Category Archives: Daily Market Update

Daily Market Update – February 27, 2015 (9:00 AM)

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

The following trade outcomes are possible today:

Assignments: American Express

Rollovers:  Marathon Oil, United Continental

Expirations: Las Vegas Sands

The following were ex-dividend this week:   SBGI (2/25 $0.16), LXK (2/26 $0.36), SNDK (2/26 $0.30), ANF (2/27 $0.20)

The following will be ex-dividend next week: HAL (3/2 $0.18), JOY (3/2 $0.20), MOS (3/3 $0.25), BAC (3/4 $0.05), COH (3/4 $0.34), HFC (3/6 $0.32)

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

Daily Market Update – February 26, 2015 (Close)

Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.

While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.

Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.

This morning, ahead of the opening bell, all appearances were for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.

And that was exactly how the entire day unfolded, as the trading range was again a narrow one and there was very little of interest going on anywhere.

As we get set for tomorrow’s GDP release, with a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.

In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected.

You really do have to wonder about that altered guidance that Macys gave about two weeks ago and ask what happened between then and yesterday when they released their earnings and didn’t seem as optimistic about what the near term future was holding for them.

Maybe it was the weather, as it was last year, but so far no one is really pointing a finger in that direction, as everyone instead is blaming currency headwinds, although that shouldn’t be too much of an issue for Macys.

Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.

With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.

Equally possible and as was the case as the afternoon wore on, a sudden drop in oil prices could do something to upset the cart, as well.

At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a period of prolonged quiet the market won’t do what people sometimes do and become overly introspective.

For the most part I like my markets in a state of denial or aimlessly moving ahead.

With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.

Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.

Daily Market Update – February 26, 2015 (7:45 AM)

Yesterday set another new closing record high for the DJIA but not in the same way as it had the day before.

While the second day of questioning of Janet Yellen, this time by the House of Representatives side of the 2 bodied chamber was more contentious than on the first day, Yellen didn’t slip or say anything to spook or delight markets.

Instead of a strong showing as when the more genteel legislative body did its questioning, yesterday the market barely eked out a gain, as the S&P 500 actually fell a little.

This morning, ahead of the opening bell, all appearances are for another listless day of trading as the real impetus for any kind of move may be in store tomorrow as the GDP statistics are released.

With now a few months of lower energy prices having been reality the expectation would be that some increase in GDP would become evident, even though GDP also includes gasoline sales, which itself would be expected to put a damper on the total growth in GDP.

In the meantime, as retail sales reports and earnings are now nearly complete, the picture is mixed and guidance that has been provided seems to be less optimistic than has been expected. Any boost to markets that could have come from strong earnings reports and enthusiastic guidance hasn’t materialized and may have to wait until next quarter, or until someone steps forward with altered guidance between now and late May.

With only a handful of positions in play for tomorrow’s contract expirations there’s not likely to be much trading action as most appear to be in position to be assigned. Of course, that could change fairly abruptly with a disappointing GDP number or a surprisingly strong number that would re-instill fears of interest rate hikes, despite Yellen’s dovish tones over the past two days.

At the same time, the world appears to be fairly quiet, despite any number of items that could pop up to upset things. Hopefully, during a period of prolonged quiet the market won’t do what people sometimes do and become overly introspective.

For the most part I like my markets in a state of denial or aimlessly moving ahead.

With the exception of a couple of strong moves higher over the past few weeks that’s exactly what it has been doing. Doing so in a slow and methodical way makes it less likely that a trap door will be suddenly sprung open and undo all of the good that’s been done this February.

Hopefully tomorrow’s GDP will be another in a series of reports that are right in line with expectations and the market will continue its calm climb while those other markets, bonds, oil and precious metals, continue their uncertain paths, but actually go nowhere too distant.

Daily Market Update – February 25, 2015 (Close)

Yesterday was a very quiet day in the market until Janet Yellen got going in front of her congressional questioners as part of her mandated bi-annual report to them.

Once she got started the overall impression she gave was that her more dovish side had re-taken center stage.after a few months of seemingly being somewhat coy about the timing of any interest rate increases that we all know have to come.

The most recent FOMC report even went to lengths to explain the adverse impact of prolonged low rates.

It doesn’t take a genius to figure out that when you hear that sort of thing you’re being set up to come to some sort of reluctant acceptance of something that you’re being told is good for you, even though it doesn’t feel very good.

But yesterday there was a sense that there was no real rush to get those rates moving higher which is something that typically makes stock people happy and bond people doing whatever they do to send rates lower.

Today was Day 2 of the testimony and we didn’t see her bring a repeat to yesterday’s new closing highs to both the DJIA and S&P 500. Those were the first since Monday or last Friday. I forget, as it’s been so long since that has happened. Today we just had to make do with a new closing high on the DJIA.

With now 2 days of trading still left for the week there’s plenty that can happen, especially with Friday being the release of the latest GDP data.

With yesterday’s 3 rollover trades, a little surprising having come so early in the week, that leaves only 4 positions that could potentially be rolled over or assigned this week and now the same number expiring next week.

That may result in looking at potential rollovers to the March 13, 2015 contract in an effort to get some more time diversification, as long as it doesn’t give up too much in premiums, as volatility is again very low for most positions, with the continuing notable exceptions in energy related stocks.

I made an after-hours trade yesterday, which is something that I very infrequently do, having purchased shares of Hewlett Packard after they tumbled once earnings were released and the conference call was near its conclusion.

Depending on its price behavior this morning and how the option premiums would begin to look I thought that I might make it an OTP trade as well, with its ex-dividend date conveniently and maybe coincidentally enough being on the Monday of the week of the March 13 contracts.

But that didn’t happen as shares traded down even further, which was surprising as shares had closed the previous evening’s after hours session well off the lows following the conference call. However, Meg Whitman’s appearance on CNBC did nothing to inspire confidence, as her responses to questions really seemed muddled and she put far too much empasis on currency issues and future cists associted with the planned breakuo of HP near the end of the year.

Instead, Lexmark, which goes ex-dividend and which was assigned just a week and a half ago at $43 was now on sale, having plunged along with HP, even though Lexmark is no longer in the oprinter business. Somehow smart investors have forgotten that Lexmark has followed in the strategy of its one time parent, IBM, and gone the consulting route.

Other than that additional new position I don’t think there will be too much reason to consider any more new positions for the week, but then again, you never know what the day will hold once the bell rings and people start making believe that they are rational players with perfect vision of what the future will hold.

Daily Market Update – February 25, 2015 (8:30 AM)

Yesterday was a very quiet day in the market until Janet Yellen got going in front of her congressional questioners as part of her mandated bi-annual report to them.

Once she got started the overall impression she gave was that her more dovish side had re-taken center stage.after a few months of seemingly being somewhat coy about the timing of any interest rate increases that we all know have to come.

The most recent FOMC report even went to lengths to explain the adverse impact of prolonged low rates.

It doesn’t take a genius to figure out that when you hear that sort of thing you’re being set up to come to some sort of reluctant acceptance of something that you’re being told is good for you, even though it doesn’t feel very good.

But yesterday there was a sense that there was no real rush to get those rates moving higher which is something that typically makes stock people happy and bond people doing whatever they do to send rates lower.

Today is Day 2 of the testimony and we’ll see whether she can bring a repeat to yesterday’s new closing highs. Those were the first since Monday or last Friday. I forget, as it’s been so long since that has happened.

With 3 days of trading still left for the week there’s plenty that can happen, especially with more of today’s testimony to go and with Friday being the release of the latest GDP data.

With yesterday’s 3 rollover trades, a little surprising having come so early in the week, that leaves only 4 positions that could potentially be rolled over or assigned this week and now the same number expiring next week.

That may result in looking at potential rollovers to the March 13, 2015 contract in an effort to get some more time diversification, as long as it doesn;t give up too much in premiums, as volatility is again very low for most positions, with the continuing notable exceptions in energy related stocks.

I made an after-hours trade yesterday, which is something that I very infrequently do, having purchased shares of Hewlett Packard after they tumbled once earnings were released and the conference call was near its conclusion.

Depending on its price behavior this morning and how the option premiums will begin to look I may make it an OTP trade as well, with its ex-dividend date conveniently and maybe coincidentally enough being on the Monday of the week of the March 13 contracts.

Other than that I don’t think there will be too much reason to consider any more new positions for the week, but then again, you never know what the day will hold once the bell rings and people start making believe that they are rational players with perfect vision of what the future will hold.

Daily Market Update – February 24, 2015 (Close)

Yesterday was a very quiet day in the market as it traded in a very narrow range. Today looked as if it wouldn’t start much differently, but everyone knew that there could be some surprises along the way, as Janet Yellen began her 2 days of mandated congressional testimony.

Based on the way the markets have reacted lately to anything coming from the Federal Reserve, there wasn’t necessarily a likely response, at least not in the stock markets.

The real action lately has been in the bond markets and then maybe secondarily flowing over to stocks.

Even if you’re a day trader the actual dynamic isn’t very important, it’s just that the stock market hasn’t had any kind of theme for a while and has been trading aimlessly while bond markets are focused on what seems to be the certainty of rate increases, questioning only whether they are coming soon or very soon.

Instead, both markets received a little bit of a surprise today as Janet Yellen sounded a little more dovish than she has sounded for a while, making it seem as if interest rates may not be ready to go higher as soon as many believed. That sent stocks higher and interest rates much lower, with the 10 Year Treasury Bond breaking 2% for the first time in a couple of weeks.

While Greece and oil prices are basically the only external stories of interest outside of any surprises that may be delivered over the next two days of testimony, the basic internal stories are recurring ones. Those are earnings reports and this week marks the end of the final important period of earnings as the major national retailers speak up.

This morning Home Depot gave reasons to be optimistic, not just for their own business but for the consumer’s ability and willingness to spend and for the health of all of those smaller contractors whose spending activity at Home Depot reflects on overall optimism. As far as the economy goes, there are worse problems to have than companies reporting having to battle with currency headwinds.

This morning also came Macys, which just a couple of weeks ago gave some positive forward guidance, but now reported a miss on top line revenue. We’ll just have to see how that gets spun and whether or not the recent extremes in weather in the Northeast corridor change their sunny predictions from just a couple of weeks ago. Later this week come Target, Kohls, JC Penney and Sears. They will have something to say about consumer optimism and willingness, too and won’t be spending too much time on those pesky headwinds.

Otherwise, over the next couple of weeks are some stragglers reporting their earnings with an occasionally important company doing so in the company of much lesser ones, until it starts all over again in about 7 weeks.

With 3 new purchases yesterday I don’t know how interested I’ll be in adding any more, although there is still enough cash reserves to do so. I would feel better about dipping into those reserves if I had a greater sense of confidence that positions set to expire this week are likely to be assigned, although some are in decent enough position for that to be the case and the others appear to be positioned for rollovers, but those can all change even on the basis of a simple unintentional comment during congressional testimony.

The more likely would be those assignments the more likely I would be inclined to spend the money in anticipation. However, if rollovers appear to be more likely then there isn’t too much reason to deplete cash if existing positions can be used to generate next week’s income stream.

The problem that I’d rather not face, but it does occur, is when there is dwindling cash and decreased likelihood of assignments and rollovers, so there’s some hope that there won’t be any unfortunate slips of the tongue by Yellen over the  two day of testimony.

During today’s first day her performance was admirable..

Other than her very first press conference that hasn’t been an issue and for the most part when she speaks markets react positively. However, when you speak for hours on end, unless there’s something of a blockbuster in those comments the reactions are mixed and often appear as if they’re just biding time until some blockbuster might come along.

I may be biding my time for the rest of the week, as well, hoping that Yellen gives the markets something more to be happy about, as today’s comments helped reach even more record highs.

Daily Market Update – February 24, 2015 (8:15 AM)

Yesterday was a very quiet day in the market as it traded in a very narrow range. Today looks as if it won’t start much differently, but there could be some surprises along the way, as Janet Yellen begins her 2 days of mandated congressional testimony.

Based on the way the markets have reacted lately to anything coming from the Federal Reserve, there may not be too much of a response, at least not in the stock markets.

The real action may be in the bond markets and then maybe secondarily flowing over to stocks.

Even if you’re a day trader the actual dynamic isn’t very important, it’s just that the stock market hasn’t had any kind of theme for a while and has been trading aimlessly while bond markets are focused on what seems to be the certainty of rate increases, questioning only whether they are coming soon or very soon.

While Greece and oil prices are basically the only external stories of interest outside of any surprises that may be delivered over the next two days of testimony, the basic internal stories are recurring ones. Those are earnings reports and this week marks the end of the final important period of earnings as the major national retailers speak up.

This morning Home Depot gave reasons to be optimistic, not just for their own business but for the consumer’s ability and willingness to spend and for the health of all of those smaller contractors whose spending activity at Home Depot reflects on overall optimism. As far as the economy goes, there are worse problems to have than companies reporting having to battle with currency headwinds.

This morning also came Macys, which just a couple of weeks ago gave some positive forward guidance, but now reported a miss on top line revenue. We’ll just have to see how that gets spun and whether or not the recent extremes in weather in the Hortheast corridor change their sunny predictions from just a couple of weeks ago. Later this week come Target, Kohls, JC Penney and Sears. They will have something to say about consumer optimism and willingness, too and won’t be spending too much time on those pesky headwinds.

Otherwise, over the next couple of weeks are some stragglers reporting their earnings with an occasionally important company doing so in the company of much lesser ones, until it starts all over again in about 7 weeks.

With 3 new purchases yesterday I don’t know how interested I’ll be in adding any more, although there is still enough cash reserves to do so. I would feel better about dipping into those reserves if I had a greater sense of confidence that positions set to expire this week are likely to be assigned, although some are in decent enough position for that to be the case and the others appear to be positioned for rollovers, but those can all change even on the basis of a simple unintentional comment during congressional testimony.

The more likely would be those assignments the more likely I would be inclined to spend the money in anticipation. However, if rollovers appear to be more likely then there isn’t too much reason to deplete cash if existing positions can be used to generate next week’s income stream.

The problem that I’d rather not face, but it does occur, is when there is dwindling cash and decreased likelihood of assignments and rollovers, so there’s some hope that there won’t be any unfortunate slips of the tongue by Yellen over the next two days.

Other than her very first press conference that hasn’t been an issue and for the most part when she speaks markets react positively. However, when you speak for hours on end, unless there’s something of a blockbuster in those comments the reactions are mixed and often appear as if they’re just biding time until some blockbuster might come along.

I may be biding my time today, as well, hoping that she gives the markets something to be happy about.

Daily Market Update – February 23, 2015 (Close)

Although the pre-opening futures this morning didn’t look as if the week was going to get off to the kind of start that takes us to more record high closes, there will still be plenty of opportunities this week.

With most of the major retailers reporting earnings this week, and more importantly providing some  future guidance, we may finally get to know whether lower energy costs can translate into an expanding economy.

The week then ends with another GDP report which a number of months ago was predicted to greatly expand due to decreasing energy costs, as about 70% of the GDP is dependent on consumer spending.

Also during the week will be 2 days of congressional testimony by Janet Yellen and there is always the possibility of disclosing something, especially regarding the timing of any interest rate increases, that hasn’t been made public previously.

With Bernanke and Yellen the market rarely moved as much when they provided testimony as it did during the Greenspan years.

The real difference, though, was that when Bernanke or Yellen responded to questions posed to them the answers were generally understood. If there was something truly newsworthy, the market generally knew how to react. Instead, when Greenspan spoke, the market was never sure of what he meant and they would alternate between large drops and surges, often within minutes of one another.

That, at least isn’t likely to happen.

As another monthly option cycle gets ready to begin, it’s nice closing the previous month with a fair number of assignments and the cash to play along, if warranted.

Today there seemed to be some reason to add new positions, but the market stayed as tentative through the entire trading day as it did in the pre-open.

Last Friday’s very unexpected response to a temporary solution to the Greek crisis isn’t likely to have much impact on things going forward until approaching that 4 month date down the road when the crisis could start all over again.

Because Friday’s events were really a “one-off” kind of thing there’s not too much reason to believe that those new closing highs will be the starting point for even more due to some technical set of factors or newly discovered optimism.

Instead, this week will likely stand on its own merits based on the major events planned for the week.

With a few positions et to expire this week and with volatility once again falling, the emphasis will be on finding short term option expiration opportunities and trying to populate this week and perhaps next week, as well, with expiring contract positions. Actually, that’s probably a secondary emphasis. I would still rather generate the week’s income stream from finding some chance to sell calls on existing uncovered positions.

Today, though, it was the secondary emphasis that took center stage as trading was pretty listless and very little moved in a meaningful way.

While retail sales and Yellen’s two days on Capital Hill will be the next center stage there is still plenty of reason to still reserve some focus for oil prices and interest rates.

It’s not always about stocks.

As long as those continue to bounce wildly it’s hard to envision any particular direction for the stock market. You can also add precious metals to that short list, too.

Among asset classes there is often a flow of money from major players as one opportunity looks better than the next. With the constant back and forth seen in some of those markets there’s reason not to be fully committed to any of the markets, even the ones that seem to be reasonably stable, as a collapse in the other markets could result in a quick outflow even from the relatively healthy market, such as to meet margin obligations in other markets.

It’s too bad that we’re not seeing some of the same back and forth in the broader stock market, as that would really drive premiums much higher, as is the case for many energy positions, right now. In the best case scenario even with all of that volatility prices would remain basically unchanged as they have recently been in the energy and precious metals markets.

For now, it’s an issue of waiting to see what character the market assumes this week and not being too reckless with what is left of this week’s newfound cash.

Daily Market Update – February 23, 2015 (9:00 AM)

Although it doesn’t look as if the week is going to get off to the kind of start that takes us to more record high closes, there will be plenty of opportunities this week.

With most of the major retailers reporting earnings this week, and more importantly providing some  future guidance, we may finally get to know whether lower energy costs can translate into an expanding economy.

The week then ends with another GDP report which a number of months ago was predicted to greatly expand due to decreasing energy costs, as about 70% of the GDP is dependent on consumer spending.

Also during the week will be 2 days of congressional testimony by Janet Yellen and there is always the possibility of disclosing something, especially regarding the timing of any interest rate increases, that hasn’t been made public previously.

With Bernanke and Yellen the market rarely moved as much when they provided testimony as it did during the Greenspan years.

The real difference, though, was that when Bernanke or Yellen responded to questions posed to them the answers were generally understood. If there was something truly newsworthy, the market generally knew how to react. Instead, when Greenspan spoke, the market was never sure of what he meant and they would alternate between large drops and surges, often within minutes of one another.

That, at least isn’t likely to happen.

As another monthly option cycle gets ready to begin, it’s nice closing the previous month with a fair number of assignments and the cash to play along, if warranted.

Last Friday’s very unexpected response to a temporary solution to the Greek crisis isn’t likely to have much impact on things going forward until approaching that 4 month date down the road when the crisis could start all over again.

Because Friday’s events were really a “one-off” kind of thing there’s not too much reason to believe that those new closing highs will be the starting point for even more due to some technical set of factors or newly discovered optimism.

Instead, this week will likely stand on its own merits based on the major events planned for the week.

With a few positions et to expire this week and with volatility once again falling, the emphasis will be on finding short term option expiration opportunities and trying to populate this week and perhaps next week, as well, with expiring contract positions. Actually, that’s probably a secondary emphasis. I would still rather generate the week’s income stream from finding some chance to sell calls on existing uncovered positions.

While retail sales and Yellen’s two days on Capital Hill will be center stage there is still plenty of reason to still reserve some focus for oil prices and interest rates.

It’s not always about stocks.

As long as those continue to bounce wildly it’s hard to envision any particular direction for the stock market. You can also add precious metals to that short list, too.

Among asset classes there is often a flow of money from major players as one opportunity looks better than the next. With the constant back and forth seen in some of those markets there’s reason not to be fully committed to any of the markets, even the ones that seem to be reasonably stable, as a collapse in the other markets could result in a quick outflow even from the relatively healthy market, such as to meet margin obligations in other markets.

It’s too bad that we’re not seeing some of the same back and forth in the broader stock market, as that would really drive premiums much higher, as is the case for many energy positions, right now. In the best case scenario even with all of that volatility prices would remain basically unchanged as they have recently been in the energy and precious metals markets.

For now, it’s an issue of waiting to see what character the market assumes this week and not being too reckless with newfound cash.

Daily Market Update – February 20, 2015 (7:45 AM)

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

Today’s possible trades include:

Assignments:  DOW, GM, LXK, MET TMUS

Rollovers:  UAL

Expirations:  AZN, FAST

The following positions were ex-dividend this week:  MAT (2/17 $0.38), RIG (2/18 $0.75), AZN (2/18 $1.88), WNR (2/18 $0.30)

The following will be ex-dividend next week:  SBGI (2/25 $0.16)

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

Daily Market Update – February 19, 2015 (8:30 AM)

Yesterday’s FOMC Statement said essentially what I had written about yesterday and it confused stock traders and gave bond traders a reason to sell.

The 2 points that the FOMC raised were that low interest rates could have adverse effects and raising those rates too fast could also have adverse effects.

The net result of the comments was for many to believe that the once inveterate dovish FOMC was now leaning dovish after a brief dalliance with some more hawkish tones.

The release of their monthly statement did nothing to kindle optimism among stock traders, but for the moment, at least, caused bond traders to sell. While bond yields did go down about 4%, those yields are still well above where they were even 2 weeks ago.

With the FOMC Statement release now out of the way, there’s very little scheduled between now and the end of the February 2015 cycle.

Not that that means smooth sailing from here until Friday’s close, but even with events devolving in Europe, there doesn’t seem to be the kind of nervousness that would create a systemic retreat.

I nver feel comfortable counting those chickens before they’re hatched, as I’ve seen too many times when it doesn’t even take 2 full days to erase what should have been lots of rollovers and assignments.

Until tomorrow’s close I’m hoping that the market does still find time for some more increases.

Although most positions set to expire this week are within rollover or assignment range and I wouldn’t necessarily stand to benefit from the market going higher for the rest of the week, it could still offer some opportunity to sell more calls in an attempt to create some more income and enhance the week’s return.

While stocks haven’t moved very much this week, if you look around you’ll see that other asset classes, like bonds, precious metals and especially oil have been bouncing around wildly.

If you’ve owned the Gold Miners ETF or sold the puts you may be like me and wondering why all stocks couldn’t do that kind of frequent back and forth movement. Sometimes it is amazing at how those movements can give the opportunity to generate lots of accumulating premiums even when the net result of all of that movement is really minor.

It has been a while since stocks, other than some individual stocks, have done that sort of thing on a regular basis. Seeing what GDX has been doing recently just adds to the reasons I’d love seeing a return of volatility to more than just individual stocks, but to the market as a whole.

As today unfolds, with the pre-open futures pointing just mildly lower, I don’t anticipate too much activity. For now, any rollovers that may be possible are still a little too expensive to buy back, relative to their forward week premiums.

With a few positions possibly in line to be assigned and with cash reserves moving higher, any rollovers would likely look at either next week’s or the following week’s expiration dates, as new purchases next week may do the same. With a small number of positions set to expire next week and currently in decent position either for assignment or rollover, that gives some leeway to consider the following week for contracts in an effort to keep March diversified throughout the month.

Those are the plans, anyway. We’ll see how all of that actually works out as plans and reality don’t always have great correlation.

Daily Market Update – February 18, 2015 (Close)

Yesterday was a rare quiet day for 2015, which has, so far, been far more broad in its daily trading ranges, but as that volatility had increased it has slowly started to retreat.

That’s usually what happens when the market goes higher and when the trading ranges are smaller from day to day and during the day.

Today, while no one was really expecting it to happen, the volatility could have gotten a push as the FOMC Statement was to be released this afternoon. Lately there’s been a lot of focus on the new wording that the FOMC has been using to semi-quantitatively give an idea of when interest rate increases could be expected.

Today, there turned out to be mixed signals about the need for higher rates but the potential danger of rates going higher, too fast and so the market did nothing in its response.

That was actually a pretty mature way to act.

Given the nearly 30% increase in the interest rate of the 10 Year Treasury Note over the past few weeks, albeit from incredibly low levels, the bond market may be suggesting that the increase will be coming sooner than many now believe, as the futurists of the world are split into two camps on the issue.

There are those that believe that interest rates will be raised by the FOMC sometime in the middle of the year and others are saying that we won’t see any rise until 2016.

Following what may have sounded like a net dovish statement from the FOMC rates actually tumbled, down nearly 4% for the day.

The first clue over who will be right may come this week and re-inforced next week as major national retailers start to report their quarterly earnings. If the general axiom that the bond traders are the smartest guys in the room is correct, then their recent action on the 10 Year Note would suggest that those rates are going higher sooner, rather than later.

Today, they just blinked a little.

For those old enough to remember, increasing interest rates can be pretty frightening, but you have to go back about 30 years for that memory. We’ve never known the kind of situation that Japan and now Europe have undergone where low interest rates have lost their ability to stimulate the economy and higher interest rates appear to be the tonic for the economy.

While there’s definitely a negative aspect to increasing rates, including competition for investor’s money away from stocks, like most everything else, there’s good things in moderation.

In this case, increased interest rates is a sign of things getting better, but based on the kind of recovery that this has been, having come from incredible depths from its nadir 6 years ago, there’s not too much reason to fear the kind of over-heating that was seen in the 1970s. Back then, the only beneficiaries of increasing rates were banks and energy companies, who produced the oil that contributed to much of the rise in prices and subsequently, interest rates.

So even if the FOMC had said anything that would have taken the market by surprise, that reaction probably would have been very short lived. As it was the market started the morning off by continuing yesterday’s cautious trading until getting some word that all was clear.

With a shortened trading week and a few new positions already purchased, there wasn’t too much likelihood of adding any new positions today and the same probably holds for the rest of the week.

At this point I’m simply hoping that the week will end somewhere close to where we are as we begin this morning, giving a better cash position to begin the March 2015 option cycle.

That’s not too much too ask for.

Daily Market Update – February 18, 2015 (9:00 AM)

Yesterday was a rare quiet day for 2015, which has, so far, been far more broad in its daily trading ranges, but as that volatility had increased it has slowly started to retreat.

That’s usually what happens when the market goes higher and when the trading ranges are smaller from day to day and during the day.

Today, while no one is really expecting it to happen, the volatility could get a push as the FOMC Statement is released this afternoon. Lately there’s been a lot of focus on the new wording that the FOMC has been using to semi-quantitatively give an idea of when interest rate increases could be expected.

Given the nearly 30% increase in the interest rate of the 10 Year Treasury Note over the past few weeks, albeit from incredibly low levels, the bond market may be suggesting that the increase will be coming sooner than many now believe, as the futurists of the world are split into two camps on the issue.

There are those that believe that interest rates will be raised by the FOMC sometime in the middle of the year and others are saying that we won’t see any rise until 2016.

The first clue over who will be right may come this week and re-inforced next week as major national retailers start to report their quarterly earnings. If the general axiom that the bond traders are the smartest guys in the room is correct, then their recent action on the 10 Year Note would suggest that those rates are going higher sooner, rather than later.

For those old enough to remember, increasing interest rates can be pretty frightening, but you have to go back about 30 years for that memory. We’ve never known the kind of situation that Japan and now Europe have undergone where low interest rates have lost their ability to stimulate the economy and higher interest rates appear to be the tonic for the economy.

While there’s definitely a negative aspect to increasing rates, including competition for investor’s money away from stocks, like most everything else, there’s good things in moderation.

In this case, increased interest rates is a sign of things getting better, but based on the kind of recovery that this has been, having come from incredible depths from its nadir 6 years ago, there’s not too much reason to fear the kind of over-heating that was seen in the 1970s. Back then, the only beneficiaries of increasing rates were banks and energy companies, who produced the oil that contributed to much of the rise in prices and subsequently, interest rates.

So if the FOMC says anything that takes the market by surprise, whatever reaction there will be will probably be short lived, but this morning the market is continuing yesterday’s cautious trading until getting some word that all is clear.

With a shortened trading week and a few new positions already purchased, there’s not too much likelihood of adding any new positions today.

At this point I’m simply hoping that the week will end somewhere close to where we are as we begin this morning, giving a better cash position to begin the March 2015 option cycle.

That’s not too much too ask for.

Daily Market Update – February 17, 2015 (Close)

Another day and another day of snow on the east coast.

This week there’s very little going on in economic news other than tomorrow’s FOMC Statement release, so snow may be the top issue for the next few days.

Coming off of last week’s nice gains and adding to what has been a nice February, so far, I wouldn’t mind if this was a quiet week for the markets. The latest pattern of recovery from the last of several drops lower has been very different from the previous recoveries.

Instead of jumping straight back from those drops, usually about 5% lower, this time around the market has been taking two steps forward and then either a small step back or simply digesting the move higher.

Considering that in the past two months these market drops have been coming on a much more frequent basis, there was reason to start getting concerned. When they had been coming on a regular basis, just about every 2 months for nearly the past 3 years, it does get your attention when you get about 4 of those drops in the period of time that you normally would have seen just one. 

The manner in which Friday’s record close was set was a much better way to do so than those straight lines to the top. This week would be a perfect one to digest those gains for the month and take a rest to move even higher.

When looking at the pre-open futures it looked as if it would be a totally non-committal kind of opening and it stayed that way all day long with trading ending up in a pretty narrow range.

Last month was the first time in several months that the market didn’t go substantially higher on the day before an FOMC Statement release, which was a return to the more logical way of trading in advance of the release. Today was another month that returned to a more rational pattern of not getting too far ahead of the curve before some potentially substantive policy change may be made known.

As it is interest rates of the 10 Year Treasury shot up by 6% and is getting itself ahead of the FOMC.

With lots of positions expiring this week I hope that the FOMC Statement, whatever nuanced phrases it may contain that do or don’t signal a change in policy, does nothing to move the markets in any substantial way.

Since there are so many positions expiring this week and that currently are in a position to be assigned and there was some replenishment in cash from last week’s assignments, the likelihood is that if there are any new purchases for this trade shortened week I would want to look at expirations that are somewhere in the March 2015 cycle.

The problem with going out too far in those contracts is that while the market moves higher the general trend will be that those premiums will be getting relatively smaller. In the face of an advancing market you really don’t want to commit your positions too far in advance and possibly miss more of the upside, especially at such low premiums.

With already a number of positions set to expire on the final week of the March 2015 option cycle, any new contracts would try to look at expiration dates in between, although some of this week’s potential stock picks have only monthly options available, so those go a little counter to strategies to diversify positions by expiration and optimize premiums.

For this morning my expectation was that I’ll be sitting tightly on the cash pile waiting to see if any thing of interest looks like it’s going on further sale or at least firming up and maybe poised for a small comeback.

That didn’t last long as there seemed to be enough reason to loosen up those purse strings, including for a position expiring this week, among others.

With a number of the week’s expiring positions in or near the money, there is a little bit of a cushion in the event that the market reacts poorly after the FOMC Statement, so there’s not too much need to think about doing rollovers early in the week, although even when there is reason to think about doing so there most often isn’t a worthwhile trade to be made.

The exception to that, however, was the GDX, once again, as gold took a big hit this morning and took the Gold Miners ETF along with it. That particular holding has been a joy as the premiums keep piling up on the position. Too bad others can’t do that on a regular basis.

Hopefully, then, this week will have little drama and little of that market heat for anything other than offering some more chance to sell calls on uncovered positions and melt some snow.

All in all, however, today was a good way to get a short week off the ground.

Daily Market Update – February 17, 2015 (9:00 AM)

Another day and another day of snow on the east coast.

This week there’s very little going on in economic news other than tomorrow’s FOMC Statement release, so snow may be the top issue for the next few days.

Coming off of last week’s nice gains and adding to what has been a nice February, so far, I wouldn’t mind if this was a quiet week for the markets. The latest pattern of recovery from the last of several drops lower has been very different from the previous recoveries.

Instead of jumping straight back from those drops, usually about 5% lower, this time around the market has been taking two steps forward and then either a small step back or simply digesting the move higher.

Considering that in the past two months these market drops have been coming on a much more frequent basis, there was reason to start getting concerned. When they had been coming on a regular basis, just about every 2 months for nearly the past 3 years, it does get your attention when you get about 4 of those drops in the period of time that you normally would have seen just one. 

The manner in which Friday’s record close was set was a much better way to do so than those straight lines to the top. This week would be a perfect one to digest those gains for the month and take a rest to move even higher.

So far, looking at the pre-open futures it looks as if it will be a totally non-committal kind of opening.

Last month was the first time in several months that the market didn’t go substantially higher on the day before an FOMC Statement release, which was a return to the more logical way of trading in advance of the release. Today may be another month that returns to a more rational pattern of not getting too far ahead of the curve before some potentially substantive policy change may be made known.

With lots of positions expiring this week I hope that the FOMC Statement, whatever nuanced phrases it may contain that do or don’t signal a change in policy, does nothing to move the markets in any substantial way.

Since there are so many positions expiring this week and that currently are in a position to be assigned and there was some replenishment in cash from last week’s assignments, the likelihood is that if there are any new purchases for this trade shortened week I would want to look at expirations that are somewhere in the March 2015 cycle.

The problem with goiung out too far in those contracts is that while the market moves higher the general trend will be that those premiums will be getting relatively smaller. In the face of an advancing market you really don’t want to commit your positions too far in advance and possibly miss more of the upside, especially at such low premiums.

With already a number of positions set to expire on the final week of the March 2015 option cycle, any new contracts would try to look at expiration dates in between, although some of this week’s potential stock picks have only monthly options available, so those go a little counter to strategies to diversify positions by expiration and optimize premiums.

FOr this morning my expectation is that I’ll be sitting tightly on the cash pile waiting to see if any thing of interest looks like it’s going on further sale or at least firming up and maybe poised for a small comeback.

With a number of the week’s expiring positions in or near the money, there is a little bit of a cushion in the event that the market reacts poorly after the FOMC Statement, so there’s not too much need to think about doing rollovers early in the week, although even when there is reason to think about doing so there most often isn’t a worthwhile trade to be made.

Hopefully, then, this week will have little drama and little of that market heat for anything other than offering some more chance to sell calls on uncovered positions and melt some snow.

.