Category Archives: Daily Market Update

Daily Market Update – April 16, 2015  (9:00 AM)

With Citibank and Goldman Sachs reporting earnings this morning, they were in line with other major money center bank reports and so all seems well in the financial sector, as we get ready to move forward to the rest of the S&P 500.

So far the week is trading flatly, but that may be a little bit of a victory considering that this quarter will likely continue to be characterized by decreased guidance, decelerating growth in earnings and continued fears about currency.

All of those will also be happening in the context of the possibility of rising energy prices, but at least for the moment we’re not fretting about when interest rate rises will be coming.

What hasn’t been discussed at all, although may still be forthcoming when companies like Dow Chemical report, is what the impact of lower energy costs have been on their bottom lines. To this point we haven’t really seen any evidence of the hypothetical benefits of decreased energy costs, even though they have to be real.

When you consider that at some point the ability of stock buy backs to prop up EPS data is going to have to wane, there has to be something else to propel EPS or the market is going to be in for some major disappointment.

Since the most common way to cut costs and drive up the bottom line is to cut the workforce, that’s not a very good alternative means to grow EPS. It never is, but it would be even worse if coming before anyone  ever gets to believe that the marketplace ever even recovered from the 2008-9 drop in employment.

If lower energy costs won’t be the bump necessary to offset decreasing share buy backs, we had better hope that the dollar starts to demonstrate some weakness and that interest rates stay low, even though some rise in interest rates would probably be a good thing for the economy.

But all of that is way too esoteric this morning.

We’re 2 days from the end of the April 2015 option cycle and we still have 2 weeks of trading for the month to live up to its hype of being among the best for the market year in and year out. So far the S&P 500 is up 2%, so it is doing its part when you realize that YTD the market is up only 2.3%.

With this morning’s Housing Starts number being on the light side the market isn’t capitalizing on the Citibank and Goldman Sachs news as it gets ready to open for trading. Instead it is erasing yesterday’s moderate gains and then some.

Hopefully there will be enough moderation in selling to let this week end with enough assignments to fund any buying in the coming weeks as we continue to try and figure out what there is out there that can push markets ahead.

For now, bottom lines that aren’t as bad as we had expected is a good enough reason for stocks to move higher. But that isn‘t the sort of excuse that has lasting power.

Unfortunately, an increase in subscriber numbers to Netflix, the kind that can give a 12% pop to shares in the pre-open, isn’t the kind of thing that finds its way trickling down to the rest of the market.

Someone else will have to do the heavy lifting while others watch House of Cards, but they need to move up soon, before we get tired of hearing the same old “better than expected” refrain to characterize lower earnings and decelerating growth.

Daily Market Update – April 15, 2015  (Close)

Over the course of Wednesday and Thursday there will be no fewer than 7 speeches being given by Federal Reserve Governors, any of which could get enough attention to cause some shifts in the market. Considering that there isn’t really any compelling reason to believe that the economy is getting so heated that interest rate hikes are going to be necessary very soon, for the most part, however, those seven speeches should be offering nothing new.

In the meantime earnings will continue having now gotten off to a decent start.

With Bank of America reporting this morning and being roughly in line with expectations there will be more to come from Citibank, Morgan Stanley and Goldman Sachs and after those we’ll have a good idea of where the financial sector has been and where it thinks it may be going. At least from what we’ve heard so far the past quarter was just a sleepy one that still paid all of the bills and left a little something over for everyone’s efforts.

That’s no small accomplishment for banks when interest rates are so low, so there is something positive coming out of even mediocre kind of earnings reports.

Of particular importance yesterday were Johnson and Johnson, before trading started and Intel, after trading ended.

Different businesses for certain, but both have significant stakes overseas and both reported significant currency related issues decreasing their bottom line.

More importantly after both cut guidance for the coming quarter due to the expectation of continuing currency head winds the market didn’t act surprised and didn’t punish the companies on top of whatever has already been factored into their prices. 

While it would seem logical for it to not over-react to news that had been widely expected, you wouldn’t be overly confident in predicting a calm and rational response if you factored in past responses to what were widely expected events.

I still think back to the winter of 2014 when retail stocks were feeling the pressure of the bad weather and their share prices went lower in expectation of what would eventually be reported. Then when the reports became reality they all went down sharply as if it was the first time anyone had considered that weather could have been an earnings factor.

Sometimes you just look for good news wherever you can find it and so far, the restrained response to reduced guidance is promising.

If looking for a catalyst to drive the markets higher it may not require anything more than simply wiping the collective brow of the market in relief that the earnings and forward guidances being given just aren’t as bad as we had all been expecting.

As we come up on the middle of the week and the end of the monthly option cycle now easily in sight, I would just like to see the next few days at least tread water so that the week can end with a combination of assignments and rollovers that is skewed toward more assignments.

Today, the market did more than just tread water, even as it lost some steam in the final 30 minutes of trading.

That was despite a sharp climb in energy prices that was to the same level as the recent 5% decline, neither of which seemed to matter, despite the superficial importance that was attached to those gyrations when they first started months ago.

It’s unlikely that there will be any additional new purchases for the week, but as always, it’s hard to stick to the script if an opportunity appears to pop up. But otherwise, I would be happy to raise some cash to be in a better position to take advantage of any future opportunities that may be awaiting next week.

Today’s market just gave a little bit an added cushion while awaiting Friday and happily offered some chance to sell some more calls on uncovered positions.

Hopefully some of the paper gains today will become realized gains sooner rather than later.

Daily Market Update – April 15, 2015  (8:00 AM)

Over the course of the next two days there will be no fewer than 7 speeches being given by Federal Reserve Governors, any of which could get enough attention to cause some shifts in the market. Considering that there isn’t really any compelling reason to believe that the economy is getting so heated that interest rate hikes are going to be necessary very soon, for the most part, however, those seven speeches should be offering nothing new.

In the meantime earnings will continue having now gotten off to a decent start.

With Bank of America reporting this morning and being roughly in line with expectations there will be more to come from Citibank, Morgan Stanley and Goldman Sachs and after those we’ll have a good idea of where the financial sector has been and where it thinks it may be going. At least from what we’ve heard so far the past quarter was just a sleepy one that still paid all of the bills and left a little something over for everyone’s efforts.

That’s no small accomplishment for banks when interest rates are so low, so tere is something positive coming out of even mediocre kind of earnings reports.

Of particular importance yesterday were Johnson and Johnson, before trading started and Intel, after trading ended.

Different business for certain, but both have significant stakes overseas and both reported significant currency related issues decreasing their bottom line.

More importantly after both cut guidance for the coming quarter due to the expectation of continuing currency head winds the market didn’t act surprised and didn’t punish the companies on top of whatever has already been factored into their prices. 

While it would seem logical for it to not over-react to news that had been widely expected, you wouldn’t be overly confident in predicting a calm and rational response if you factored in past responses to what were widely expected events.

I still think back to the winter of 2014 when retail stocks were feeling the pressure of the bead weather and their share prices went lower in expectation of what would eventually be reported. Then when the reports became reality they all went down sharply as if it was the first time anyone had considered that weather could have been an earnings factor.

Sometimes you just look for good news wherever you can find it and so far, the restrained response to reduced guidance is promising.

If looking for a catalyst to drive the markets higher it may not require anything more than simply wiping the collective brow of the market in relief that the earnings and forward guidances being given just aren’t as bad as we had all been expecting.

As we come up on the middle of the week and the end of the monthly option cycle now easily in sight, I would just like to see the next few days at least tread water so that the week can end with a combination of assignments and rollovers that is skewed toward more assignments.

It’s unlikely that there will be any additional new purchases for the week, but as always, it’s hard to stick to the script if an opportunity appears to pop up. But otherwise, I would be happy to raise some cash to be in a better position to take advantage of any future opportunities that may be awaiting next week.

Daily Market Update – April 14, 2015  (Close)

It started this morning with Johnson and Johnson reporting, then followed by JP Morgan and Wells Fargo.

Those three have a combined market capitalization that so large that it’s even about 10% larger than that of Apple.

But the good news is that the first 2 major banks to report did nothing to surprise markets and actually beat on revenues.

Johnson and Johnson, which was the first of this season to report with significant currency considerations did report the effects of the stronger dollar and did reduce forward guidance, but as expected, investors were prepared to hear that kind of news. More importantly, the news wasn’t so bad as to have exceeded those expectations.

That’s a good start for what may still be a challenging few weeks ahead, but at the very least the major banks do very often at least set a tone when they’re not behaving badly and thus far this morning the behavior is unremarkable and restrained.

The market too, during its pre-open futures trading is equally restrained and unremarkable.

Given the 3 options of behavior that existed as earnings season gets underway, the same 3 options that exist every day, being restrained and unremarkable can be a good one, if it’s sustained for a while and if any deviations from restraint are soon brought back into line.

Given a portfolio of holdings, some of which are covered, some of which are longing for cover, you can have different hopes for what trend the broader market will be following.

If I had all positions covered I would love seeing a restrained, unremarkable and flat market with occasional punctuations higher and lower. That would make a nice environment for rollovers. That’s the best of all situations when you just roll over position after position and see the income come in on a regular basis.

But when there are uncovered positions the hope is for the ability to see new cover and that typically requires the kind of high tide that pulls everything along. That usually also leads to assignments and rollovers, as well.

So with all of those uncovered positions a flat and restrained market just won’t do it.

While it’s definitely better than a downward moving market at this moment, I’d still like to see this morning’s earnings reports perhaps be the first among a series of non-disappointing reports, that could perhaps serve as the fuel for a move higher.

Until more positions are covered there’s no reason to want to see a lower move by the market. Those are nice to have when you’re sitting on a pile of cash or had a large portion of your holding suddenly called away by a large move higher.

I don’t think that’s going to be the case, although this week’s expiring positions are still in good shape for assignment if the market can avoid any large move lower.

This morning’s early indications following the earnings releases of Johnson and Johnson, JP Morgan and Wells Fargo at least gave some hope for the prospects of the rest of the week. It was nice to see the market trade reasonably well for the day, especially continuing some recovery in energy positions after the rough day last Friday.

With Intel releasing its earnings this afternoon and the post-sessions market’s first response being a positive one, there’s at least some hope that currency headwinds won’t be the kind of drag that was feared, although there’s still lots more to go.

Daily Market Update – April 14, 2015  (8:30 AM)

It started this morning with Johnson and Johnson reporting, then followed by JP Morgan and Wells Fargo.

Those three have a combined market capitalization that so large that it’s even about 10% larger than that of Apple.

But the good news is that the first 2 major banks to report did nothing to surprise markets and actually beat on revenues.

Johnson and Johnson, which was the first of this season to report with significant currency considerations did report the effects of the stronger dollar and did reduce forward guidance, but as expected, investors were prepared to hear that kind of news. More importantly, the news wasn’t so bad as to have exceeded those expectations.

That’s a good start for what may still be a challenging few weeks ahead, but at the very least the major banks do very often at least set a tone when they’re not behaving badly and thus far this morning the behavior is unremarkable and restrained.

The market too, during its pre-open futures trading is equally restrained and unremarkable.

Given the 3 options of behavior that existed as earnings season gets underway, the same 3 options that exist every day, being restrained and unremarkable can be a good one, if it’s sustained for a while and if any deviations from restraint are soon brought back into line.

Given a portfolio of holdings, some of which are covered, some of which are longing for cover, you can have different hopes for what trend the broader market will be following.

If I had all positions covered I would love seeing a restrained, unremarkable and flat market with occasional punctuations higher and lower. That would make a nice environment for rollovers. That’s the best of all situations when you just roll over position after position and see the income come in on a regular basis.

But when there are uncovered positions the hope is for the ability to see new cover and that typically requires the kind of high tide that pulls everything along. That usually also leads to assignments and rollovers, as well.

So with all of those uncovered positions a flat and restrained market just won’t do it.

While it’s definitely better than a downward moving market at this moment, I’d still like to see this morning’s earnings reports perhaps be the first among a series of non-disappointing reports, that could perhaps serve as the fuel for a move higher.

Until more positions are covered there’s no reason to want to see a lower move by the market. Those are nice to have when you’re sitting on a pile of cash or had a large portion of your holding suddenly called away by a large move higher.

I don’t think that’s going to be the case, although this week’s expiring positions are still in good shape for assignment if the market can avoid any large move lower.

This morning’s early indications following the earnings releases of Johnson and Johnson, JP Morgan and Wells Fargo at least give some hope for the prospects of the rest of the week.

Daily Market Update – April 13, 2015  (Close)

While there are some economic reports of interest this week they’re not likely to be anywhere near as important as the real beginning of earnings season this week.

It may have started with Alcoa last week, but tomorrow begins the series of reports from the major money center banks.

While they can do well and not bring the rest of the market higher with it, it’s not to common for those banks to report disappointing earnings and then to see the rest of the market thrive. However, that was the case in the final quarter of 2014, when the relatively disappointing earnings reports from the banks didn’t drag markets lower.

So it could happen.

This time around there aren’t really great expectations for the banks and instead most attention is going to be focused on those companies that may have significant currency exposure, such as Intel, which also reports this week.

We’ve been talking and fretting for so long about currency impact that you would have to think that it would have to be much worse than expected for the actual reports to bring stocks down very much. You might also think that companies with lots of cash overseas and earning lots of money overseas are involved in fairly sophisticated currency hedging that would finally start to pay off.

However, coming off a relatively strong 2 weeks to start April after a really disappointing March, there’s room to give up some of those recent gains. On the other hand, though, April is just an historically strong month for markets and our lowered expectations for earnings may be just the environment necessary for the next phase higher.

Each of those is reasonable and we’ll find out soon enough whether there is enough contained in the upcoming earnings reports to push markets higher, as we’re running out of other reasons to see growth.

At this point it looks as if we’re going back to good old fundamentals, which normally would be a good thing, unless some one comes up with the realization that current levels are just artificially so high and to a degree are based on engineering of EPS data through years of buy backs that have probably now seen their peak.

Just look at the performance of GE today, just a day after its 10% gain following announcement of a $50 Billion buyback that will be funded from selling its non-industrial pieces. Never mind that those pieces were now making money.

That GE buyback may truly have been the peak of the corporate strategy that has been soaking up shares and helping to create an illusion of greater comparative earnings.

GE actually reports earnings this week, too. That could be interesting.

With only a single assignment last week I’m not expecting to be very actively looking for new positions this week, just as last week was restrained.

With a number of positions set to expire this Friday as the monthly cycle comes to its end, I’d be very happy to have a repeat of last week. Being able to get rollovers done and execute the sale of some calls on existed uncovered positions would satisfy my need to generate income for the week.

However, as much as I was happy with last week, this week I would like to see some more emphasis on the assignment side of the equation.

At the moment a number of positions are candidates for assignment but it’s not a done deal until the final closing bell rings on Friday and even then it’s not really a done deal until as much as another 90 minutes passes.

So I won’t be making too many plans with all of that money from assignments that still may not ever become reality until they do.

However, with the likelihood of at least some and with the additional likelihood of at least being able to get some rollovers accomplished, any new positions may equally look at expirations this Friday or in some future weeks.

With volatility getting lower and lower and bringing premiums down, as well, there’s not too much attraction for looking at the extended weekly options unless earnings come into play and help to boost up some premiums.

The market appeared to be getting ready to open the week on a flat note, so the early direction could have then gone anywhere, but it ended up getting progressively weaker as the day wore on, in the complete absence of news.

For whatever there was today the week won’t begin for real until tomorrow morning when JP Morgan and Wells Fargo get it all going.

Daily Market Update – April 13, 2015  (7:30 AM)

While there are some economic reports of interest this week they’re not likely to be anywhere near as important as the real beginning of earnings season this week.

It may have started with Alcoa last week, but tomorrow begins the series of reports from the major money center banks.

While they can do well and not bring the rest of the market higher with it, it’s not to common for those banks to report disappointing earnings and then to see the rest of the market thrive. However, that was the case in the final quarter of 2014, when the relatively disappointing earnings reports from the banks didn’t drag markets lower.

So it could happen.

This time around there aren’t really great expectations for the banks and instead most attention is going to be focused on those companies that may have significant currency exposure, such as Intel, which also reports this week.

We’ve been talking and fretting for so long about currency impact that you would have to think that it would have to be much worse than expected for the actual reports to bring stocks down very much. You might also think that companies with lots of cash overseas and earning lots of money overseas are involved in fairly sophisticated currency hedging that would finally start to pay off.

However, coming off a relatively strong 2 weeks to start April after a really disappointing March, there’s room to give up some of those recent gains. On the other hand, though, April is just an historically strong month for markets and our lowered expectations for earnings may be just the environment necessary for the next phase higher.

Each of those is reasonable and we’ll find out soon enough whether there is enough contained in the upcoming earnings reports to push markets higher, as we’re running out of other reasons to see growth.

At this point it looks as if we’re going back to good old fundamentals, which normally would be a good thing, unless some one comes up with the realization that current levels are just artificially so high and to a degree are based on engineering of EPS data through years of buy backs that have probably now seen their peak.

With only a single assignment last week I’m not expecting to be very actively looking for new positions this week, just as last week was restrained.

With a number of positions set to expire this Friday as the monthly cycle comes to its end, I’d be very happy to have a repeat of last week. Being able to get rollovers done and execute the sale of some calls on existed uncovered positions would satisfy my need to generate income for the week.

However, as much as I was happy with last week, this week I would like to see some more emphasis onthe assignment side of the equation.

At the moment a number of positions are candidates for assignment but it’s not a done deal until the fiunal closing bell rings on Friday and even then it’s not really a done deal until as much as another 90 minutes passes.

So I won’t be making too many plans with all of that money from assignments that still may not ever become reality until they do.

However, with the likelihood of at least some and with the additional likelihood of at least being able to get some rollovers accomplished, any new positions may equally look at expirations this Friday or in some future weeks.

With volatility getting lower and lower and bringing premiums down, as well, there’s not too much attraction for looking at the extended weekly options unless earnings come into play and help to boost up some premiums.

For now, the market appears to be getting ready to open the week on a flat note, so the early direction can be anywhere, as can the opportunities, but the week may not begin for real until tomorrow morning when JP Morgan and Wlls Fargo get it all going.

Daily Market Update – April 10, 2015  (8:00 AM)

The Week in Review will be posted by 6:00 PM and the Weekend Update will be posted by Noon on Sunday:

The following trade outcomes are possible today:

Assignments: Halliburton

Rollovers:  Coca Cola, The Gap

Expirations:  Market Vectors Gold Miners ETF, Whole Foods

The following positions were ex-dividend this week:  The Gap (4/6 $0.23), Whole Foods (4/8 $0.13)

The following positions will be ex-dividend next week:  AbbVie (4/13 $0.51), Chesapeake Energy (4/13 $0.09), Freeport McMoRan (4/13 $0.05)

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

Daily Market Update – April 9, 2015  (Close)

Yesterday’s was another day of a failed rally, as the market squandered another triple digit gain, although it did manage to stay above water. In fact, when you consider the huge drop taken by oil prices yesterday and the portion of the S&P 500 comprised by energy positions, the market actually did fairly well for the day.

This morning, as this news-free week was winding down, is looked as if it’s going to be another flat open, but when the day came to its end, nothing was squandered. It wasn’t a terribly exciting day, but it worked for me. It was a day that was different from those recently preceding it in that it stayed on the same mellow course all through the session.

What had distinguished this week a little has been the occasional change in direction during the trading day, instead of simply alternating from day to day. For the most part, that’s not something that we had seen in more than a month. During that time, while we’ve seen a lot of flat openings being portended by the futures market, that hasn’t been the way the market has actually traded for much of that period.

For most of that time there’s been very little reason to account for the switch in magnitude seen so often, just as there’s been very little reason to explain the switch in direction from day to day, that had really been a hallmark of March, while April continues to look for its own character.

That character may get formed over the next week as earnings season got underway yesterday. At some point we will have heard from enough companies with large interests abroad to get a feeling for just how much earnings will be depressed and just how much they may be expected to impact earnings for the coming quarter.

For all of the emphasis that’s put on EPS growth from comparable periods, the suggestion that EPS growth is decelerating isn’t the sort of thing that investors are happy to hear about. They so much like to hear about accelerating EPS data, that they’re completely willing to overlook how it happened, such as through large buyback programs.

So these coming weeks may be interesting. Maybe even more so than with the usual beginning of earnings season

With just two days left to go for the week my eyes are set on whatever opportunities there may still be for rollovers and a hope that at least some of the positions will get a chance to be assigned.

That’s pretty much the hope for every week, where it doesn’t get better than when you have a nice combination of opening positions, rollovers, assignments and sales on uncovered positions.

With only one new position opened this week and only two new sales of previously uncovered positions, that leaves rollovers and assignments for this week and at least those still look like possibilities, as long as the market can stay in the game. With no real news today and none due tomorrow, it would be easy to think that there’s nothing to know the market off of its perch, but we all know how quickly the mood can change even when there’s no apparent catalyst.

Every now and then that mood becomes buoyant, but there’s been a definite lack of optimism being expressed lately.

But who knows, that may be the most positive thing of all.

Maybe the more people warn of calamity or pulling your wagons together, the better things may be in the coming week as things may end up not being as bad as we’ve been coming to expect.

Daily Market Update – April 9, 2015  (8:45 AM)

Yesterday’s was another day of a failed rally, as the market squandered another triple digit gain, although it did manage to stay above water. In fact, when you consider the huge drop taken by oil prices yesterday and the portion of the S&P 500 comprised by energy positions, the market actually did fairly well for the day.

This morning, as this news-free week is winding down, is looking as if it’s going to be another flat open.

What has distinguished this week a little has been the occasional change in direction during the trading day, instead of simply alternating from day to day. For the most part, that’s not something that we had seen in more than a month. During that time, while we’ve seen a lot of flat openings being portended by the futures market, that hasn’t been the way the market has actually traded for much of that period.

For most of that time there’s been very little reason to account for the switch in magnitude seen so often, just as there’s been very little reason to explain the switch in direction from day to day, that had really been a hallmark of March, while April continues to look for its own character.

That character may get formed over the next week as earnings season got underway yesterday. AT some point we will have heard from enough companies with large interests abroad to get a feeling for just how much earnings will be depressed and just how much they may be expected to impact earnings for the coming quarter.

For all of the emphasis that’s put on EPS growth from comparable periods, the suggestion that EPS growth is decelerating isn’t the sort of thing that investors are happy to hear about. They so much like to hear about accelerating EPS data, that they’re completely willing to overlook how it happened, such as through large buyback programs.

So these coming weeks may be interesting. Maybe even more so than with the usual beginning of earnings season

With just two days left to go for the week my eyes are set on whatever opportunities there may still be for rollovers and a hope that at least some of the positions will get a chance to be assigned.

That’s pretty much the hope for every week, where it doesn’t get better than when you have a nice combination of opening positions, rollovers, assignments and sales on uncovered positions.

With only one new position opened this week and only two new sales of previously uncovered positions, that leaves rollovers and assignments for this week and at least those still look like possibilities, as long as the market can stay in the game. With no real news coming today nor tomorrow, it would be easy to think that there’s nothing to know the market off of its perch, but we all know how quickly the mood can change even when there’s no apparent catalyst.

Every now and then that mood becomes buoyant, but there’s been a definite lack of optimism being expressed lately.

But who knows, that may be the most positive thing of all.

.

Daily Market Update – April 8, 2015  (Close)

Yesterday’s late sell-off prevented a repeat of two consecutive higher closes, so they continue to remain elusive in 2015, but at least this morning wasn’t an assured loser, as the futures were trading flatly to begin the day.

Also on the bright side is that the close yesterday gives the market a chance to digest Monday’s unexpectedly large gains following the turnaround from the morning’s sell-off.

Otherwise, there isn’t too much news for the rest of the week, although the minutes from last month’s FOMC meeting will be released and you can be certain that each and every word will be dissected by lots of people with very different lenses.

There shouldn’t be anything shocking in there, although it could offer some insight into just how concerned the FOMC may be about the strengthening US Dollar and how that may be acting to slow the growth of the economy.

They may also be caught discussing how the drop in energy prices hasn’t yet seem to materialize into the kind of increased consumer activity that just about every economist projected and resulted in a significant upward change to the projected 2015 GDP.

Instead, however, most all attention ended up being diverted by the news of a verdict in the Boston Marathon Bombing trial.

All of that came on the day that earnings season begins after today’s market close.

The only question as we head into the second quarter of earnings, the one in which we were all expecting to hear about increased consumer driven revenues and decreased energy related prices, is how much have we prepared ourselves for currency related issues.

For companies that have lots of exports it may be difficult to deal with the stronger dollar that ends up making those goods more expensive to overseas buyers. However, for those companies that make lots of sales from their direct activities abroad the strengthening US dollar’s impact may only be as much as their currency hedging activities failed to offset.

Companies like Apple, Microsoft and others likely will report decreased earnings from currency shifts, but likely to a much lesser degree because of their hedges, just as some airlines hedged the price of fuel for years to their advantage.

There will still be earnings surprises, but we may be better prepared for the upcoming quarter than expected, as the expectation for currency related charges has now been in the air for quite some time.

However the season begins this afternoon, it will be an interesting few weeks.

For a while it has been hard to identify a possible upside catalyst. Earnings, even if below analysts expectations, may end up being that surprise catalyst.

For the rest of the week I think it will just be a case of sitting back and waiting, while hoping for those opportunities to sell options, rollover or cash out of positions may come along.

Today ended up with a pretty flat close, although if looking to be very critical you could point to a second consecutive day of a failed rally, as the market was up by triple digits early in the day. Given the very strong downward move by energy stocks today the DJIA and S&P 500 did reasonably well, as the latter is about 20% energy.

So what today may mean, whether in the big picture or just for the day is dubious.

Just more of the same tomorrow and one step closer to seeing this week come to an end, still within striking range of decent outcomes on those positions set to expire.

.

Daily Market Update – April 8, 2015  (8:45 AM)

Yesterday’s late sell-off prevented a repeat of two consecutive higher closes, so they continue to remain elusive in 2015, but at least this morning isn’t an assured loser, as the futures are trading flatly to begin the day.

Also on the bright side is that the close yesterday gives the market a chance to digest Monday’s unexpectedly large gains following the turnaround from the morning’s sell-off.

Otherwise, there isn’t too much news for the rest of the week, although the minutes from last month’s FOMC meeting will be released and you can be certain that each and every word will be dissected by lots of people with very different lenses.

There shouldn’t be anything shocking in there, although it could offer some insight into just how concerned the FOMC may be about the strengthening US Dollar and how that may be acting to slow the growth of the economy.

They may also be caught discussing how the drop in energy prices hasn’t yet seem to materialize into the kind of increased consumer activity that just about every economist projected and resulted in a significant upward change to the projected 2015 GDP.

All of that comes on the day that earnings season begins after today’s market close.

The only question as we head into the second quarter of earnings, the one in which we were all expecting to hear about increased consumer driven revenues and decreased energy related prices, is how much have we prepared ourselves for currency related issues.

For companies that have lots of exports it may be difficult to deal with the stronger dollar that ends up making those goods more expensive to overseas buyers. However, for those companies that make lots of sales from their direct activities abroad the strengthening US dollar’s impact may only be as much as their currency hedging activities failed to offset.

Companies like Apple, Microsoft and others likely will report decreased earnings from currency shifts, but likely to a much lesser degree because of their hedges, just as some airliines hedged the price of fuel for years to their advantage.

There will still be earnings surprises, but we may be better prepared for the upcoming quarter than expected, as the expectation for currency related charges has now been in the air for quite some time.

However the season begins this afternoon, it will be an interesting few weeks.

For a while it has been hard to identify a possible upside catalyst. Earnings, even if below analysts expectations, may end up being that surprise catalyst.

For the rest of the week I think it will just be a case of sitting back and waiting, while hoping for those opportunities to sell options, rollover or cash out of positions may come along.

.

Daily Market Update – April 7, 2015  (Close)

Yesterday was as welcome of a reversal as you could have orchestrated.

While I mentioned yesterday morning that the gap between Friday’s futures trading and Monday’s open was the kind of day that could see a reversal once the filling in of the gap had been done, I didn’t expect it to happen so fast.

The reversal started almost immediately following the opening which had gapped down by more than 100 points and had returned the market to the flat line by 10 AM. That was the time that the ISM non-Manufacturing data was released and the market just kept climbing higher and higher. The ISM data got the credit, but the trend was already pretty clear before the data was released.

While the ISM could have added to the gain the likelihood is that some sane minds came to realize that the February job numbers, which were outrageously high and the March numbers, which were outrageously low, may not have been accurate reflections of what is really going on.

The market’s decline leading to an abysmal March all started with the February Employment Situation Report release and we were getting poised to do the same with the new report’s release of the March data.

Maybe not lost on anyone is that April tends to be a really good month and it would be a shame to let history down.

It looks like it was serendipitous that markets were closed for 3 days and had a chance to let things cool down enough to let rational thought take over, although we will likely never learn that even the best of data is subject to revisions that can paint an entirely different picture. The revisions to February’s employment data may have made a big difference if reported as part of the original data and could have avoided us going through a lost month in the market.

This morning the market was very mildly higher and there’s not too much this week to spook or elate markets, other than the release of the FOMC meeting minutes tomorrow, which could provide some insights into the thoughts going on behind closed doors.

Otherwise this morning had a JOLT Survey, which hasn’t gotten anywhere near the attention that Janet Yellen believed it deserved, other than when she first mentioned how she believed that it was an important measure of the health and vibrancy of the labor market.

With little evidence of upward wage pressure it’s not too likely that future JOLT Surveys will indicate the kind of optimism that Janet Yellen had referred to just a few months ago, when it seemed that people were willingly leaving their jobs to pursue better paying ones.

That was so yesterday.

With a single purchase yesterday and cash being at a bare minimum, I don’t anticipate adding many new positions this week. While I’d love to see a repeat of yesterday, the early indications weren’t looking as if that will be the magnitude of any climb higher. But I still am on the lookout for any opportunity to sell calls on any uncovered positions. Upcoming earnings may enhance some premiums, but they are still so very depressed by the low volatility that continues, despite the up and down climbs from day to day.

As with last week, while I’d love to see some assignments in order to free up some cash, I wouldn’t mind if the alternative was to be able to rollover whatever was otherwise scheduled for expiration this week.

I don’t really care how I generate the income objectives for the week, as long as it’s legal, but it’s always nice to have a mix of assignments, new calls and rollovers. As long as we can stay away from any of those sharp daily declines, as we’ve had for much of 2015, this could be one of those overdue weeks.

At least today’s market didn’t set things back a step to make Friday’s goals less attainable.

Daily Market Update – April 7, 2015  (8:45 AM)

Yesterday was as welcome of a reversal as you could have orchestrated.

While I mentioned yesterday morning that the gap between Friday’s futures trading and Monday’s open was the kind of day that could see a reversal once the filling in of the gap had been done, I didn’t expect it to happen so fast.

The reversal started almost immediately following the opening which had gapped down by more than 100 points and had returned the market to the flat line by 10 AM. That was the time that the ISM non-Manufacturing data was released and the market just kept climbing higher and higher. The ISM data got the credit, but the trend was already pretty clear before the data was released.

While the ISM could have added to the gain the likelihood is that some sane minds came to realize that the February job numbers, which were outrageously high and the March numbers, which were outrageously low, may not have been accurate reflections of what is really going on.

The market’s decline leading to an abysmal March all started with the February Employment Situation Report release and we were getting poised to do the same with the new report’s release of the March data.

It looks like it was serendipitous that markets were closed for 3 days and had a chance to let things cool down enough to let rational thought take over, although we will likely never learn that even the best of data is subject to revisions that can paint an entirely different picture. The revisions to February’s employment data may have made a big difference if reported as part of the original data and could have avoided us going through a lost month in the market.

This morning the market is very mildly higher and there’s not too much this week to spook or elate markets, other than the release of the FOMC meeting minutes tomorrow, which could provide some insights into the thoughts going on behind closed doors.

Otherwise this morning has a JOLT Survey, which hasn’t gotten anywhere near the attention that Janet Yellen believed it deserved, other than when she first mentioned how she believed that it was an important measure of the health and vibrancy of the labor market.

With little evidence of upward wage pressure it’s not too likely that the JOLT Survey will indicate the kind of optimism that Janet Yellen had referred to just a few months ago, when it seemed that people were willingly leaving their jobs to pursue better paying ones.

That was so yesterday.

With a single purchase yesterday and cash being at a bare minimum, I don’t anticipate adding many new positions this week. While I’d love to see a repeat of yesterday, the early indications aren’t looking as if that will be the magnitude of any climb higher. But I still am on the lookout for any opportunity to sell calls on any uncovered positions. Upcoming earnings may enhance some premiums, but they are still so very depressed by the low volatility that continues, despite the up and down climbs from day to day.

As with last week, while I’d love to see some assignments in order to free up some cash, I wouldn’t mind if the alternative was to be able to rollover whatever was otherwise scheduled for expiration this week.

I don’t really care how I generate the income objectives for the week, as long as it’s legal, but it’s always nice to have a mix of assignments, new calls and rollovers. As long as we can stay away from any of those sharp daily declines, as we’ve had for much of 2015, this could be one of those overdue weeks.

Daily Market Update – April 6, 2015  (Close)

This morning looked as if it would do what it has to do to make up for lost time when it wasn’t able to react to Friday’s Employment Situation Report.

With the very disappointing numbers, that can still be subject to revision, as they always are, the bond markets and futures markets were open and did what you would probably have expected them to do in light of a very weak report.

Maybe a year ago or even just 6 months ago, the very same kind of weak job growth report would have been met enthusiastically because it would have meant a continuation of Quantitative Easing.

Now, a decline from what’s expected only means that growth is decelerating and that’s not a good thing when you realize how flat the trajectory has been over the past 6 years. It’s not as if there’s been explosive growth that could just as easily fall off of a cliff. The gains in employment and the economic growth have all been hard won, but have only been incremental victories. Even a small step backward may seem overly large or significant.

In the best of the worlds the market will come to the realization that the numbers released on Friday may either be an aberration, perhaps weather related, or be in line for their own revisions. Doing so would require some rational thought regarding the logic or reacting so strongly to data that is subject to revision. In fact Friday’s data included a downward revision to the previous month which had exceptionally strong numbers that started the recent decline seen all through the month of March.

But that’s not likely to happen based on the past. We will still go from number to number. Reacting first and rarely thinking over the logic of the action other than to have an equally illogical reaction.

Yet, it did happen today, as suggested this morning that it might once the need to do something about that gap was requited.

After what turned out to be a really nice day today, tomorrow we start all over again with eyes firmly set on Wednesday.

This week brings another FOMC Statement release and there’s not too much reason to suspect that it will contain anything to move markets. There’s no expectation for a rate increase, nor for change in the language unless there is an acknowledgement that the economy is not growing as much as would have been expected.

The language used, especially if expressing any disappointment at the slower than expected pace of economic expansion, especially in the face of declining energy prices could be one of those things that sends the market higher, as there will be an expectation of  some more time with free and easy money courtesy of the Federal Reserve.

With only a single assignment last week it was at least good to get all expiring positions rolled over. That added to the positions now set to expire this week and next, which marks the end of the monthly cycle.

With volatility so low, despite what seems like a very volatile environment, there’s not much inducement to think about looking very far into the future when it comes to selecting expiration dates. The caveat to that is that earnings season starts this week and for select positions there may be some enhancement of premium due to an upcoming earnings report.

With minimal in cash reserves I still don’t expect very much action this week and find myself again preferring to generate whatever weekly income possible either through rollovers or the sale of calls on existing uncovered positions. There was some limited opportunity today, just not enough.

With the large decline expected this morning it wasn’t too likely that the latter of those preferences would be borne out today, but this kind of day, with the market needing to do some filling in for what was missed on Friday was also the kind of day that has seen a turnaround once that filling in has come to its end.

Luckily, that’s exactly the way the script played itself out and did so quickly. Hopefully the rest of the week will also allow some nice constructive tardes to be made in preparation for the end of the cycle next week.