Category Archives: Daily Market Update

Daily Market Update – February 13, 2015 (8:30 AM)

The Week in Review will be posted by 6 PM tonight and the Weekend Update will be posted by Noon on Monday, as markets are closed in celebration of Presidents Day.

The following trade outcomes are possible this week:

Assignments:  ATVI, MSFT

Rollovers:  GPS, MET

Expirations:   GDX puts

The following position was ex-dividend this past week: BP (2/11 $0.60)

The following will be ex-dividend next week.  MAT (2/17 $0.38), RIG (2/18 $0.75), AZN (2/18 $1.88)

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

Daily Market Update – February 12, 2015 (Close)

This morning, based on the pre-opening futures, looked to have a similar opening to that seen on Tuesday.

The futures were pointing nicely higher, approaching a triple digit gain on the DJIA, and those kind of larger moves tend to have more staying power. At least they tend to give a little more direction to trading once the market actually opens.

That would have been a welcome move, particularly as the week was coming to its end and the fate of those positions set to expire this week are being determined during the final hours of trading for the week.

Luckily that is exactly the way the day worked out as the market was never trading at a loss for the day and actually closed near its highs for the day and ended up within easy distance of an all time high, not having done so since the end of December.

The news that seems to be responsible for the move actually started shortly after yesterday’s market closed and the S&P 500 futures went up about 12 points and the DJIA went nearly 100 points higher.

That news was that there was some kind of an agreement between the the ECB, EU and Greece over its debt.

That gain disappeared in the late afternoon and early evening yesterday, but then returned and seemed to be holding as the morning’s session was set to begin. It was, however, weakened a little by another weaker than expected “Retail Sales” report, that will hopefully be undone as the major retailers begin reporting earnings over the next two weeks and start focusing on the future, rather than the past, to look at the potential impact of lower energy prices, more people at work and more people receiving higher salaries.

With 5 positions set to expire this week and 8 the following week, I would much prefer seeing assignments this week rather than rolling over those positions. However, if rollovers are called for, or if there may be some other reason for a rollover, such as to capture Microsoft’s dividend, I would likely want to look at an expiration date sometime after next week.

The slightly elevated volatility makes that a little more palatable.

As it is  next week offers only 4 days of premium, due to the Presidents Day holiday and there are more than enough expiring positions than to add too many more and increase risk of a sudden market drop just before that expiration.

If tomorrow can add to today’s gain, it will hopefully position those expiring contracts to be more likely to be assigned and may even offer a miracle of selling some more new call contracts on existing positions, as was the case today.

Anyway, that’s my dream and I’m sticking to it for at least one more day.

Daily Market Update – February 11, 2015 (Close)

Yesterday was a nice surprise.This morning there wasn’t much reason to expect the same kind of upward movement and the pre-open futures weren’t showing any indication of continuing with yesterday’s gains.

However, those pre-open numbers were benign enough that anything would be reasonable when the opening bell rang, as there’s not much commitment one way or the other this morning.

It was a little surprising to see a nearly 100 point loss develop in the first hour, just as it was then a little surprising to see a nearly 100 point reversal within another hour, then another 100 point downturn by mid afternoon and yet another by the close. 

In a week where there’s very little economic news the Wednesday “Petroleum Status Report” was in a position to take on more importance than it usually does. It’s not a report that I typically pay attention to other than to watch the immediate reactions to the inventory news that are similar to the back and forth movements often seen when earnings are released in the after hours trading.

The reaction is often a combination of reacting to the news, reacting to the expectations and trying to figure out whether the news is good or bad and then applying some kind of reverse psychology analysis to all of it.

With some hint from the Saudi Oil Minister of expectations for demand increases in the next year more and more attention is going to be paid to inventory levels for as long as energy prices seem to be in play and right now those prices have been moving in big chunks in both directions.

But that’s also been the case for just about everything other than the US Dollar.

Stocks for certain have been gyrating, but so have interest rates and precious metals. Oil is now just another of those asset classes that is having a really hard time deciding where it should be going.

Today’s report will get plenty of scrutiny, but even then the next question is whether the market decides to re-couple or de-couple from energy prices. In a normal world it’s usually de-coupled, but over the past month or two it has spent more time joined at the hip with oil prices than behaving normally.

Today the market had many faces while the face of energy was singular and mostly strongly lower as there are indications that despite fewer rigs drilling for oil, the US is actually pumping even more oil at the moment and adding to supplies.

What does all of that mean?

Whatever it may have meant today it will be forgotten by tomorrow, or maybe mean something different altogether.

With 3 new positions opened this week I’m not anticipating doing much else that involves spending money, for the rest of the week, particularly as I don’t have much in the way of cash reserves. My hope is that the next few days can add to those cash reserves or at least position next Friday’s monthly option cycle ending contracts to be more likely to be assigned.

Or rolled over.

The idea is to generate income, but as the market may be poised for increasing volatility the preference is to  preserve cash and use existing assets to generate income, sometimes even rolling over positions that might otherwise be assigned.

That becomes more likely as forward week options show more volatility than the expiring week’s options and the differential in buy and sell premiums increases.

Right now, there’s not much in the way of added premium for selling in the money options and as long as near term volatility is higher than longer term, it is relatively more expensive to buy back those in the money positions.

However, if that forward week volatility starts showing more increases, that situation may change and could result in preferring rollovers to assignments.

That would be nice, except the wish for volatility to increase has been a long and ongoing one and I’ll believe it only when I see it.

Daily Market Update – February 11, 2015 (8:00 AM)

Yesterday was a nice surprise.This morning there’s not much reason to expect the same kind of upward movement and the pre-open futures aren’t showing any indication of continuing with yesterday’s gains.

However, those pre-open numbers are benign enough that anything is reasonable when the opening bell rings, as there’s not much commitment one way or the other this morning.

In a week where there’s very little economic news the Wednesday “Petroleum Status Report” may take on more importance than it usually does. It’s not a report that I typically pay attention to other than to watch the immediate reactions to the inventory news that are similar to the back and forth movements often seen when earnings are released in the after hours trading.

The reaction is often a combination of reacting to the news, reacting to the expectations and trying to figure out whether the news is good or bad and then applying some kind of reverse psychology analysis to all of it.

With some hint from the Saudi Oil Minister of expectations for demand increases in the next year more and more attention is going to be paid to inventory levels for as long as energy prices seem to be in play and right now those prices have been moving in big chunks in both directions.

But that’s also been the case for just about everything other than the US Dollar.

Stocks for certain have been gyrating, but so have interest rates and precious metals. Oil is now just another of those asset classes that is having a really hard time deciding where it should be going.

Today’s report will get plenty of scrutiny, but even then the next question is whether the market decides to re-couple or de-couple from energy prices. In a normal world it’s usually de-coupled, but over the past month or two it has spent more time joined at the hip with oil prices than behaving normally.

With 3 new positions opened this week I’m not anticipating doing much else that involves spending money, particularly as I don’t have much in the way of cash reserves. My hope is that the next few days can add to those cash reserves or at least position next Friday’s monthly option cycle ending contracts to be more likely to be assigned.

Or rolled over.

The idea is to generate income, but as the market may be poised for increasing volatility the preference is to  preserve cash and use existing assets to generate income, sometimes even rolling over positions that might otherwise be assigned.

That becomes more likely as forward week options show more volatility than the expiring week’s options and the differential in buy and sell premiums increases.

Right now, there’s not much in the way of added premium for selling in the money options and as long as near term volatility is higher than longer term, it is relatively more expensive to buy back those in the money positions.

However, if that forward week volatility starts showing more increases, that situation may change and could result in preferring rollovers to assignments.

That would be nice, except the wish for volatility to increase has been a long and ongoing one and I’ll believe it only when I see it.

Daily Market Update – February 10, 2015 (Close)

This morning there was the rare sight, at least for 2015, of the S&P 500 with a nice positive move in the pre-opening futures.

In general, the bigger the move the more staying power it has and the more likely it will set the tone for the day, but even then the unfolding events of the day will have their way.

Of course, sometimes there don’t have to be any events to cause significant reversals and that’s when everyone starts pointing to technical factors to explain the unexplainable.

Today there was no need for pointing toward anything in an attempt to get an explanation where none may have existed, but the market did stay true top its pre-opening trading, although it did take a little bit of a tortuous route to get there. It was in the final 2 hours that the market was able to reclaim some of the early advances that had been lost by mid-morning.

This morning the market was de-coupled from oil prices, which is really the way it should be and which is really the way logic would dictate that it would be. Logic, though, sometimes has no real place in things as the market fell or rose far more than it should have based on the size of the energy sector’s representation in the S&P 500.

While the market was showing a nice gain and with some more of those optimistic retail reports are coming in from smaller players like Aeropostale and The Gap, there is increasing reason to be hopeful that there will be some real dividend coming from the reduced cost of oil.

Whether that dividend does anything to move the stock market forward may be questionable, but at the very least it should push the economy forward and maybe some of that debate will come to an end. In the best of worlds the benefits top the economy would end up with better earnings data and stocks responding to profits, which is also the way it should be.

Meanwhile, this still remains a very quiet news week, but this morning brought the JOLT Survey which has, for the past few months been showing a trend that is one reflecting a positive shift in the workplace.

It has been showing that people with jobs have been willing to leave their jobs to look for, or take other jobs. More importantly those other jobs have been higher paying.

That paints a real picture of optimism. Rather than staying at a job someone doesn’t want due to the fear of how difficult it would be to find a new job, people are willing to take that chance in the recognition that there are more and better jobs out there.

The morning’s report continued that feeling of optimism among people in the workforce. Basically the boots on the ground have a better feeling about the future than do some indicators that may just need some time to catch up.

With a couple of new positions added yesterday, I still have room for a little more, but again would be much happier figuring out a different way to generate this week’s revenue stream. A nice move higher today could bring some of the opportunities to sell calls on uncovered positions, but yesterday’s weakness just moved the needle a little further away.

While I generally like the market moving back and forth, because it helps to create higher option premiums, the downside is that it’s harder to find sustained moves to bring some positions that are in need of finding cover back into a range where even a “DOH Trade” is a reasonable thing to do.

In the meantime, however, there could be a powerful catalyst one – two punch in the week or two ahead as the major retailers begin to report their earnings and hopefully shower us with good guidance. The second part of that punch would be some continuing stability in energy prices, especially if there’s any sign of demand picking up and not just as the result of decreasing supply.

For now, there are at least a few positions set to expire this week and a fair number for the week after to end the monthly cycle. That gives me something to do and think about, which is a nice change from last week.

Hopefully this week will restore some of the activity that can make even down days profitable and sometimes fun.

Despite not being able to make those new call sales today, it was still enjoyable letting the excess energy in the market spread itself in a broad way.

I’m not shy about going along for the ride.

Daily Market Update – February 10, 2015 (9:00 AM)

This morning there was the rare sight, at least for 2015, of the S&P 500 with a nice positive move in the pre-opening futures.

In general, the bigger the move the more staying power it has and the more likely it will set the tone for the day, but even then the unfolding events of the day will have their way.

Of course, sometimes there don’t have to be any events to cause significant reversals and that’s when everyone starts pointing to technical factors to explain the unexplainable.

This morning the market is decoupled from oil prices, which is really the way it should be and which is really the way logic would dictate that it would be. Logic, though, sometimes has no real place in things as the market fell or rose far more than it should have based on the size of the energy sector’s representation in the S&P 500.

While the market is showing a nice gain and with some more of those optimistic retail reports are coming in from smaller players like Aeropostale and The Gap, there is increasing reason to be hopeful that there will be some real dividend coming from the reduced cost of oil.

Whether that dividend does anything to move the stock market forward may be questionable, but at the very least it should push the economy forward and maybe some of that debate will come to an end. In the best of worlds the benefits top the economy would end up with better earnings data and stocks responding to profits, which is also the way it should be.

Meanwhile, this still remains a very quiet news week, but this morning brings the JOLT Survey which has, for the past few months been showing a trend that is one reflecting a positive shift in the workplace.

It has been showing that people with jobs have been willing to leave their jobs to look for, or take other jobs. More importantly those other jobs have been higher paying.

That paints a real picture of optimism. Rather than staying at a job someone doesn’t want due to the fear of how difficult it would be to find a new job, people are willing to take that chance in the recognition that there are more and better jobs out there.

With a couple of new positions added yesterday, I still have room for a little more, but again would be much happier figuring out a different way to generate this week’s revenue stream. A nice move higher today could bring some of the opportunities to sell calls on uncovered positions, but yesterday’s weakness just moved the needle a little further away.

While I generally like the market moving back and forth, because it helps to create higher option premiums, the downside is that it’s harder to find sustained moves to bring some positions that are in need of finding cover back into a range where even a “DOH Trade” is a reasonable thing to do.

In the meantime, however, there could be a powerful catalyst one – two punch in the week or two ahead as the major retailers begin to report their earnings and hopefully shower us with good guidance. The second part of that punch would be some continuing stability in energy prices, especially if there’s any sign of demand picking up and not just as the result of decreasing supply.

For now, there are at least a few positions set to expire this week and a fair number for the week after to end the monthly cycle. That gives me something to do and think about, which is a nice change from last week.

Hopefully this week will restore some of the activity that can make even down days profitable and sometimes fun.

Daily Market Update – February 9, 2015 (8:30 AM)

There is extraordinarily little economic news scheduled to be released this week.

 While there are a few companies of note reporting earnings this week, none of them will get too much attention for much longer than it takes to report the earnings and none of them will be impactful. They may be interesting, but not impactful.

It’s in the following two weeks that major national retailers begin to report their earnings and provide some guidance into the next quarter, which will be the first one to fully have a chance to show some benefit from reduced oil prices on the economy.

And if there is no impact?

At least it will put the debate to rest as oil prices now seem to be stabilizing at a point 10% above the very recent lows.

This week oil may be the most important story, but as with a few weeks ago the story just as easily could become how the stock market and oil prices have come decoupled, as was already seen last Friday and seems to be the developing case as the futures are trying to set the tone for the week to begin.

With a little more cash to begin the week but still with an objective of trying to raise that cash level at the end of the week, I don’t anticipate doing much in the way of adding new positions this week.

While I’d prefer to at least see some more activity than last week I wouldn’t mind seeing some give backs of last week’s gains. Unless you have an unbridling bull market awaiting, it’s hard to digest a weekly 3% gain and right now there’s not too much reason to expect that there’s that kind of a bull market awaiting, at least not until the retailers start their reporting.

AS was the case last week, there’s not much reason to want to jump in with additional funds when the market is already rising. If you’re otherwise invested, at least you can enjoy the ride with what you already have at risk, rather than add more to that risk exposure.

With a few positions set to expire this week and twice as many next week to end the February 2015 option cycle, the likelihood for any new positions this week is to look for weekly expirations, so as to not add to the risk of having too many expire next week and still maintaining a chance  of adding to cash reserves.

As has been the case for quite some time, but has been difficult for most of 2015, my preference continues to be trying to find opportunities to put uncovered positions to work or to squeeze more income out of existing positions by rolling them over. Part of that becomes necessity if markets aren’t continually rising as they did in 2013 and 2014, resulting in a consistent stream of assignments.

Thus far, 2015 has been more like 2011 and 2012 and would be even more so if the volatility could still climb higher. That would lead to far less opening of new positions and much more trading that centers on rollovers and finding new covers for uncovered positions.

AS long as the market trades within a reasonable range, rather than taking a large drop downward, that can be a very nice environment and may even see more reason to look at monthly option contracts in order to lock in premiums that themselves are moving higher due to the volatility rise.

That’s still my dream for 2015.

Daily Market Update – February 6, 2015 (8:30 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 trade outcomes include:

Assignments:  HAL

Rollovers:  GPS, MET

Expirations:  EMC

This week’s ex-dividend positions were Intel (2/4 $0.24) and MET (2/4 $0.35)

Next week’s ex-dividend positions is BP (2/11 $0.60)

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

Daily Market Update – February 5, 2015 (Close)

With only a single trade in the books through the first three days of this week, this is looking like it will be the slowest week in about 5 years.

And by today’s closing bell it was just more of the same, but if things have to be sort of on the boring side, I couldn’t ask for it to be any better.

So far, based on the week’s comparative results, I don’t mind the inaction and hope to see the broader advance continue to close out the week tomorrow, as I would really like to see some assignments and some more cash becoming available for next week and beyond.

The pre-open futures were pointing to another gain after yesterday’s very quixotic trading, but the eventual size of today’s gain was also quixotic, but more in line with the results of Monday and Tuesday.

Try as you may, there really wasn’t too much reason to see the market create another of these 200 point kind of gains. You can look at Europe and you can look at energy prices, but there isn’t very much consistency. Simply looking for an event and claiming it is the cause has become what analysts are now resorting to in an effort to explain what we’ve been seeing this week.

This morning there was a chance to ponder what the meaning of positive forward guidance from a handful of national retailers may mean.

When Macys, Kohls and L Brands think that this quarter will be better than expected, there’s reason to believe that the good news that has been accumulating will finally result in something tangible.

So it’s possible that could have been the root cause of today’s rally, except that it took quite a bit of time for the gains to get any traction and like yesterday they accelerated going into the close, similar to what was seen on Wednesday, except successfully done.

Increased job growth over a sustained period, wages finally increasing and much lower energy prices should reasonably be expected to translate into a growing consumer economy, but for the past month, as we’ve been waiting for some evidence of that to happen, we’ve been getting just the opposite.

Looking at it from the perspective of our expectations versus what is being reported as reality may explained the behavior of the markets over the past 6 weeks, as we have repeatedly bounced between DJIA 17000 and 18000.

In fact, since mid-October we’ve had 5 or 6 very noticeable declines when in a 2 1/2 year period before that they were coming only every 2 months.

But you really can’t blame traders for that kind of indecision given what logic dictates should have been happening in the economy and then what was being reported.by companies and by official government statistics.

Although there isn’t necessarily a direct correlation between the economy and the stock market, at least you would have expected that companies would have been reporting good news or predicting some better news down the road, regardless of how traders and investors may react to that news.

With stock buybacks slowing down and so many having been executed at such high prices, you do have to wonder a little where the next impetus for increasing stock prices may come from.

But when it happens, as it has been happening this week, you don’t really take the time to look a gifthorse in the mouth.

While positive or revised forward guidance is always helpful and while the top and bottom lines may improve, the impact of continuing decreasing share floats will likely be reduced and that artificially induced elevation in EPS will be less of a factor going forward.

But that’s an issue that may not begin to unfold until the next earnings season is set to begin.

For now, we can hope that what Macys, Kohls and maybe others are seeing in their top and bottom lines will translate into reasons to be optimistic over where the stock markets will be heading in the near future, even as energy prices may be looking for a higher level.

Daily Market Update – February 5, 2015 (8:00 AM)

With only a single trade in the books through the first three days of this week, this is looking like it will be the slowest week in about 5 years.

So far, based on the comparative results, I don’t mind the inaction and hope to see the broader advance continue to close out the week as I would really like to see some assignments and some more cash becoming available for next week and beyond.

The pre-open futures are already pointing to another gain after yesterday’s very quixotic trading.

This morning there’s a chance to ponder what the meaning of positive forward guidance from a handful of national retailers may mean.

When Macys, Kohls and L Brands think that this quarter will be better than expected, there’s reason to believe that the good news that has been accumulating will finally result in something tangible.

Increased job growth over a sustained period, wages finally increasing and much lower energy prices should reasonably be expected to translate into a growing consumer economy, but for the past month, as we’ve been waiting for some evidence of that to happen, we’ve been getting just the opposite.

Looking at it from the perspective of our expectations versus what is being reported as reality may explained the behavior of the markets over the past 6 weeks, as we have repeatedly bounced between DJIA 17000 and 18000.

In fact, since mid-October we’ve had 5 or 6 very noticeable declines when in a 2 1/2 year period before that they were coming only every 2 months.

But you really can’t blame traders for that kind of indecision given what logic dictates should have been happening in the economy and then what was being reported.by companies and by official government statistics.

Although there isn’t necessarily a direct correlation between the economy and the stock market, at least you would have expected that companies would have been reporting good news or predicting some better news down the road, regardless of how traders and investors may react to that news.

With stock buybacks slowing down and so many having been executed at such high prices, you do have to wonder a little where the next impetus for increasing stock prices may come from.

While positive or revised forward guidance is always helpful and while the top and bottom lines may improve, the impact of continuing decreasing share floats will likely be reduced and that artificially induced elevation in EPS will be less of a factor going forward.

But that’s an issue that may not begin to unfold until the next earnings season is set to begin.

For now, we can hope that what Macys, Kohls and maybe others are seeing in their top and bottom lines will translate into reasons to be optimistic over where the stock markets will be heading in the near future, even as energy prices may be looking for a higher level.

Daily Market Update – February 4, 2015 (Close)

Another day without a single trade, at least not for any new positions.That makes three in a row to start the week.

That’s no way to make money.

Given the choice, I’d rather not be making any trades in the face of a market showing a great advance than sitting around and being paralyzed into inaction during a tremendous decline, as long as my positions aren’t already in the money.

Today, I got my wish, at least for a very short while as it was a really strange day in the markets and an especially strange final hour.

For that brief time that the market was up another triple digits I got that part of my preferences.

Why the market went from a day of complete boredom with the DJIA positive only because of strong performances by Disney and Visa, adding about 80 points, to a day where the broad market turned reasonably positive to one where even the DJIA was underwater until the final moment, all in the space of 60 minutes, is a mystery.

At least for part of the day we were able to see some green and at least they didn’t take off so much that positions ended up being deep in the money and unable to participate.

I think that’s actually my worst case scenario. There’s not much worse than seeing a slew of positions already in the money being unable to celebrate in a broad and sustained market rally.

On the other hand, if your positions are well covered there’s a strange sense of comfort, maybe even satisfaction if a large decline suddenly hits.

As the past 2 days 500 point advance served to bring positions closer to assignment or easier to rollover, that two day move was much welcomed, especially as there was some further catch-up by the energy sector, which is now helping to continue the string of relative out-performance, just as it led to under-performance late in 2014, as it was in the throes of its decline.

Today began the 3 days of employment related data that will be streaming in.

As I wrote this morning’s update the ADP data has already been released and it was a little weaker than expected. Tomorrow’s Jobless Claims and Friday’s Employment Situation Report complete the story, but just as this morning’s ADP report, shouldn’t have too much influence on where the market will be going.

Later this morning came the release of the counterpart to the ISM Manufacturing Index. The Non-manufacturing Index measures changes in the services sector.

Lately, despite logic telling us that both manufacturing and services should be growing, and perhaps even growing at a greater rate, that hasn’t really been the case and the continuing increase in employment and the extra money in people’s pockets from higher wages, growing employment and from their energy dividend, hasn’t been finding its way back into the economy in any measurable way.

But in a nice surprise, the non-manufacturing numbers were actually better than expected and coupled with some better than expected guidance from Kohls and Macys in advance of their earnings reports in 2 weeks, came some reason to be optimistic.

While Wednesdays are usually quiet days and I don’t often make any new purchases during the latter half of the week, this week may be a little different, seeing as there haven’t been any so far this week. Although I knew that there wouldn’t be much activity as I wanted to conserve cash and hopefully add to it from week ending assignments, the hunt never ends.

While I do want to see my cash reserve grow right now and would be more interested in generating weekly income from existing positions, I’m not completely adverse to adding new positions. The big concern that I have right now, however, is related to the same thing that makes for some joy.

That is, the past 2 days.

While it’s great seeing the past 500 points get added, there’s till no escaping the reality that those kinds of moves, especially coming on the heels of some equally large declines, are not the sort of thing that you see in bullish runs.

Today’s 100 point gain that was methodically built upon the scaffolding provided by Disney and Visa was nice, but its quick collapse was not.

Taking a wide angle look at things those large moves higher are typically seen as a part of a developing bear market and create a bull trap fr those getting in just to share in what they think will be the party to come.

“FOMO,” or the “fear of missing out,” can be just as deadly as greed and panic, as the final 30 minutes of trading could have illustrated.

While I’ll be content to let things ride that can benefit from the ride, having seen a series of reversals over the past 6 weeks makes it hard to believe that the past two days are the real thing.

I have no idea what today’s trading means. It certainly wasn’t very real and it would be really hard to draw any conclusions from the changes in direction and sentiment.

Instead, if the market can continue this sort of back and forth and do so with big moves in both directions, the beneficiaries will be those that can take advantage of the volatility.

If that volatility does rise and stay at elevated levels, you don’t have to create as many new positions to generate your income. All you have to do is try and trade your existing positions and rolling over as often as possible, taking advantage of the better and better premiums.

Daily Market Update – February 4, 2015 (8:45 AM)

Another day without a single trade, at least not for any new positions.

Given the choice, I’d rather not be making any trades in the face of a market showing a great advance than sitting around and being paralyzed into inaction during a tremendous decline, as long as my positions aren’t already in the money.

I think that’s actually my worst case scenario. There’s not much worse than seeing a slew of positions already in the money being unable to participate in a broad and sustained market rally.

On the other hand, if your positions are well covered there’s a strange sense of comfort, maybe even satisfaction if a large decline suddenly hits.

As the past 2 days 500 point advance served to bring positions closer to assignment or easier to rollover, that two day move was much welcomed, especially as there was some further catch-up by the energy sector, which is now helping to continue the string of relative out-performance, just as it led to under-performance late in 2014, as it was in the throes of its decline.

Today begins the 3 days of employment related data that will be streaming in.

As I write this the ADP data has already been released and it is a little weaker than expected. Tomorrow’s Jobless Claims and Friday’s Employment Situation Report complete the story, but just as this morning’s ADP report, shouldn’t have too much influence on where the market will be going.

Later this morning will be the release of the counterpart to the ISM Manufacturing Index. The Non-manufacturing Index measures changes in the services sector.

Lately, despite logic telling us that both manufacturing and services should be growing, and perhaps even growing at a greater rate, that hasn’t really been the case and the continuing increase in employment and the extra money in people’s pockets from higher wages, growing employment and from their energy dividend, hasn’t been finding its way back into the economy in any measurable way.

While Wednesdays are usually quiet days and I don’t often make any new purchases during the latter half of the week, this week may be a little different, seeing as there haven’t been any so far this week. Although I knew that there wouldn’t be much activity as I wanted to conserve cash and hopefully add to it from week ending assignments, the hunt never ends.

While I do want to see my cash reserve grow right now and would be more interested in generating weekly income from existing positions, I’m not completely adverse to adding new positions. The big concern that I have right now, however, is related to the same thing that makes for some joy.

That is, the past 2 days.

While it’s great seeing the past 500 points get added, there’s till no escaping the reality that those kinds of moves, especially coming on the heels of some equally large declines, are not the sort of thing that you see in bullish runs.

Taking a wide angle look at things those large moves higher are typically seen as a part of a developing bear market and create a bull trap fr those getting in just to share in what they think will be the party to come.

“FOMO,” or the “fear of missing out,” can be just as deadly as greed and panic.

While I’ll be content to let things ride that can benefit from the ride, having seen a series of reversals over the past 6 weeks makes it hard to believe that the past two days are the real thing.

Instead, if the market can continue this sort of back and forth and do so with big moves in both directions, the beneficiaries will be those that can take advantage of the volatility.

If that volatility does rise and stay at elevated levels, you don’t have to create as many new positions to generate your income. All you have to do is try and trade your existing positions and rolling over as often as possible, taking advantage of the better and better premiums.

Daily Market Update – February 3, 2015 (Close)

Not a single trade yesterday, but at least there was some good news with the market’s turnaround after nearly a 200 point decline early in trading.

While the size of these gains, seeing multiple 200 point advances in the last 6 weeks, and not really seeing the market move any higher, should be good if you like volatility, the problem is the sheer size of those moves.

Granted that 200 points don’t mean as much at these record levels as it would have meant 5 years ago, but unusually large advances are typically seen during bear markets or leading up to them.

That’s part of the reason that I’m not overly anxious to add any new positions and would especially like to add to cash, instead.

Along with that I’d also especially like to simply add the protection that cover gives, as that protection also gets more rewarding as this kind of volatility continues or even increases.

Whether those 200+ point moves are indicative of a bear market around the corner is, however, irrelevant when enjoying the advance. By that measure, today’s advance was about 50% more enjoyable than yesterday’s, which is generally infinitely more enjoyable than a 200 point loss.

Today made two days of enjoyment in a row, as the market went above and beyond yesterday’s gains, but there still wasn’t too much opportunity to make trades.

This morning the pre-open futures was indicating some follow-up to yesterday’s large late day gain. That gain was one that just kept picking up steam in the final hour similar to that seen in the mid-afternoon on Friday, except that one ended up waving the white flag when no real reason for the advance in oil prices, which led the market’s advance, could be figured out and seemed to be either rumor driven or hedging driven.

There was no real reason for Monday’s turnaround either, although the good news for the day was that the news continues to not be so bad from the energy sector as they report earnings and the disappointment that’s being provided in forward guidance already seems to be factored in.

This morning the only real economic news of any importance was one that isn’t generally so important. After the morning’s trades begin Factory Orders are reported and oddly, given that we’re supposed to be in an expanding economy, those factory orders have been down for the past 4 months. Going down for a fifth consecutive month doesn’t really send a signal that the economy is humming along on all cylinders.

But as it turned out it didn’t really matter that it did show a fifth consecutive month of declines. Instead, what mattered was that oil prices continued to strengthen.

After two nice days, essentially the rest of the week focuses on jobs, with ADP statistics coming on Wednesday, Jobless Claims on Thursday and the big Employment Situation Report on Friday.

None of those should really have much of an impact on markets unless they contain some really big surprises.

If the numbers are too big, then the fear of the FOMC increasing interest rates sooner rather than later creeps in, but the bond market, which usually gets things right, was going in the opposite direction. That is until today when it rocketed higher.

Much higher.

As far as the Employment Situation numbers go If the number is too small, or if there are big adjustments downward, there comes the doubts about the story we’ve been all believing and investing in.

So while I would, at least theoretically, like to be participating in whatever rally may come our way this week, if yesterday and today’s good graces can continue, I’d rather be in a position to take advantage of any moves higher, regardless of for how long they may turn out to last.

At least while sitting and doing nothing I won’t find reason to complain if some catch up in the bottom line starts occurring, whether there’s a good reason for energy sector positions to be moving higher or not.

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

Not a single trade yesterday, but at least there was some good news with the market’s turnaround after nearly a 200 point decline early in trading.

While the size of these gains, seeing multiple 200 point advances in the last 6 weeks, and not really seeing the market move any higher, should be good if you like volatility, the problem is the sheer size of those moves.

Granted that 200 points don’t mean as much at these record levels as it would have meant 5 years ago, but unusually large advances are typically seen during bear markets or leading up to them.

That’s part of the reason that I’m not overly anxious to add any new positions and would especially like to add to cash, instead.

Along with that I’d also especially like to simply add the protection that cover gives, as that protection also gets more rewarding as this kind of volatility continues or even increases.

This morning the pre-open futures is indicating some follow-up to yesterday’s large late day gain. That gain was one that just kept picking up steam in the final hour similar to that seen in the mid-afternoon on Friday, except that one ended up waving the white flag when no real reason for the advance in oil prices, which led the market’s advance, could be figured out and seemed to be either rumor driven or hedging driven.

There was no real reason for Monday’s turnaround either, although the good news for the day was that the news continues to not be so bad from the energy sector as they report earnings and the disappointment that’s being provided in forward guidance already seems to be factored in.

This morning the only real economic news of any importance is one that isn‘t generally so important. After the morning’s trades begin Factory Orders are reported and oddly, given that we’re supposed to be in an expanding economy, those factory orders have been down for the past 4 months. Going down for a fifth consecutive month doesn’t really send a signal that the economy is humming along on all cylinders.

After that report is made essentially the rest of the week focuses on jobs, with statistics coming on Wednesday, Thursday and the big Employment Situation Report on Friday.

None of those should really have much of an impact on markets unless they contain some really big surprises.

If the numbers are too big, then the fear of the FOMC increasing interest rates sooner rather than later creeps in, but the bond market, which usually gets things right, is going in the opposite direction.

If the number is too small, or if there are big adjustments downward, there comes the doubts about the story we’ve been all believing and investing in.

So while I would, at least theoretically, like to be participating in whatever rally may come our way this week, if yesterday’s good graces can continue, I’d rather be in a position to take advantage of any moves higher, regardless of for how long they may turn out to last.

AT least while sitting and doing nothing I won’t find reason to complain if some catch up in the bottom line starts occurring, whether there’s a good reason for energy sector positions to be moving higher or not.