Category Archives: Daily Market Update

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

What a wild week ahead.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Daily Market Update – October 3, 2014 (8:45 AM)

The Week in Review will be posted by 6 PM and the Weekend Uodate will be posted by 12:00 Noon on Sunday.

The following outcomes are possible today:

Assignments: EBAY

Rollovers: CMCSA, GM, GPS, WAG

Expirations: ANF, GDX, JOY, WFM

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

The following positions were ex-dividend this week: CMCSA (9/29 $0.22), BMY (10/1 $0.36)

The following positions are ex-dividend next week: GPS (10/6 $0.22), CPB (10/8 $0.31), DRI (10/8 $0.55), CHK (10/9 $0.10), FCX (10/10 $0.31)

Daily Market Update – October 2, 2014 (Close)

After yesterday’s 238 point drop and following all of the tumult of the past two weeks, it’s hard to believe that the market is down only about 3% from its peak of just two weeks ago.

For the most part there really hasn’t been much in the way of meaningful news during the past two weeks but the market has certainly taken on a very, very different tone.

Whether the net movement is lower or higher there’s a palpable difference even if you have never heard of the word “volatility.”

For all intents and purposes the market was neither higher nor lower today, but you certainly know that it was volatile, having traded over an 180 point range, having lost 130 points at its lowest point.

When there are no real over-riding economic themes, as there haven’t been of late, you can at least see why the market is like a ping pong ball in active play. The movements of the past two weeks have really been dizzying and there’s no indication of when the next period of stability will be at hand.

The only thing that may return some fundamentals to trading may be the beginning of earnings season next week.

It would be nice to see a market trading on something tangible, such as fundamentals.

It lately has been ignoring geo-political events, which is a good thing, but has also been ignoring the precipitous drop in commodity prices which would ordinarily have a positive impact on growth and discretionary spending.

Of course the results from earnings season could cut both ways, especially as there is an increasing consensus looking for improved numbers. The problem with those kinds of expectations is that there is more possibility for disappointment.

We all know the phenomenon of “good not being good enough,” and that consistently extends to stocks when they report their earnings.

Before next week’s earnings there was still the matter of this morning’s statement from the ECB and tomorrow’s Employment Situation Report.

What may be increasingly noted on the ECB front is that its leader, Mario Draghi may be much better at rhetoric than action.

He has moved global markets on more than one occasion by making comments suggesting that the ECB can and will do whatever it takes to meet the ECB’s single mandate, which is to maintain price stability.

Most recently the expectation has been that the ECB would introduce its version of Quantitative Easing to help keep interest rates low, but it has really done nothing.

That didn’t change this morning as Draghi announced that the ECB will continue to observe the situation. He also lambasted the EU leadership and that pleased no one and may ahve been the ultimate reason for the morning’s weakness.

So that leave’s tomorrow’s Employment Situation Report to offer some respite to the negative trend.

After last month’s disappointment we really don’t need another, but too good of a number will get ebveryone all concerned again about the prospect of rising rates, so it may be another case of bad news better better than good news.

Hopefully, whatever the news , it will be interpreted as good news. If so, it couldn’t come at a better time, but at least today didn’t move positions further, or at least much further from their strike levels. That removes some of the burden from tomorrow’s market and it won’t be requiring an explosively upside move in order to get that desired combination of rollovers and assignments.

Daily Market Update – October 2, 2014 (9:00 AM)

After yesterday’s 238 point drop and following all of the tumult of the past two weeks, it’s hard to believe that the market is down only about 3% from its peak of just two weeks ago.

For the most part there really hasn’t been much in the way of meaningful news during the past two weeks but the market has certainly taken on a very, very different tone.

Whether the net movement is lower or higher there’s a palpable difference even if you have never heard of the word “volatility.”

When there are no real over-riding economic themes, as there haven’t been of late, you can at least see why the market is like a ping pong ball in active play. The movements of the past two weeks have really been dizzying and there’s no indication of when the next period of stability will be at hand.

The only thing that may return some fundamentals to trading may be the beginning of earnings season next week.

It would be nice to see a market trading on something tangible, such as fundamentals.

It lately has been ignoring geo-political events, which is a good thing, but has also been ignoring the precipitous drop in commodity prices which would ordinarily have a positive impact on growth and discretionary spending.

Of course the results from earnings season could cut both ways, especially as there is an increasing consensus looking for improved numbers. The problem with those kinds of expectations is that there is more possibility for disappointment.

We all know the phenomenon of “good not being good enough,” and that consistently extends to stocks when they report their earnings.

Before next week’s earnings there was still the matter of this morning’s statement from the ECB and tomorrow’s Employment Situation Report.

What may be increasingly noted on the ECB front is that its leader, Mario Draghi may be much better at rhetoric than action.

He has moved global markets on more than one occasion by making comments suggesting that the ECB can and will do whatever it takes to meet the ECB’s single mandate, which is to maintain price stability.

Most recently the expectation has been that the ECB would introduce its version of Quantitative Easing to help keep interest rates low, but it has really done nothing.

That didn’t change this morning as Draghi announced that the ECB will continue to observe.

So that leave’s tomorrow’s Employment Situation Report to offer some respite to the negative trend.

If so, it couldn’t come at a better time, but hopefully today there will still be some reason for the market to move higher and offer opportunities to remove some of the burden from requiring an explosively upside move tomorrow in order to get that desired combination of rollovers and assignments.

Daily Market Update – October 1, 2014 (Close)

For many, closing out the third quarter will be a welcome thing, as it turned out to be the worst quarter since December 2012.

It’s hard to fathom that bit of news as we haven’t had a sharp decline this past quarter and we’ve had so much news of hitting new market high after new market high.

How do you reconcile both of those?

Part of the illusion lies in realizing that sometimes a small number of stocks that are performing very well may account for the vast majority of the year’s advances, as is the case in the NASDAQ, courtesy of Apple, Facebook, Intel, Microsoft and Gilead.

The rest? Not so encouraging.

The morning didn’t look like the new quarter will necessarily herald the beginning of a reversal and when it was all aid and done the decline from the previous market high found itself having been increased by 100%.

The remainder of this week still has some potentially important stock moving news as tomorrow brings news from the ECB and then Friday has the monthly Employment Situation Report.

Any of those could be impactful, but they may be so in differing directions. It would be nice if they could line up in the same way as a few weeks ago when we had such disparate events as the Scottish referendum, the Alibaba IPO and an FOMC statement all working out as hoped.

With the market now about 3% below its all time high the one thing that becomes clear is that we are less and less tolerant of any looming threats. There was a time when we considered 10% rollbacks to be a normal kind of occurrence. For the past two years it has been more like 5% and we’ve been dragged kicking and screaming into those, possibly still sensitive to the declines seen in 2007 and 2008.

Now, we get very nervous even below the 2% value, maybe because our minds are more wired to focus on the absolute size of the drop rather than on the relative size of the drop. When the DJIA gets up to 17000 those triple digit moves aren’t as meaningful as they were at 12000, yet we make no adjustment in our minds.

I know that I don’t. I don’t set the threshold by increasing my recognition of a large move to 150 points. So today’s 200+ point decline seems even larger than it really should seem.

At the mid-week point, even before today’s plunge, I wasn’t likely to be thinking about adding too much to the existing portfolio. I don’t want to spend cash reserves down and instead will be hopeful of making it out of this week with both assignments and rollovers, although I would like to see more on the assignment side of the ledger.

While it’s hard to resist what appear to be bargains you could have easily said the same thing yesterday and the day before and now you would be sitting on the wrong side of that bargain. As was said yesterday, the challenge is really distinguishing between value and “value traps.”

Meanwhile, volatility is ticking higher and as long as the market continues having large alternating movements, including those intra-day movements, the increase in volatility can be relatively easy to take and not come at too great of a cost. Today was not the right way to do it, though.

While this week continues the challenge that had been the third quarter, next week begins yet another earnings season and it may be a very critical one as the market’s most recent weakness hasn’t really had much of a foundation. Poor earnings could finally give the market a reason to seek a lower level, especially since many are expecting some improved reports from the retail sector.

On the other hand good earnings, especially exceeding expectations could become the fuel that’s been missing for a while, even as markets did reach new highs.After the declines of this week good earnings news could easily be a springboard for some meaningful moves higher, or at least back to where we started.

So this week is one to hopefully be escaped in preparation for next week, which may herald a quarter different from the last and different from today.

Daily Market Update – October 1, 2014 (9:30 AM)

For many, closing out the third quarter will be a welcome thing, as it turned out to be the worst quarter since December 2012.

It’s hard to fathom that bit of news as we haven’t had a sharp decline this quarter and we’ve had so much news of hitting new market high after new market high.

How do you reconcile both of those?

Part of the illusion lies in realizing that sometimes a small number of stocks that are performing very well may account for the vast majority of the year’s advances, as is the case in the NASDAQ, courtesy of Apple, Facebook, Intel, Microsoft and Gilead.

The rest? Not so encouraging.

The morning doesn’t look like the new quarter will necessarily herald the beginning of a reversal.

The remainder of this week still has some potentially important stock moving news, as later this morning comes the ISM Manufacturing Index, tomorrow brings news from the ECB and then Friday has the monthly Employment Situation Report.

Any of those could be impactful, but they may be so in differing directions. It would be nice if they could line up in the same way as a few weeks ago when we had such disparate events as the Scottish referendum, the Alibaba IPO and an FOMC statement all working out as hoped.

With the market less than 2% below its all time high the one thing that becomes clear is that we are less and less tolerant of any looming threats. There was a time when we considered 10% rollbacks to be a normal kind of occurrence. For the past two years it has been more like 5% and we’ve been dragged kicking and screaming into those, possibly still sensitive to the declines seen in 2007 and 2008.

Now, we get very nervous even below the 2% value, maybe because our minds are more wired to focus on the absolute size of the drop rather than on the relative size of the drop. When the DJIA gets up to 17000 those triple digit moves aren’t as meaningful as they were at 12000, yet we make no adjustment in our minds.

I know that I don’t. I don’t set the threshold by increasing my recognition of a large move to 150 points.

At the mid-week point I’m not likely to think about adding too much to the existing portfolio. I don’t want to spend cash reserves down and instead will be hopeful of making it out of this week with both assignments and rollovers, although I would like to see more on the assignment side of the ledger.

Meanwhile, volatility is ticking higher and as long as the market continues having large alternating movements, including those intra-day movements, the increase in volatility can be relatively easy to take and not come at too great of a cost.

While this week continues the challenge that had been the third quarter, next week begins yet another earnings season and it may be a very critical one as the market’s most recent weakness hasn’t really had much of a foundation. Poor earnings could finally give the market a reason to seek a lower level, especially since many are expecting some improved reports from the retail sector.

On the other hand good earnings, especially exceeding expectations could become the fuel that’s been missing for a while, even as markets did reach new highs.

So this week is one to hopefully be escaped in preparation for next week, which may herald a quarter different from the last

Daily Market Update – September 30, 2014 (Close)

Yesterday was an interesting day, to say the least.

With the opening futures pointing to a sharply lower open that went just as planned and nearly all of that reversed at one point, it was a day to fairly painlessly see the volatility increase.

While the volatility march higher continues, it’s not really much of a march in the underlying market and not even in the volatility index itself. While so many cite the percentage climb and those numbers sound so impressive, the volatility is still at ridiculously low levels as the past 24 months have really been fairly unprecedented in the absence of any meaningful correction.

When there’s no uncertainty, there’s no volatility.

Of course, we’re now at the point that everyone is again talking about volatility. The last time that happened marked the peak of the short term climb in volatility, that coincided with the late July 5% market decline.

If all of the chatter is a contrarian indicator then we could look for the market to begin showing strength again soon. That would also certainly be in line with the pattern of mini-corrections that we’ve experienced over the past two years that seem to have come along every two months, or so.

This time seems a little different, though. Firstly, there really hasn’t been much of a decline.

So far, the S&P 500 is barely down 1.7% from its high point and the decline hasn’t been in a straight line, as has been the case in those previous pullbacks.

Back in July it was a straight line decline that lead to an increase in volatility. This time around, at least for now, the increase in volatility is due to the zigzags that are taking place, not just from day to day, but also as yesterday shows, on an intra-day basis.

Again, all of that smacks of 2011 and we really haven’t seen anything like that since, although a single week isn’t the best of data points to use to make any strong assertion of that being the case.

While yesterday was an interesting one, today was not, although it was another day that saw volatility rise. This time, however, the market was slightly lower and the range of trading was fairly tight, but the movements back and forth were going on all through the trading session.

While the ending net change was small the back and forths today really did add up as today was a perfect day to illustrate indecision.

This morning showed a mildly higher market in the pre-open trading and another day with precious metals deterioration. Unfortunately, that early market advance was showing signs of weakness and declining into the opening bell, which is usually not a good sign if you’re hoping for strength to have lasting power or develop through the trading day.

Whatever strength the market did show as it traded through the session was routinely sapped. Also not a very good sign.

Unrest in Hong Kong should give some reason for markets to be nervous, but so far there’s no real indication of that, with lots of people commenting on the restraint shown by officials and the police, who have pulled back from the scene.

For those who remember, those were the same words and thoughts expressed some 25 years ago, when the military pulled back from the Tiananmen square protestors.

For the rest of the week there is an ECB meeting on Thursday that could conceivably give a bump to European markets if there’s any tangible hint of their version of Quantitative Easing. That’s followed the next day by our Employment Situation Report.

That left us with today and tomorrow and now we are just left with tomorrow.

For one, I’m happy to have heard of this morning’s news on the forthcoming spinoff of PayPal by eBay,

Although that means that the $53.50 strike shares expiring this week will fetch only $53.50 if assigned, the good news is that they will be assigned and I would really like to see as many of those occurring this week as possible.

Whereas I normally like to see a fairly even mix of assignments and rollovers, if I could write the script, I would put my preferences on the assignment end of things, as I would really like to add to a dwindling cash reserve.

For the rest of the week I don’t anticipate adding too many new positions but would always have a hard time ignoring anything that looks like a screaming bargain. The only problem is that if everything heads lower as part of a broad market move you run into the old conundrum of “value versus value trap,” and caution becomes a good companion.

Daily Market Update – September 30, 2014 (9:25 AM)

Yesterday was an interesting day, to say the least.

With the opening futures pointing to a sharply lower open that went just as planned and nearly all of that reversed at one point, it was a day to fairly painlessly see the volatility increase.

While the volatility march higher continues, it’s not really much of a march. While so many cite the percentage climb and those numbers sound so impressive, the volatility is still at ridiculously low levels as the past 24 months have really been fairly unprecedented in the absence of any meaningful correction.

When there’s no uncertainty, there’s no volatility.

Of course, we’re now at the point that everyone is again talking about volatility. The last time that happened marked the peak of the short term climb in volatility, that coincided with the late July 5% market decline.

If all of the chatter is a contrarian indicator then we could look for the market to begin showing strength again soon. That would also certainly be in line with the pattern of mini-corrections that we’ve experienced over the past two years that seem to have come along every two months, or so.

This time seems a little different, though. Firstly, there really hasn’t been much of a decline.

So far, the S&P 500 is barely down 1.7% from its high point and the decline hasn’t been in a straight line, as has been the case in those previous pullbacks.

Back in July it was a straight line decline that lead to an increase in volatility. This time around, at least for now, the increase in volatility is due to the zigzags that are taking place, not just from day to day, but also as yesterday shows, on an intra-day basis.

Again, all of that smacks of 2011 and we really haven’t seen anything like that since, although a single week isn’t the best of data points to use to make any strong assertion of that being the case.

This morning shows a mildly higher market in the pre-open trading and another day with precious metals deteriorating. Unfortunately, that early market advance was showing signs of weakness and declining into the opening bell, which is usually not a good sign.

Unrest in Hong Kong should give some reason for markets to be nervous, but so far there’s no real indication of that, with lots of people commenting on the restraint shown by officials and the police, who have pulled back from the scene.

For those who remember, those were the same words and thoughts expressed some 25 years ago, when the military pulled back from the Tiananmen square protestors.

For the rest of the week there is an ECB meeting on Thursday that could conceivably give a bump to European markets if there’s any tangible hint of their version of Quantitative Easing. That’s followed the next day by our Employment Situation Report.

That still leaves us with today and tomorrow.

For one, I’m happy to hear of this morning’s news on the forthcoming spinoff of PayPal by eBay,

Although that means that the $53.50 strike shares expiring this week will fetch only $53.50 if assigned, the good news is that they will be assigned and I would really like to see as many of those occurring this week as possible.

Whereas I normally like to see a fairly even mix of assignments and rollovers, if I could write the script, I would put my preferences on the assignment end ot things, as I would really like to add to a dwindling cash reserve.

For the rest of the week I don’t anticipate adding too many new positions but would always have a hard time ignoring anything that looks like a screaming bargain. The only problem is that if everything heads lower as part of a broad market move you run into the old conundrum of “value versus value trap,” and caution becomes a good companion.

Daily Market Update – September 29, 2014 (Close)

Finally, after a week of 5 trading days with triple digit moves that really had no reason for being, today could have been one of those days where there was an identifiable reason.

If you asked just a few days ago no one would likely have said that pro-democracy demonstrations in Hong Kong were on the horizon.

That is the kind of surprise that markets don’t like to see. Certainly the market in Hong Kong didn’t like the uncertainty and their market saw volatility spike by 20% in a single day..

So unlike all of the previous trading days of last week when there was no reason to suspect that anything was brewing, at least based on the pre-opening futures trading, today wa a little different. The futures had indicated a triple digit open to the downside and at its lowest point during the regular trading session that DJIA was down nearly 180 points.

While the pre-opening futures don’t usually give much indication where the trading day is heading, that’s less the case when the futures are making a strong statement.

Granted, a 100 point move in the futures today isn’t what a 100 point move was 5 years ago, but it is still something that you don’t see with great regularity neither in the futures nor in the regular trading session. The difference is that when it is in the futures there is almost always a reason that can be readily associated with the move, whereas there often doesn’t have to be any reason for the regular trading session to blow off some steam in either direction.

So this morning was just another of those to watch and see where things go.

The surprise was the repeated attempts to come back from the losses. That’s something that wasn’t seen at all last week during the three large losing sessions.

With only a single assignment last week I was hoping that Friday’s double dip purchase of Comcast would have been assigned as today was the ex-dividend date, but my shares weren’t, which came as a surprise, as shares finished well in the money. Later in the morning after tallying subscribers, as is usually the case when an ex-dividend position is in the money, the collective experience was the same. In fact, no one reported assignment, but in this case, I think assignment would have been preferable.

While the early market drop may have made some of  the week’s positions look even more appealing, I really didn’t want to spend too much of my remaining cash down, particularly since last week’s rebounds were all short lasting.

However, the prospects of selling new covered call positions decreases as the market is poised to go lower, although there may come that point that the volatility rises enough to start making the “DOH” kind of trades feasible again.

As this week’s Weekend Update article suggests, that rise in volatility is a good thing if you’re selling options, but it’s much better if it comes in an orderly manner, as was the case last week with all of the gyrations and relatively little net movement. With Friday’s strong close an equally strong drop today will add to that volatility and will add to the value of those premiums, perhaps even finally making out of the money premiums attractive to sell.

If you paid attention today and watched the volatility, while it did come off of its day’s highs, it was actually up quite a bit for a day in which the overall market was only down by 0.2%.

In turn, the VIX was nearly 7% higher.

That’s because of all of the intra-day volatility. That’s precisely the kind of market activity that leaves little in the way of damage, or at least must less than an unrestrained drop lower and no subsequent bounce. The good thing is that while there isn’t that much net change in the market there is a large net change in volatility.

That’s why all of those alternations in direction are so nice to see. 

With a number of positions set to expire this week and with the currently indicated price action making those assignments less likely, the likelihood is that any new purchases will still look at this Friday for their expiration, in an effort to create a greater chance of not only generating current income, but in having a greater possibility of assignment so that the cash can be recycled for use next week.

While there is an Employment Situation Report coming at the end of this week and we are coming off of the disappointment from the previous month, that report will be on the back burner as we watch and see what will develop in Hong Kong over the week.

The ebullience over the Alibaba IPO in China may give way to something else if authorities lose the ability to exercise some restraint and so while waiting to see what develops we will be held hostage to those events that were very much downplayed over the weekend and reportedly have not made their way into the Chinese news media on the mainland.

Insofar as events in China increasingly have an impact on our own markets this may be another interesting week, although being a bystander may be the way to go.

With only a single new position opened today, I don’t expect too much more. The other trade that I was hoping to open, one in MetLife started moving higher early in the session, as I was getting an order ready and it never returned close to the $53.50 level and today didn’t seem like the kind of day that you really wanted to chase anything.

Daily Market Update – September 29, 2014 (9:30 AM)

Finally, after a week of 5 trading days with triple digit moves that really had no reason for being, today may be one of those days where there is an identifiable reason.

If you asked just a few days ago no one would likely have said that pro-democracy demonstrations in Hong Kong were on the horizon.

That is the kind of surprise that markets don’t like to see. Certainly the market in Hong Kong didn’t like the uncertainty and their market saw volatility spike by 20%.

So unlike all of the previous trading days of last week when there was no reason to suspect that anything was brewing, at least based on the pre-opening futures trading, today is a little different. The futures are indicating a triple digit open to the downside.

While the pre-opening futures don’t usually give much indication where the trading day is heading, that’s less the case when the futures are making a strong statement.

Granted, a 100 point move in the futures today isn’t what a 100 point move was 5 years ago, but it is still something that you don’t see with great regularity neither in the futures nor in the regular trading session. The difference is that when it is in the futures there is almost always a reason that can be readily associated with the move, whereas there often doesn’t have to be any reason for the regular trading session to blow off some steam in either direction.

So this morning may be another of those to watch and see where things go.

With only a single assignment last week I was hoping that Friday’s double dip purchase of Comcast would have been assigned as today was the ex-dividend date, but my shares weren’t, which came as a surprise, as shares finished well in the money. Later in the morning I will tally subscribers, as is usually the case when an ex-dividend position is in the money and see what the collective experience was, but in this case, I think assignment would have been preferable.

While the likelihood of decreasing prices may make some of  the week’s positions look even more appealing, I really don’t want to spend too much of my remaining cash down.

However, the prospects of selling new covered call positions decreases as the market is poised to go lower, although there may come that point that the volatility rises enough to start making the “DOH” kind of trades feasible again.

As this week’s Weekend Update article suggests, that rise in volatility is a good thing if you’re selling options, but it’s much better if it comes in an orderly manner, as was the case last week with all of the gyrations and relatively little net movement. With Friday’s strong close an equally strong drop today will add to that volatility and will add to the value of those premiums, perhaps even finally making out of the money premiums attractive to sell.

With a number of positions set to expire this week and with the currently indicated price action making those assignments less likely, the likelihood is that any new purchases will still look at this Friday for their expiration, in an effort to create a greater chance of not only generating current income, but in having a greater possibility of assignment so that the cash can be recycled for use next week.

While there is an Employment Situation Report coming at the end of this week and we are coming off of the disappointment from the previous month, that report will be on the back burner as we watch and see what will develop in Hong Kong over the week.

The ebullience over the Alibaba IPO in China may give way to something else if authorities lose the ability to exercise some restraint and so while waiting to see what develops we will be held hostage to those events that were very much downplayed over the weekend and reportedly have not made their way into the Chinese news media on the mainland.

Insofar as events in China increasingly have an impact on our own markets this may be another interesting week, although being a bystander may be the way to go.

MONDAY:  After 5 straight days of triple digit moves for no real reason at all, this morning may bring a reason as political unrest in Honkg Kong comes unexpectedly

TUESDAY:     Very big intra-day moves yesterday added to volatility, despite not having a 6th consecutive triple digit day. Today may be a little more calm although events in China are still to unfold

WEDNESDAY:  More negativity to begin the day’s trading and the remained of the week will potentially react to ISM, ECB and ESR, all while digesting news of EBOLA in the USA.

THURSDAY:    After yesterday’s sharp drop it would have been nice to seen a bounce, even if insincere. With this morning’s flat opening being indicated by the futures it looks like a reflexive bounce is not at hand and it will take today’s  ECB report or tomorrow’s Employment Situation Report to make the next move.

FRIDAY:  The EMployment Situation Report ends the week as futures point higher in anticipation and hopefully end an abysmal week on an upwsing







Daily Market Update – September 26, 2014 (8:30 AM)

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

The following are outcomes today:

Assignments:  EBAY

Rollovers: ANF, GDX, JOY

Expirations:   HAL, IP, LVS, TMUS, WFM

This week’s ex-dividend stocks were CY (9/23 $0.11) and WFM (9/24 $0.12)

Next week BMY (10/1 $0.36) is ex-dividend.

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

Daily Market Update – September 25, 2014 (Close)

After yesterday’s gain which recouped about 70% of what was lost during the first two trading days of this week, it’s hard to know which of the two very different markets to believe.

This morning’s pre-opening futures was equally confused as yesterday’s strong gain wasn’t very dissimilar from the sharp losses of the two prior days.

None of those days really had any kind of meaningful news that seemed to be responsible for the moves.

At least today we could blame it all on outgoing Dallas Federal Reserve Governor, Richard Fisher.

Not having any news is always frustrating because it makes you believe that sometimes there’s not much more involved than the luck of the coin toss. Even totally rational and maybe even correct theses could have looked very much otherwise depending on the day of initiation.

However, reacting as the market did to Richard Fisher’s comments is equally frustrating as he has been a loose cannon since his appointment in 2005 when he was chastised by then Chairman Greenspan for public comments. Additionally, he has consistently been on the wrong side of history in the dogged pursuit of his own dogma.

Monday and Tuesday there was a predominant wave in one direction and yesterday that wave may have simply gone in the opposite direction, creating geniuses and idiots, all because of the accident of their timing.

After all of the pointing at “Death Crosses” and where previous record IPOs came during their respective market cycles, yesterday all of that was just ignored. Just as with the selling on  Monday and Tuesday, yesterday’s buying didn’t come in tremendous waves. It was fairly insidious and orderly. But after the buying was done the market was only a scant 0.3% below its record high from last week.

Today, however, although not a blow out by any means, it was a decidedly negative day, as you could have seen if looking at any heat map at any time of the day.

For those waiting for another of those periodic mini-corrections that seem to come about every two months and temporarily shave 4-5% off the market highs before setting new ones, we started the morning needing that means we have to re-create Monday and Tuesday and then still lose another 3-4%.

Well, we did recreate Monday and Tuesday, almost to the last decimal point.

As that happened and if this gyrations continue in a short time frame we might really see volatility begin to really move. It usually goes higher as markets move lower, it is also a measure of the variation and the pronounced moves in opposite directions is the sort of thing that drives up volatility, beta and investor uncertainty.

For those that remember 2011, that was a year with so many triple digit moves, but they routinely went in either direction, as the year ended unchanged from where it started. The volatility, however, was more than triple where it stands this morning.

This morning began the countdown on rollover considerations and yesterday’s gains were helpful in trying to get there, but more would have been welcome, especially in the hope of seeing what is always sought.

That is a balance between rollovers and assignments to feed the income stream and replenish the cash pile.

At the moment my cash reserves are lower than I would like so I’d prefer seeing more assignments than rollovers, but that outcome looked tentative, at best without another strong and broad move higher. Today’s trading made even “tentative” seem to be out of reach.

Tomorrow’s GDP report may offer some of that needed positive catalyst, but in the shadows of some of summer’s disappointing employment statistics, there may be concern, especially as GDP has been a very inconsistent this year.

For today I wouldn’t have minded a flat market, as that would at least have eroded some of the premium necessary to re-purchase contracts for potential rollovers, as those premiums are still heavily weighted in the current week due to the continuing low volatility.

So today  started as another day of watching and waiting and waiting for that tossed coin to land. Unfortunately, it landed hard.

Daily Market Update – September 25, 2014 (9:00 AM))

After yesterday’s gain which recouped about 70% of what was lost during the first two trading days of this week, it’s hard to know which of the two very different markets to believe.

This morning’s pre-opening futures is equally confused as yesterday’s strong gain wasn’t very dissimilar from the sharp losses of the two prior days.

None of those days really had any kind of meaningful news that seemed to be responsible for the moves.

That’s always frustrating because it makes you believe that sometimes there’s not much more involved than the luck of the coin toss. Even totally rational and maybe even correct theses could have looked very much otherwise depending on the day of initiation.

Monday and Tuesday there was a predominant wave in one direction and yesterday that wave may have simply gone in the opposite direction, creating geniuses and idiots, all because of the accident of their timing.

After all of the pointing at “Death Crosses” and where previous record IPOs came during their respective market cycles, yesterday all of that was just ignored. Just as with the selling on  Monday and Tuesday, yesterday’s buying didn‘t come in tremendous waves. It was fairly insidious and orderly. But after the buying was done the market was only a scant 0.3% below its record high from last week.

For those waiting for another of those periodic mini-corrections that seem to come about every two months and temporarily shave 4-5% off the market highs before setting new ones, that means we have to re-create Monday and Tuesday and still lose another 3-4%.

If that were to happen and in a short time frame, then we might really see volatility begin to move. AS it usually goes higher as markets move lower, it isa lso a measure of the variation and the pronounced moves in opposite directions is the sort of thing that drives up volatility, beta and investor uncertainty.

For those that remember 2011, that was a year with so many triple digit moves, but they routinely went in either direction, as the year ended unchanged from where it started. The volatility, however, was more than triple where it stands this morning.

This morning begins the countdown on rollover considerations and yesterday’s gains were helpful in trying to get there, but more would be welcome, especially in the hope of seeing what is always sought.

That is a balance between rollovers and assignments to feed the income stream and replenish the cash pile.

At the moment my cash reserves are lower than I would like so I’d prefer seeing more assignments than rollovers, but that outcome looks tentative, at best without another strong and broad move higher.

Tomorrow’s GDP report may offer some of that needed catalyst, but in the shadows of some of summer’s disappointing employment statistics, there may be concern, especially as GDP has been a very inconsistent this year.

For today I wouldn’t mind a flat market, as that would at least erode some of the premium necessary to re-purchase contracts for potential rollovers, as those premiums are still heavily weighted in the current week due to the continuing low volatility.

So today is another day of watching and waiting and waiting for that tossed coin to land.

Daily Market Update – September 24, 2014 (Close)

Yesterday was just another really awful day.

It wasn’t quite as awful as the pattern seen in the previous week when the broader market wasn’t as robust as the DJIA, however, as the S&P 500 fared slightly better, yesterday.

Not well, just slightly better.

Put two awful days together after having reached another market top and you have about a 1.2% decline from that top.

That’s not very much, but it does get people who haven’t known real hardship for the last two years a little bit nervous. Every one tries to look for a marker that indicates that the tide has turned and many have seen the Alibaba IPO as that landmark event, as if it was some sort of albatross around the market’s neck.

While in hindsight in may appear to be that way, it’s pretty laughable seeing the attempts to portray single IPO events of the past as somehow being the marker of large market declines, as best can be said is that there is a coincidence, based upon less than a handful of observations.

Where there is more than a handful of observations is looking at the  longer term chart for the S&P 500 chart for the past two years and you can see this pattern of ebb and tide that has been occurring every two months or so, the last of which was in July, when we went down about 5% in two weeks and then just as quickly went even higher, as August saw each and every week end higher than the previous one.

Different time periods have different characteristics. Certainly the 2007-2009 time frame wouldn’t likely show a similar pattern, but there are markets within markets, much as you hear debate about whether we are currently in a bull market that’s part of a secular bear market or whether 2007-2008’s decline was a bear market in a secular bull.

No one knows, because there are no real definitions and the time frames can be conveniently shifted to fulfill whatever goal you have in support of your contention.

Ultimately, the last two years don’t matter, as it’s only the future that now has any real meaning.

Based on the past two years every time we have seen some kind of a retracement and some mild increase in volatility, the real only question has been whether the decline will be mild and limiting. Knowing that is helpful if looking toward the future, as we all should be doing.

In hindsight, the answer every time that question has been asked has been the same, but each new assault rightly raises the question anew, because every rational person knows that history demands that there be a period of reversal, whether it’s a reversal from 2007 or a reversal from 2009.

It’s far better to be ahead of that curve than behind it.

Today appeared as if there might be a little bit of a break from the past couple of days of broad selling and as as usually the case that kind of activity is welcome going into the end of the week.

Usually weakness is a great way to begin the week, unless there are some concerns about how prolonged that weakness may be, as was the case this Monday. However, coming off weakness it’s often comforting to see some price appreciation when starting to think about assignments and rollovers, especially when there’s an added hope of being able to replenish at least some of the cash that was expended during the week.

That would get us ahead of that curve, regardless of what direction it travels.

As with most curves, it’s usually best to slow down and take in all of the information that’s available.

That sounds like a good plan for the rest of the week as today’s market gain erased about 70% of the previous two day’s worth of losses and at least for a day put to bed all of those running around pointing out the dreaded “Iron Cross,” that was yet another of those unvalidated technical indicators that sometimes tells you what is going to happen and other times tells you what isn’t going to happen, but doesn’t really tell you which of the two outcomes it will predict.

So with now two more days left for the week we’ll just have to guess which market will return tomorrow and whether that market will also be back on Friday, as so far this has been a week with no real catalysts and no real reasons for much of anything.

Those are hard to get ahead of as they are more like blind curves and even traveling at slow speed may be tricky.