the 2045 level on the S&P 500 after repeated attempts to assault it.

During a period of time preceding the  initial 10% correction that we had just seen, the market was making a series of lower highs and higher lows. That kind of situation is one that technicians believe predicts a large move, but they can’t quite tell you in which direction it’s going to be, so that means you move onto the next tool, which is a coin flip.

In this case that pattern did precede a precipitous drop and that 2045 support level didn’t hold.

The next support level is at about 1865 and we were getting close to re-testing that yesterday, but this morning’s bounce in the futures created some more distance from that support level and that distance not only lasted through the regular trading session, but actually grew just a bit.

That’s a good thing because there could be some concern that if that 1870 level is breached, there’s only minimal support at 1830 and the next stop is 1750, which would be right at bear market territory.

To put it into DJIA terms, that would be a drop of about 1200 points, so we are about halfway there, after yesterday’s loss.

After a quiet trading day in China overnight, our futures were pointing to what would ordinarily be a nice move higher. But after a 469 point loss the previous day, it will take a lot more to make up for that retreat.

The day’s final gain, more than 200 points was nice, but it just wasn’t nice enough.

Surprisingly, despite the very negative tone of the first 2 trading days, I’ve found reasons to buy and have also been lucky enough to find some opportunities to roll some positions over. 

As long as the primary goal is to generate income then the goal is basically to keep that ball alive and doing something more than just sitting there, especially while the broader market is declining.

With the Employment SItuation Report coming on Friday, there’s really not much that’s inherent to this market that should account for any meaningful moves until then, but we will continue trading in response to what happens overseas until that is either no longer an issue or we come to the realization that it really shouldn’t be an issue.

However, that won’t be too much of an issue as this week will be heading into its latter half as the CHinese markets will be closed as they commemorate the end of World War II in a large national event, that has even seen the closure of factories in and around Beijing days ahead of events in order to attempt and improve the air quality.

That certainly won’t be good for earnings comparisons, but given that the numbers were always suspect, that shouldn’t make too much of a difference, anyway.

While economic woes in China certainly do have an impact on many US companies, the overwhelming realization has to be that the US economy is not only Number 1, but also the best in the world at the time being regardless of having continually been written off in light of the miracle of China.

There will come a point that the market will celebrate that fact and disengage from moving in response to the Number 2 economy in the world that may have received lots of support from smoke and mirrors.

For the rest of the week I would be stunned if I actually made any more trades to open new positions. With 3 opened this week and 2 rollovers and an unusually large number of ex-dividend positions, this had the feeling of weeks from a long time ago.

Hopefully, while I do like the higher level of volatility and the better premiums it creates, I would give some of that up for the chance to make some call sales on uncovered positions.

I know that may be asking for too much, but you never know unless you ask.

Daily Market Update – September 2,  2015  (8:30 AM)

Yesterday’s 469 point decline was just another in a series of unusually large moves that have come in both directions, that can’t really be called unusual anymore.

For those who look at charts, the market had done very well at defending the 2045 level on the S&P 500 after repeated attempts to assault it.

During a period of time preceding the  initial 10% correction that we had just seen, the market was making a series of lower highs and higher lows. That kind of situation is one that technicians believe predict a large move, but they can’t quite tell you in which direction it’s going to be, so that means you move onto the next tool, which is a coin flip.

In this case that pattern did precede a precipitous drop and that 2045 support level didn’t hold.

The next support level is at about 1865 and we were getting close to re-testing that yesterday, but this morning’s bounce in the futures creates some more distance from that support level.

There could be some concern that if that 1870 level is breached, there’s only minimal support at 1830 and the next stop is 1750, which would be right at bear market territory.

To put it into DJIA terms, that would be a drop of about 1200 points, so we are about halfway there, after yesterday’s loss.

After a quiet trading day in China overnight, our futures are pointing to what would ordinarily be a nice move higher. But after a 469 point loss the previous day, it will take a lot more to make up for that retreat.

Surprisingly, despite the very negative tone of the first 2 trading days, I’ve found reasons to buy and have also been lucky enough to find some opportunities to roll some positions over. 

As long as the primary goal is to generate income then the goal is basically to keep that ball alive and doing something more than just sitting there.

WIth the Employment SItuation Report coming on Friday, there’s really not much that’s inherent to this market that should account for any meaningful moves until then, but we will continue trading in response to what happens overseas until that is either no longer an issue or we come to the realization that it really shouldn’t be an issue.

While economic woes in China certainly do have an impact on many US companies, the overwhelming realization has to be that the US economy is not only Number 1, but also the best in the world at the time being.

There will come a point that the market will celebrate that fact and disengage from moving in response to the Number 2 economy in the world that may have received lots of support from smoke and mirrors.

FOr the rest of the week I would be stunned if I actually made any more trades to open new positions. With 3 opened this week and 2 rollovers and an unusually large number of ex-dividend positions, this had the feeling of weeks from a long time ago.

Hopefully, while I do like the higher level of volatility and the better premiums it creates, I would give some of that up for the chance to make some call sales on uncovered positions.

I know that may be asking for too much, but you never know unless you ask.

Daily Market Update – September 1,  2015  (Close)

There are some nights that I go to bed just knowing that the following day is not likely to be a very good one.

Last night was one of those nights as the S&P 500 futures were tumbling and the outlook for China and Japan weren’t looking very good as their opens were getting near.

I tend to wake up even earlier than usual the next morning to see whether overseas markets were able to turn around, but more importantly to see whether our futures were able to turn around in the early hours of the morning.

Not as if there was really anything that could be done about it, other than having an extra cup of coffee.

Many times those markets do turn around because the overnight futures trading is really very light and it doesn’t take that much to stop what may be looking like a hemorrhage, but isn’t really.

For anyone that actually looks at individual stock prices in the pre-open, you may recall how Holly Frontier had fallen $12 one morning last week on a volume of about 305 shares. Once the opening bell rang, Holly Frontier started trading at a loss of about $1, pretty much where it ended the day even as the market fell by more than 3%.

This morning it was United Continental that was down about 20% in the pre-open on also just a couple of hundred of shares.

This morning, though, it looked as if the selling in the S&P 500 futures had gotten worse from the previous evening.

Overnight China fell, but not as much as has become their norm lately, but Japan also fell and they fell with Chinese market-like quality and quantity, approaching a 5% decline for their session.

Hong Kong, too and Europe was now following.

The news from China wasn’t very good, especially as you start seeing some more desperate kind of moves, which includes some coerced buying by brokerage houses and increasing threats of arresting and punishing “malicious short sellers.”

Last week’s impressive recovery during the middle of the week took the S&P 500 out of correction territory, but this morning’s early losses would put it right back. That tends to be the pattern of markets that feature really large moves higher, as we’ve definitely been seeing over the past few months and especially pronounced over the last few weeks.

The net sum of all of the large moves higher and large moves lower tends to be a negative one and in a meaningful way.

So far, this recent series of very large moves higher has certainly been consistent with history.

With the morning looking as if it was about to get off to a very sour start, it probably wasn’t a great time to go hunting for anything that looked like a bargain, as that hasn’t necessarily been a good strategy of late, despite those occasional appearances to the contrary.

Still, it was hard to resist a small position in General Electric for the day and somehow a couple of rollover opportunities popped up, as well, despite what would be another 400+ down session.

At this point, probably the best thing the market could do would be to re-group at this lower level and build the kind of technical support necessary to launch a move higher than can be sustained. These quantum leaps higher are basically worthless, as they represent points that people who wished that they had gotten out earlier then simply take the new opportunity presented to them to cash out.

That sort of thing doesn’t happen when the recovery from a severe drop is slow and methodical.

Forget about technical analysis and support and resistance levels. It’s all about basic investor psychology that continually balances fear and greed.

With that drop the fear is definitely overtaking the greed, as there’s not too much evidence of bottom dipping going on.

Today was expected to be a likely day of observation, but maybe the rest of the week may turn out that way, as it culminates with the Employment Situation Report.

The August data is usually on the low side, but a larger than expected number might lead to selling, at least the way our mindset has been for the past year or more. However, we may now be finding ourselves at a cross road in the realization that our economy is a relative winner against the rest of the world and a rate increase would just be confirmation of that fact.

I hope that number is a good one on Friday, not just for what it means for individuals in the workforce, but for what it could mean as it may be the start of a market resurgence based on optimism for accelerating economic growth.

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

There are some nights that I go to bed just knowing that the following day is not likely to be a very good one.

Last night was one of those nights as the S&P 500 futures were tumbling and the outlook for China and Japan weren’t looking very good as their opens were getting near.

I tend to wake up even earlier than usual the next morning to see whether overseas markets were able to turn around, but more importantly to see whether our futures were able to turn around in the early hours of the morning.

Many times they do because the overnight futures trading is really very light and it doesn’t take that much to stop what may be looking like a hemorrhage, but isn’t really.

For anyone that actually looks at individual stock prices in the pre-open, you may recall how Holly Frontier had fallen $12 one morning last week on a volume of about 305 shares. Once the opening bell rang, Holly Frontier started trading at a loss of about $1, pretty much where it ended the day even as the market fell by more than 3%.

This morning, though, it looks as if the selling in the S&P 500 futures has gotten worse.

Overnight China fell, but not as much as has become their norm lately, but Japan also fell and they fell with Chinese market-like quality.

Hong Kong, too and Europe is now following.

The news from China isn’t very good, especially as you start seeing some more desperate kind of moves, which includes some coerced buying by brokerage houses and increasing threats of punishing “malicious short sellers.”

Last week’s impressive recovery during the middle of the week took the S&P 500 out of correction territory, but this morning’s early losses will put it right back. That tends to be the pattern of markets that feature really large moves higher, as we’ve definitely been seeing over the past few months and especially pronounced over the last few weeks.

The net sum of all of the large moves higher and large moves lower tends to be a negative one and in a meaningful way.

So far, this recent series of very large moves higher has certainly been consistent with history.

With the morning looking as if it about to get off to a very sour start, it’s probably not a good time to go hunting for anything that looks like a bargain, as that hasn’t necessarily been a good strategy of late, despite those occasional appearances to the contrary.

At this point, probably the best thing the market could do would be to re-group at this lower level and build the kind of technical support necessary to launch a move higher than can be sustained. These quantum leaps higher are basically worthless, as they represent points that people who wished that they had gotten out earlier then simply take the new opportunity presented to them to cash out.

That sort of thing doesn’t happen when the recovery from a severe drop is slow and methodical.

Forget about technical analysis and support and resistance levels. It’s all about basic investor psychology that continually balances fear and greed.

Today is likely to be one of observation and that may be the case for the rest of the week, as well, which culminates with the Employment Situation Report.

The August data is usually on the low side, but a larger than expected number might lead to selling, at least the way our mindset has been for the past year or more. However, we may now be finding ourselves at a cross road in the realization that our economy is a relative winner against the rest of the world and a rate increase would just be confirmation of that fact.

I hope that number is a good one on Friday, not just for what it means for individuals in the workforce, but for what it could mean as it may be the start of a market resurgence based on optimism for accelerating economic growth.

Daily Market Update – August 31,  2015  (8:15 AM)

While it’s not too likely that this week, or any week, can really be anything like the one that we just concluded, with lots of global economic turmoil being fomented from within China continuing, you just never know.

This morning the week begins with news that CHina has announced that it will no longer be buying stocks in its open markets, helping to support those prices amidst a plunge that had taken t6he SHanghai market down by more than 30%.

As it is, even with a wide range of interventions all within a confined period of time, that market is still down 20% and it really is anyone’s guess as to what unbridled market forces can now accomplish, if intervention is ending.

This morning, our own futures are pointing to another triple digit decline, after last week’s very tumultuous week ended on a very sedate note.

For our part, the only real potential catalyst that we may have to move markets will come on Friday, as the Employment SItuation Report is released.

The timing of that release may be a little unfortunate as markets are closed on the following Monday.

Although the past few years haven’t seen the exercise of the old adage of to not stay long over a weekend of uncertainty, especially if it’s going to be a long holiday extended weekend, this time it could be different.

With lots of uncertainty over what the FOMC has in mind and whether it interprets data differently from the rest of us, any indication of a strong jobs market could again stoke those completely unnecessary fears of an interest rate hike.

I still can’t understand why that has been feared so much and for so long, especially since so many people are well versed in the market’s trading patterns. Such early rate hikes turn out to come at times when markets still have lots of energy to move higher.

Anyway, as was noted in this week’s Weekend Update, whatever may await us is open to lots of interpretation.

10% corrections mean nothing as far as predicting where the market will go next. They certainly don’t portend an upcoming bear market. Yet, on the other hand, the kind of really large moves higher that we’ve seen do portend a continuing weak market.

With a few positions set to expire this week, an unusually large number of ex-dividend positions and still relying on the equivalent of margin funds to make new purchases, I am not likely to be anxious to open any new positions.

Of course, I’ve said that before.

As has been the case for quite a while, I would be most happy with the chance to sell call options on uncovered positions,  and would love to see some assignments this week to repay myself the margin extended to me.

That, however, seems unlikely as the week begins, so instead, I’d be really happy just to see those expiring positions get rolled over.

Hopefully this week will see some liquidity increase in the options market, as it would be great to take advantage of growing premiums. But as last week showed, there was so much uncertainty that buyers and sellers of options just couldn’t commit themselves to the trades, as the bid – ask spreads were unusually large. For the most part, it was the absence of buyers for both calls and puts that was at fault last week.

Continued market volatility, though, would likely start bringing in more motivated buyers and that would be great, because I am definitely a motivated seller.

Hopefully, this week will also continue the recent trend of out-performing the market, but also do so in more than relative terms and also add to portfolio value.

That’s more meaningful than just being able to say “I won,”when you still ended up losing.

Daily Market Update – August 28,  2015  (7:30 AM)

The Week in Review will be posted by 12 Noon on Saturday and the Weekend Update will be posted by Noon on SUnday.

The following trade outcomes are possible today:

Assignments:   none

Rollovers:    none

Expirations:   none

The following were ex-dividend this week: MAT (8/24 $0.38), ANF (8/28 $0.20), SBGI (8/28 $0.16)

The following will be ex-dividend next week:   HAL (8/31 $0.18), HFC (8/31 $0.33), COH (9/3 $0.34), BAC (9/2 $0.05), MOS (9/1 $0.28), JOY (9/2 $0.20), KSS (9/4 $0.45)

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

Daily Market Update – August 27,  2015  (Close)

This has been a week of some really jaw dropping moves, but still, in percentage terms, nothing like some of the plunges, surges and then more plunges that we saw in 2008 and the early part of 2009.

Some people are mentioning that, but they treading very softly. They’re not saying the unsaid. That is that all of those incredibly stunning moves higher were more than offset by stunning moves lower, in addition to death by a thousand cuts.

In addition to the really large moves higher, back in 2008 and 2009, as well as late 2007, there were lots of smaller moves that simply added up to move markets significantly lower.

What was missing were the same kind of smaller moves strung together to bring the market higher.

I was happy to be able to get some trades in yesterday to take advantage of some of the strength, but the options market is still not fully participating in terms of volume and willingness to make trades.

While yesterday may have added a little more to the overall sense of confusion about which way things will move next, this morning’s strong open to the futures trading may bring some of those reluctant option buyers out from the woodwork.

Although two consecutive days don’t really make a trend, the bar is set pretty low and people are looking for any sign of stability in the market.

The overnight action by China to purchase stocks in the open market turned things around in Shanghai and may have helped today get off to a positive start as we awaited GDP numbers and any other comments that might come from the Federal Reserve party at Jackson Hole, that is not being attended by Janet Yellen.

Those GDP numbers were strong and may have given the very first suggestion that the economy is getting stronger.

What was fascinating today was that the mrket could close up more than 350 points after yesterday’s 600+ points on a day that could have made it easier for the FOMC to raise rates and on a day that oil surged.

Go figure,

So instead of hearing anything from Janet Yellen after today’s unusual combination of events, we may get to hear someting from her Vice-Chair, and nearly everyone’s mentor, Stanley Fischer. in her absence.

With no positions set to expire this week, but with some rollovers, new positions opened and an isolated call sale on an uncovered position, in addition to some ex-dividend positions, it has been a decent income week, but there’s still much more to be done.

Today’s action also mde it more appealing, on paper, anyway.

I don’t know how much of what remains undone will get done during the rest of the week, but I definitely would welcome the climb higher.

It would be much nicer, though to see that climb come in little bits and drabs. You may or may not believe in technical analysis, and by and large, I don’t, but there is something to be said for the unsustainability of real surges higher.

When there’s not a very good foundation underneath a stock’s price, it really is very easy to see those shares tumble. As much as everyone talks about a V-shaped recovery, they’re not necessarily the kind that you like to see for longer term stability.

On the other hand, if you established some positions before the climb higher, you can definitely take advantage of the higher premiums available even on out of the money strikes.

That’s what has really been missing for the longest time. In that kind of environment you find yourself not opening very many new positions, but rather trying to keep playing and re-playing the same ones, as even in the money positions may make more sense to keep that to let be assigned.

We’re not quite at that stage yet, but if this back and forth does continue it could end up being a trader’s best friend. For now, though, it would really be good to create some base beneath these past two days and set up markets and portfolios to challenge resistance, now that it has challenged support.

Daily Market Update – August 27,  2015  (7:30 AM)

This has been a week of some really jaw dropping moves, but still, in percentage terms, nothing like some of the plunges, surges and then more plunges that we saw in 2008 and the early part of 2009.

Some people are mentioning that, but they treading very softly. They’re not saying the unsaid. That is that all of those incredibly stunning moves higher were more than offset by stunning moves lower, in addition to death by a thousand cuts.

Ib addition to the really large moves higher, back in 2008 and 2009, as well as late 2007, there were lots of smaller moves that simply added up to move markets significantly lower.

What was missing were the same kind of smaller moves strung together to bring the market higher.

I was happy to be able to get some trades in yesterday to take advantage of some of the strength, but the options market is still not fully participating in terms of volume and willingness to make trades.

While yesterday may have added a little more to the overall sense of confusion about which way things will move next, this morning’s strong open to the futures trading may bring some of those reluctant option buyers out from the woodwork.

Although two consecutive days don’t really make a trend, the bar is set pretty low and people are looking for any sign of stability in the market.

The overnight action by China to purchase stocks in the open market turned things around in Shanghai and may have helped today get off to a positive start as we await GDP numbers and any other comments that might come from the Federal Reserve party at Jackson Hole, that is not being attended by Janet Yellen.

Instead, everyone is waiting to hear what her Vice-Chair, and nearly everyone’s mentor, Stanley Fischer will say. in her absence.

With no positions set to expire this week, but with some rollovers, new positions opened and an isolated call sale on an uncovered position, in addition to some ex-dividend positions, it has been a decent income week, but there’s still much more to be done.

I don’t know how much of that will get done during the rest of the week, but I definitely would welcome the climb higher.

It would be much nicer, though to see that climb come in little bits and drabs. You may or may not believe in technical analysis, and by and large, I don’t, but there is something to be said for the unsustainability of real surges higher.

When there’s not a very good foundation underneath a stock’s price, it really is very easy to see those shares tumble. As much as everyone talks about a V-shaped recovery, they’re not necessarily the kind that you like to see for longer term stability.

On the other hand, if you established some positions before the climb higher, you can definitely take advantage of the higher premiums available even on out of the money strikes.

That’s what has really been missing for the longest time. In that kind of environment you find yourself not opening very many new positions, but rather trying to keep playing and re-playing the same ones, as even in the money positions may make more sense to keep that to let be assigned.

We’re not quite at that stage yet, but if this back and forth does continue it could end up being a trader’s best friend.

Daily Market Update – August 26,  2015  (Close)

It’s hard to describe the disappointment that accompanied yesterday’s trading, but being entirely surprised should probably not have been one of the things felt during the course of the day.

The final hour, though, was surprising, as you did have to wonder where the selling originated.

The “why” part of the question isn’t too hard to understand, as some may have seen the gain as an opportunity to get just a little more before getting out.

Deep down I thought that there still might be a wave of selling related to the need for mutual funds and ETFs to honor redemption orders. There’s no stated rule that says that they have to do that by flooding the order desks with those market depressing orders all at once and first thing in the morning.

This morning the Chinese stock market, the one that really matters, in Shanghai was again lower, but this time by less than 2%. That’s the same as a rally.

I’ve definitely lost track of how much that market has lost in the past 2 weeks or so, but after looking it up, it’s an astonishing 28%, while our own S&P 500 is down about 8% in the same time period heading into today’s session.

I guess in a world where everything is relative that should leave you feeling warm and fuzzy, but it didn’t really feel like that this morning, even as the futures were suggesting that they may just go and erase yesterday’s loss.

Even though last week we finished higher than the averages and even though this week is on that same path for now, it’s one of those mixed blessings, as overall performance for these two weeks past is still showing a loss. While comparative results are important, it’s still the bottom line that really matters.

When you look at today’s performance, would you ever think that you would see a day that the S&P rose 4%, yet the index was still down 1.4% for the week and with still 2 days to go?

It’s still hard to believe that we can talk about yesterday as having been a loss, even though there’s plenty of precedence for this sort of thing after very large losses and early reversals the following morning.

With no positions set to expire this week, partially by design, I’m still looking at any opportunities to roll over any contracts expiring in subsequent weeks, but despite some increases in volatility, the volume has been exceptionally light on both calls and puts.

That just shows that there is absolutely no sense of confidence about what may come next. Not by speculators, not by portfolio hedgers.

It didn’t change too much even as the bulls started to stampede in the latter half of the afternoon.

With some surprisingly good earnings from beaten down retailers Abercrombie and Fitch, both of which also go ex-dividend very soon, there was some opportunity to get rollovers done into price strength.

Yesterday’s early trading would have been a nice time to try and sell some new option contracts or even consider doing some rollovers, but the liquidity just wasn’t there, as the market’s decline has just been to sudden to get very many to re-align their strategies and implement them.

The sell-off during yesterday’s final hour should do very much to bolster option trader’s confidence today, even as the market was pointing higher. In fact, that early move higher may just send more confusion through the system.

As expected, the options market wasn’t very busy today, either as by mid-morning the big gains were cut by nearly 75%f and gave little reason to feel assured of anything other than continuing confusion and the very real possibility of re-testing lows.

With those kind of expectations the next wave of confusion hit as the market found a way to bounce right back from that mid-day slide and started approaching and then exceeding its highs for the day as the final hour began its countdown.

I hope that the Federal Reserve Governors who convene their meeting in Jackson Hole are less confused that we deserve to be as the week is coming to its end.

I don’t expect to be doing much for the rest of the week other than to see what else the Chinese government and the People’s Bank of China will attempt to do to calm their markets and control their currency.

For now, whatever they do, we are going to be held captive, although maybe tomorrow’s GDP Report and Jobless Claims will give us reason to focus within for a few brief moments and remember that there’s nothing in our economy that remotely warrants the kind of reaction we have seen in our markets, even though they’ve been comparatively muted compared to a half world away.

Daily Market Update – August 26,  2015  (7:15 AM)

It’s hard to describe the disappointment that accompanied yesterday’s trading, but being entirely surprised should probably not have been one of the things felt during the course of the day.

The final hour, though, was surprising, as you did have to wonder where the selling originated.

The “why” part of the question isn’t too hard to understand, as some may have seen the gain as an opportunity to get just a little more before getting out.

Deep down I thought that there still might be a wave of selling related to the need for mutual funds and ETFs to honor redemption orders. There’s no stated rule that says that they have to do that by flooding the order desks with those market depressing orders all at once and first thing in the morning.

This morning the Chinese stock market, the one that really matters, in Shanghai is again lower, but this time by less than 2%.

I’ve definitely lost track of how much that market has lost in the past 2 weeks or so, but after looking it up, it’s an astonishing 28%, while our own S&P 500 is down about 8% in the same time period.

I guess in a world where everything is relative that should leave you feeling warm and fuzzy, but it doesn’t really feel like that this morning, even as the futures are suggesting that they may just go and erase yesterday’s loss.

It’s still hard to believe that we can talk about yesterday as having been a loss, even though there’s plenty of precedence for this sort of thing after very large losses and early reversals the following morning.

With no positions set to expire this week, partially by design, I’m still looking at any opportunities to roll over any contracts expiring in subsequent weeks, but despite some increases in volatility, the volume has been exceptionally light on both calls and puts.

That just shows that there is absolutely no sense of confidence about what may come next. Not by speculators, not by portfolio hedgers.

Yesterday’s early trading would have been a nice time to try and sell some new option contracts or even consider doing some rollovers, but the liquidity just wasn’t there, as the market’s decline has just been to sudden to get very many to re-align their strategies and implement them.

The sell-off during yesterday’s final hour should do very much to bolster option trader’s confidence today, even as the market is pointing higher. In fact, that early move higher may just send more confusion through the system.

I don’t expect to be doing much for the rest of the week other than to see what else the Chinese government and the People’s Bank of China will attempt to do to calm their markets and control their currency.

For now, whatever they do, we are going to be held captive, although maybe tomorrow’s GDP Report and Jobless Claims will give us reason to focus within for a few brief moments and remember that there’s nothing in our economy that remotely warrants the kind of reaction we have seen in our markets, even though they’ve been comparatively muted compared to a half world away.

Daily Market Update – August 25,  2015  (Close)

WHat do you say about today except to shake your head and wonder why the day couldn’t have ended an hour earlier?

It’s probably senseless to try and describe yesterday’s action and now today may be equally as senseless of a thing to attempt to do.

Whatever it was that caused the 1000 point decline in the first 10 minutes yesterday, somehow it didn’t really frighten away some brave people. 

Lots of those people came out of the woodwork today but may be left wondering what exactly happened.

No one was more surprised than me to be among those adding new positions yesterday morning, but in hindsight it may have seemed premature to have done so as the market ended up the day having done just as badly as it ended the previous week.

Today was probably a good day not to have chased the market unless you were really a very short term trader.

The conventional wisdom is that these kind of plunges, as seen on Monday, are necessary in order to flush sellers out of the system and then you often see a significant bounce higher.

The late Mark Haines of CNBC used to be very calm in the face of these kind of early morning sell-offs that followed a similarly large sell off the previous day because his experience was that was the first step of the climb higher.

That seemed to be the case yesterday, but what was missing yesterday was any sense of frenzied selling, despite the fact that there was a 1000 point decline in those first 10 minutes.

Given how quickly the recovery set in, there had to be the realization that the decline was not something truly based on market forces, but rather the result of sell orders hitting mutual funds on Friday and perhaps some hedge funds calling it quits, in addition to forced margin selling.

Later, another reversal of the initial reversal, something that we may need to get used to, was fairly orderly.

So if you were waiting for a real blow off kind of moment, also called “capitulation,” it hasn’t really shown up yet. What we have been seeing, and this morning’s futures were consistent with that, is the typical kind of out-sized moves in alternating directions that you see in a bear market.

Those moves actually started more than 2 months ago. In fact, people who study this sort of thing will tell you that you don’t even need the alternating component. Simply seeing out-sized moves higher is emblematic of being in a bear market.

Who knows.

This morning came as China’s Shanghai exchange was down another 7%.

I went to bed last night seeing the Shanghai futures trading much lower, but the US futures were picking up strength, which came as a surprise.

The extent of that divergence when waking up this morning was a real surprise, that was widened when the People’s Bank of China announced an easing on its lending and bank reserve requirements.

We’ll see.

So far the attempts to control China’s markets, currency and economy haven’t fared terribly well, but these things are like trying to stop a steaming locomotive. If you remember your basic physics, there’s that concept of “momentum” at play. It takes lots and lots of energy to put the brakes on something with momentum.

That’s exactly what economies have. Lots of momentum and typically very slow to respond to external forces.

With a couple of new positions opened yesterday and the market moving higher for most of the day,I would have loved any opportunity to sell more calls, but with the move higher comes a drop in volatility. Yesterday, in looking for call sales opportunities the prevailing picture was that of a dumb struck options market. The moves were so sudden and pronounced that there were very, very few bids, so sellers were there to sell, but no one was there to buy. Not even offering a ceremonial bid that could offer some room for negotiation.

Now we’ll see how or if that changes tomorrow, because it sure didn’t change today..

Daily Market Update – August 25,  2015  (8:15 AM)

It’s probably senseless to try and describe yesterday’s action.

Whatever it was that caused the 1000 point decline in the first 10 minutes, somehow it didn’t really frighten away some brave people.

No one was more surprised than me to be among those adding new positions yesterday morning, but in hindsight it may have seemed premature to have done so as the market ended up the day having done just as badly as it ended the previous week.

The conventional wisdom is that these kind of plunges are necessary in order to flush sellers out of the system and then you often see a significant bounce higher.

The late Mark Haines of CNBC used to be very calm in the face of these kind of early morning sell-offs that followed a similarly large sell off the previous day because his experience was that was the first step of the climb higher.

That seemed to be the case yesterday, but what was missing yesterday was any sense of frenzied selling, despite the fact that there was a 1000 point decline in those first 10 minutes.

Given how quickly the recovery set in, there had to be the realization that the decline was not something truly based on market forces, but rather the result of sell orders hitting mutual funds on Friday and perhaps some hedge funds calling it quits, in addition to forced margin selling.

Later, another reversal of the initial reversal, something that we may need to get used to, was fairly orderly.

So if you were waiting for a real blow off kind of moment, also called “capitulation,” it hasn’t really shown up yet. What we have been seeing, and this morning’s futures are consistent with that, is the typical kind of out-sized moves in alternating directions that you see in a bear market.

Those moves actually started more than 2 months ago. In fact, people who study this sort of thing will tell you that you don’t even need the alternating component. Simply seeing out-sized moves higher is emblematic of being in a bear market.

Who knows.

This morning comes as China’s Shanghai exchange was down another 7%.

I went to bed last night seeing the Shanghai futures trading much lower, but the US futures were picking up strength, which came as a surprise.

The extent of that divergence when waking up tghis morning was a real surprise, that was widened when the People’s Bank of China announced an easing on its lending and bank reserve requirements.

We’ll see.

So far the attempts to control China’s markets, currency and economy haven’t fared terribly well, but these things are like trying to stop a steaming locomotive. If you remember your basic physics, there’s that concept of “momentum” at play. It takes lots and lots of energy to put the brakes on something with momentum.

That’s exactly what economies have. Lots of momentum and typically very slow to respond to external forces.

With a couple of new positions opened yesterday and the market moving higher, I would love any opportunity to sell more calls, but with the move higher comes a drop in volatility. Yesterday, in looking for call sales opportunities the prevailing picture was that of a dumb struck options market. The moves were so sudden and pronounced that there were very, very few bids, so sellers were there to sell, but no one was there to buy. Not even offering a ceremonial bid that could offer some room for negotiation.

We’ll see how or if that changes today.

Daily Market Update – August 25,  2015  (8:15 AM)

It’s probably senseless to try and describe yesterday’s action.

Whatever it was that caused the 1000 point decline in the first 10 minutes, somehow it didn’t really frighten away some brave people.

No one was more surprised than me to be among those adding new positions yesterday morning, but in hindsight it may have seemed premature to have done so as the market ended up the day having done just as badly as it ended the previous week.

The conventional wisdom is that these kind of plunges are necessary in order to flush sellers out of the system and then you often see a significant bounce higher.

The late Mark Haines of CNBC used to be very calm in the face of these kind of early morning sell-offs that followed a similarly large sell off the previous day because his experience was that was the first step of the climb higher.

That seemed to be the case yesterday, but what was missing yesterday was any sense of frenzied selling, despite the fact that there was a 1000 point decline in those first 10 minutes.

Given how quickly the recovery set in, there had to be the realization that the decline was not something truly based on market forces, but rather the result of sell orders hitting mutual funds on Friday and perhaps some hedge funds calling it quits, in addition to forced margin selling.

Later, another reversal of the initial reversal, something that we may need to get used to, was fairly orderly.

So if you were waiting for a real blow off kind of moment, also called “capitulation,” it hasn’t really shown up yet. What we have been seeing, and this morning’s futures are consistent with that, is the typical kind of out-sized moves in alternating directions that you see in a bear market.

Those moves actually started more than 2 months ago. In fact, people who study this sort of thing will tell you that you don’t even need the alternating component. Simply seeing out-sized moves higher is emblematic of being in a bear market.

Who knows.

This morning comes as China’s Shanghai exchange was down another 7%.

I went to bed last night seeing the Shanghai futures trading much lower, but the US futures were picking up strength, which came as a surprise.

The extent of that divergence when waking up tghis morning was a real surprise, that was widened when the People’s Bank of China announced an easing on its lending and bank reserve requirements.

We’ll see.

So far the attempts to control China’s markets, currency and economy haven’t fared terribly well, but these things are like trying to stop a steaming locomotive. If you remember your basic physics, there’s that concept of “momentum” at play. It takes lots and lots of energy to put the brakes on something with momentum.

That’s exactly what economies have. Lots of momentum and typically very slow to respond to external forces.

With a couple of new positions opened yesterday and the market moving higher, I would love any opportunity to sell more calls, but with the move higher comes a drop in volatility. Yesterday, in looking for call sales opportunities the prevailing picture was that of a dumb struck options market. The moves were so sudden and pronounced that there were very, very few bids, so sellers were there to sell, but no one was there to buy. Not even offering a ceremonial bid that could offer some room for negotiation.

We’ll see how or if that changes today.