Category Archives: Daily Market Update

Daily Market Update – September 24, 2014 (8:30 AM)

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 sulfill 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 appears as if there may 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.

Daily Market Update – September 23, 2014 (Close)

Yesterday was just a really awful day.

It was another in a series of days that characterized last week’s 1.3% increase in the S&P 500 that on the surface seemed great but that actually along with the other major indices lagged the DJIA by quite a bit.

Last week the market was good, just not as good as you would have thought.

Yesterday was another day of lagging the Dow, but this time you couldn’t console yourself with the 1.3% gains, as the Dow itself was down triple digits and on a relative basis everything else was down even more.

Even Alibaba was down about 5%.

For those that boldly stated that the Alibaba IPO marked the beginning of the end yesterday’s trading is validation of their position.

There was a graphic making the rounds yesterday that showed market levels at the time of three previous “largest” IPOs that showed that they occurred at precisely the market’s top of the then current bull markets.

Unfortunately, they didn’t bother telling people that they cherry picked the data and omitted including other “largest” ever IPOs, such as for General Motors (the second time around), Facebook and others. They also conveniently overlooked IPOs on foreign markets that nonetheless traded in the U.S. as ADRs.

Having included any of those other IPOs would have made their graphic appear very different and would have invalidated their contention. In fact, this is what the more reflective graphic would have looked like and that’s whithout adjusting for such factors as Visa having sold about 80% of its shares at IPO, as opposed to Facebook, which only sold 25%.

Still, whenever you’re at market highs you do have to wonder whether you’re at the peak.

For those that remember the Reagan Administration, you may remember the one time director of the Office of Management and Budget. That was David Stockman, the architect of the “trickle down theory of economics.”

He just wrote a scathing review of Alibaba that gets a little more frightening if you saw Jack Ma’s “trust me” response to questions regarding the ability of the business going forward, particularly within the context of functioning within China.

This morning things were looking better, but not looking good. Neither for the markets nor for Alibaba.

The market was again poised for a lower open and Alibaba was indicating another 2% lower on a morning that comes after Treasury has announced new regulations regarding tax inversions and the United States and its coalition allies have attacked ISIS targets inside of Syria.

Both of those represent the “unexpected” kind of news, even though most of us knew that each one would likely be coming sooner or later. It’s just that no one really thought that today would be that day.

With surprisingly more new purchases yesterday than I would have believed to have occurred, today was a day to largely be passive and hope that the events of yesterday’s market are not a prelude to a near term sell-off. At the very least today’s nearly triple point drop in the DJIA was worse than the S&P 500 performed, as today everyone was buzzing about another signal, the death cross,” that also has no validation, yet seems to have a significant following.

It’s already clear that Treasury’s decision is having an impact on some proposed inversions, as the new regulations take place immediately. However, what is not being discussed and what is very likely going to be an outgrowth of the Treasury decision is some upcoming modification to the corporate tax code, particularly regarding overseas funds and the tax rates, that would make the desire to execute an inversion less desirable in the first place.

But as far as today is concerned that possibility is irrelevant and won’t be guiding anyone’s investment decisions, much less acting as a catalyst pushing the market forward.

While there remains little that can be identified as a catalyst to help convincingly reach new record highs and do so in a broad fashion, I wouldn’t entirely dismiss the market’s resilience. Just as there is no easily discernable catalyst, there really is no compelling reason to believe that the rug is about to be pulled out as the market isn’t really trading at an historically high multiple, particularly when realizing how that multiple has been artificially elevated through massive stock buybacks.

So pessimism may reign after yesterday and today’s performance, but the signs, other than a gut feeling and a overtly biased graph, just aren’t really there.

Daily Market Update – September 23, 2014 (9:15 AM)

Yesterday was just a really awful day.

It was another in a series of days that characterized last week’s 1.3% increase in the S&P 500 that on the surface seemed great but that actually along with the other major indices lagged the DJIA by quite a bit.

Last week the market was good, just not as good as you would have thought.

Yesterday was another day of lagging the Dow, but this time you couldn’t console yourself with the 1.3% gains, as the Dow itself was down triple digits and on a relative basis everything else was down even more.

Even Alibaba was down about 5%.

For those that boldly stated that the Alibaba IPO marked the beginning of the end yesterday’s trading is validation of their position.

There was a graphic making the rounds yesterday that showed market levels at the time of three previous “largest” IPOs that showed that they occurred at precisely the market’s top of the then current bull markets.

Unfortunately, they didn’t bother telling people that they cherry picked the data and omitted including other “largest” ever IPOs, such as for General Motors (the second time around), Facebook and others. They also conveniently overlooked IPOs on foreign markets that nonetheless traded in the U.S. as ADRs.

Having included any of those other IPOs would have made their graphic appear very different and would have invalidated their contention.

Still, whenever you’re at market highs you do have to wonder whether you’re at the peak.

For those that remember the Reagan Administration, you may remember the one time director of the Office of Management and Budget. That was David Stockman, the architect of the “trickle down theory of economics.”

He just wrote a scathing review of Alibaba that gets a little more frightening if you saw Jack Ma’s “trust me” response to questions regarding the ability of the business going forward, particularly within the context of functioning within China.

This morning things are looking better, but not looking good. Neither for the markets nor for Alibaba.

The market is again poised for a lower open and Alibaba is indicating another 2% lower on a morning that comes after Treasury has announced new regulations regarding tax inversions and the United States and its coalition allies have attacked ISIS targets inside of Syria.

Both of those represent the “unexpected” kind of news, even though most of us knew that each one would likely be coming sooner or later. It’s just that no one really thought that today would be that day.

With surprisingly more new purchases yesterday than I would have believed to have occurred, today is a day to largely be passive and hope that the events of yesterday’s market are not a prelude to a near term sell-off.

It’s already clear that Treasury’s decision is having an impact on some proposed inversions, as the new regulations take place immediately. However, what is not being discussed and what is very likely going to be an outgrowth of the Treasury decision is some upcoming modification to the corporate tax code, particularly regarding overseas funds and the tax rates, that would make the desire to execute an inversion less desirable in the first place.

But as far as today is concerned that possibility is irrelevant and won’t be guiding anyone’s investment decisions, much less acting as a catalyst pushing the market forward.

While there remains little that can be identified as a catalyst to help convincingly reach new record highs and do so in a broad fashion, I wouldn’t entirely dismiss the market’s resilience. Just as there is no easily discernable catalyst, there really is no compelling reason to believe that the rug is about to be pulled out as the market isn’t really trading at an historically high multiple, particularly when realizing how that multiple has been artificially elevated through massive stock buybacks.

So pessimism may reign after yesterday’s performance and possibly today’s continuance, but the signs, other than a gut feeling and a overtly biased graph, just aren’t really there.

Daily Market Update – September 22, 2014 (Close)

After last week’s downpouring of anticipated news this week will be a snoozefest by comparison, but as we’ve seen over and over again, there isn’t necessarily a correlation between news and market movements.

Today, unfortunately turned out to be a great example of that little bit of truth.

A quiet week on the newsfront isn’t necessarily something that offers immunity from a market exploding higher or crumbling under its weight. There needn’t be a tangible reason for either of those occurrences, although we always look for the reasons as both a means of predicting and a means of explanation.

Too bad it never really seems to work that way. Even after all of the explanations in hindsight, they just don’t seem to have predictive value the next time around.

Certainly, the impact of news isn’t consistently a lasting one. We tend to forget and move on quickly, but are also subject to so many bits of news, each of which requires consideration, if not also action.

In a week such as last the news events were from such different directions, the FOMC and the Scotland independence referendum, and were so completely unrelated that it was entirely conceivable that their results could have whipsawed markets,

Instead, everything went as planned and their impacts were additive.

That has pretty much been the story of the past two years.

While there have been some disappointments, they’ve been very temporary in impact, while the greatest challenges have been the unpredicted and unpredictable, most often coming from geo-political issues around the world.

This week everything is quiet on the scheduled news front, other than for Friday’s GDP announcement and the world is relatively quiet, insofar as there’s little new expected to assault our humanity.

With markets at their familiar “new high” levels to begin this week, precious metals sinking even further and interest rates still under the  FOMC’s thumb of “considerable time,” it just makes perfect sense that money would stay at work in equity markets.

It’s hard to argue with that logic, but it’s also hard to accept it when there is a realization that such logic is what most everyone in the world is thinking will be the only path to follow.

Together with the performance spreads between the narrow DJIA and the more expansive NASDAQ 100, S&P 500 and Russell 2000, there was already some reason to be concerned as last week came to its end.

Today that spread continued as the broader markets performed less well than the more high profile DJIA.

The early morning market was already giving tentative signals and as the day progressed there was nothing tentative about the sentiment and tone of the day’s trading.

With enough assignments from last week to fuel some buying this week I didn’t have any great plans to abandon some caution, as I would still have liked to be in a position to increase my cash reserves as this week comes to its end,  rather than spending it down and putting it at risk.

However, as is so often the case, sometimes it’s hard to resist, even when there is continued reason to resist..

As the first week of the October 2014 cycle was set to begin and already having a number of positions set to expire this week, any new positions were initially considered with both weekly and expanded weekly options, in order to continue the process of attempting to develop some diversification in contract expiration dates. However the near term trades looked more appealing after the market began trading on a downward path.

While I would have especially liked to see some opportunities to sell contracts on those positions that just seemed to expensive to rollover last week and gotten those back to work, if you were looking for anything in green today there wasn’t very much to see.

The more of those opportunities the less is the need to create new positions to generate income for the week, so I would have welcomed those opportunities over buying opportunities, but you have to deal with the market you have and not the one you want.

Daily Market Update – September 22, 2014 (8:00 AM)

After last week’s downpouring of anticipated news this week will be a snoozefest by comparison, but as we’ve seen over and over again, there isn’t necessarily a correlation between news and market movements.

A quiet week on the newsfront isn’t necessarily something that offers immunity from a market exploding higher or crumbling under its weight. There needn’t be a tangible reason for either of those occurrences, although we always look for the reasons as both a means of predicting and a means of explanation.

Too bad it never really seems to work that way. Even after all of the explanations in hindsight, they just don’t seem to have predictive value the next time around.

Certainly, the impact of news isn’t consistently a lasting one. We tend to forget and move on quickly, but are also subject to so many bits of news, each of which requires consideration, if not also action.

In a week such as last the news events were from such different directions, the FOMC and the Scotland independence referendum, and were so completely unrelated that it was entirely conceivable that their results could have whipsawed markets,

Instead, everything went as planned and their impacts were additive.

That has pretty much been the story of the past two years.

While there have been some disappointments, they’ve been very temporary in impact, while the greatest challenges have been the unpredicted and unpredictable, most often coming from geo-political issues around the world.

This week everything is quiet on the scheduled news front, other than for Friday’s GDP announcement and the world is relatively quiet, insofar as there’s little new expected to assault our humanity.

With markets at their familiar “new high” levels to begin this week, precious metals sinking even further and interest rates still under the  FOMC’s thumb of “considerable time,” it just makes perfect sense that money would stay at work in equity markets.

It’s hard to argue with that logic, but it’s also hard to accept it when there is a realization that such logic is what most everyone in the world is thinking will be the only path to follow.

This morning the market looks as if it will get off to a tentative start.

With enough assignments from last week to fuel some buying this week I don’t have any great plans to abandon some caution, as I would still like to increase my cash reserves as this week comes to its end.

As the first week of the October 2014 cycle is set to begin and already having a number of positions set to expire this week, any new positions will be considered with both weekly and expanded weekly options, in order to continue the process of attempting to develop some diversification in contract expiration dates.

I would especially like to see some opportunities to sell contracts on those positions that just seemed to expensive to rollover last week and get those back to work. The more of those opportunities the less is the need to create new positions to generate income for the week, so I would welcome those opportunities over buying opportunities for now.

MONDAY:  Not too much news this week in follow-up to last week’s torrent that did little to alter the landscape. For those calling for an S&P 500 top marked by the Alibaba IPO today begins the countdown that has been nerly two years in the making

TUESDAY:     The market did begin the appeasement of those that believed the appearance of Alibaba would mark the top. This morning there appears to be some continuation as we sit less than 0.7% from the market’s high.

WEDNESDAY:  Two consecutive triple digit losses barely leaves us 1% below the closing highs. Following the familiar pattern it just looks like we’re due for another bimonthly drop in markets. Hopefully, if that’s the case the pattern continues with the obligatory rebound

THURSDAY:    Which market are you going to believe? The one yesterday or the one from earlier in the week? This morning the market itself doesn’t seem to know which way to go. Maybe it just will wait until tomorrow’s GDP

FRIDAY:  This will be one good week to see come to its end, especially as nothing of substance has occured to bring about the four preceding days of triple digit moves.







Daily Market Update – September 19, 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.

Today’s possible outcomes include:

Assignments:  C, CCL, PFE

Rollovers: COH, FAST

Expirations: CHK,  EBAY, GM, HFC, K, SBGI ($29), SBGI ($31)

Some of the expiring positions are simply too costly to rollover due to bids in $0.05 increments

This week Las Vegas Sands (9/18 $0.50) was ex-dividend

Next week Whole Foods will be ex-dividend (9/24 $0.12) and Cypress Semiconductor (9/23 $0.11), but both may be subject to early assignment.

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

Daily Market Update – September 18, 2014 (Close)

The initial response to yesterday’s FOMC statement was confusion.

While there’s usually some kind of knee-jerk reaction, this time traders really didn’t know what to do as the wording, just as Jon Hilsenrath of the Wall Street Journal had said would be the case, remained unchanged.

The market went back and forth with the release but ultimately found reason to be positive during Janet Yellen’s press conference, which was longer than most, having had an unusually long prepared statement portion read before questioning began.

Some may have come to the realization that the dissenting votes in this month’s statement came from those who will no longer have a vote in just four months.

What was clear during the follow-up to the statement’s release was that the more Janet Yellen spoke the more comfortable the market became. Almost immediately as the press conference ended the market started coming down from its highs and ended up closing the day with only a mediocre gain.

But still a gain.

Getting past the FOMC eliminates one of the hurdles for the week.

Today’s hurdle, which really has its impact tomorrow, will be the results of Scotland’s independence referendum, in which 16 and 17 year olds have been newly enfranchised to vote. While they can get married and serve in the military at those ages, they cannot vote in general elections, but will be able to do so today.

Reportedly, that group is overwhelmingly for Scotland’s independence, which probably shouldn’t come as too much of a surprise. What is surprising is that their support is  said to be as a result of their concern that under continued British rule the social safety net, including health care, that they have come to view as an entitlement may be put into private hands or eliminated.

Whether an independent Scotland can continue to provide the same kind of social services isn’t part of the equation, at least for some and could help the “Yes” vote predominate.

That could make Friday a very interesting day. WHat it did do, for another one of those inexplicable reasons, was to make today an unusually strong day in advance of tomorrow’s joint events.

With the independence vote seeming to be so close there’s not too much likelihood that any outcome has already been reflected in the market’s pricing. Currency traders know of the impact of the uncertainty, but thus far, our own equity markets have been standing by and awaiting an outcome and then an understanding of what either outcome can really mean in the short and long terms.

I have no clue, other than to know that uncertainty is almost always a bad thing and the only outcome that really brings uncertainty is very possibly in the hands of 16 and 17 year olds.

Having once been at that stage in life that doesn’t give me too much confidence.

This morning the market appeared to have some confidence as it awaitsedScotland’s decision and then the manner in which the Alibaba IPO would be executed, as well as its reception.

With yesterday’s challenge having been met today’s challenge was to decide whether to roll over any positions that still have a chance to be assigned, in order to eliminate the chance that they might get taken down by any untoward market response tomorrow.

As the morning began I was disinclined to do so but hoped to get some opportunity to rollover those positions that have a lower likelihood of being assigned. That didn’t happen, although a couple of new covered positions were created and used some forward weeks in a feeble attempt to get some diversification in time.

At any rate, waking up tomorrow morning will be interesting and the futures trading tomorrow may be the kind that has follow through for the rest of the day, as opposed to the mundane kind of daily trading that we normally see.

Hopefully the close of the September option cycle won’t be marred by the constellation of events colliding in the next 24 hours or so and then further marred by our imperfect interpretations of what goes on around us.

Daily Market Update – September 18, 2014 (8:45 AM)

The initial response to yesterday’s FOMC statement was confusion,

While there’s usually some kind of kneejerk reaction, this time traders really didn’t know what to do as the wording, just as Jon Hilsenrath of the Wall Street Journal had said would be the case, remained unchanged.

The market went back and forth with the release but ultimately found reason to be positive during Janet Yellen’s press conference, which was longer than most, having had an unusually long prepared statement portion read before questioning began.

Some may have come to the realization that the dissenting votes in this month’s statement came from those who will no longer have a vote in just four months.

What was clear during the follow-up to the statement’s release was that the more Janet Yellen spoke the more comfortable the market became. Almost immediately as the press conference ended the market started coming down from its highs and ended up closing the day with only a mediocre gain.

But still a gain.

Getting past the FOMC eliminates one of the hurdles for the week.

Today’s hurdle, which really has its impact tomorrow, will be the results of Scotland’s independence referendum, in which 16 and 17 year olds have been newly enfranchised to vote. While they can get married and serve in the military at those ages, they cannot vote in general elections, but will be able to do so today.

Reportedly, that group is overwhelmingly for Scotland’s independence, which probably shouldn’t come as too much of a surprise. What is surprising is that their support is  said to be as a result of their concern that under continued British rule the social safety net, including health care, that they have come to view as an entitlement may be put into private hands or eliminated.

Whether an independent Scotland can continue to provide the same kind of social services isn’t part of the equation, at least for some and could help the “Yes” vote predominate.

That could make Friday a very interesting day.

With the vote seeming to be so close there’s not too much likelihood that any outcome has already been reflected in the market’s pricing. Currency traders know of the impact of the uncertainty, but thus far, our own equity markets have been standing by and awaiting an outcome and then an understanding of what either outcome can really mean in the short and long terms.

I have no clue, other than to know that uncertainty is almost always a bad thing and the only outcome that really brings uncertainty is very possibly in the hands of 16 and 17 year olds.

Having once been at that stage in life that doesn’t give me too much confidence.

This morning the market appears to have some confidence as it awaits Scotland’s decision and then the manner in which the Alibaba IPO is executed, as well as its reception.

With yesterday’s challenge having been met today’s challenge is to decide whether to roll over any positions that still have a chance to be assigned, in order to eliminate the chance that they might get taken down by any untoward market response tomorrow.

At the moment I’m disinclined to do so but would hope to get some opportunity to rollover those positions that have a lower likelihood of being assigned.

At any rate, waking up tomorrow morning will be interesting and the futures trading tomorrow may be the kind that has follow through for the rest of the day, as opposed to the mundane kind of daily trading that we normally see.

Hopefully the close of the September option cycle won’t be marred by the constellation of events colliding in the next 24 hours or so and then further marred by our imperfect interpretations of what goes on around us.

Daily Market Update – September 17, 2014 (Close)

While yesterday’s 100 point gain seems inexplicable, given that the uncertainties for the week are all set to begin this afternoon, I suppose that the 3 day settlement time defined when selling would have to end for those needing to raise money to participate in Friday’s huge Alibaba IPO, may have played a role.

That, at least, would have put some kind of a stop to the rampant selling that went on in many high profile positions that had racked up big gains this year, but doesn’t really account for buying that came in yesterday, unless there are still bargain hunters out there, who took advantage of those same decliners the day after.

Still, yesterday was a nice surprise and it would be wonderful if it could continue today up until and then through the actual time of the FOMC statement release.

Yesterday’s rally was said to be related to Jon Hilsenrath, of the Wall Street Journal, stating a belief that there would be no change in the wording of the FOMC statement that would have indicated the possibility of interest rate hikes coming sooner rather than later.

Hilsenrath seemed to have had an inside track into the Bernanke Federal Reserve’s thinking, and his “scoops” could and did move markets, but even then there were some misses.

He hasn’t established his Yellen Federal Reserve credentials yet, but the market acted as if he was the real thing and knew precisely what wording was going to be contained in this afternoon’s statement.

As it turned out, he was right, in what was really a binary opportunity. No one really factored in the possibility of the wording being changed or unchanged, but qualified in some fashion.

That didn’t happen, but it would have really fooled with everyone and created lots of confusion.

Ultimately, I don’t understand all of the concern. It is similar to what occurred when the market was concerned about the time table for tapering to Quantitative Easing. We all knew that QE had to end and we all know that interest will someday begin to rise. The pre-occupation with the difference a month or two can make in the initiation of those increases is about as ridiculous as the worries over whether tapering would be done over 6 months or 8 months.

We eventually did find that Hilsenrath was correct, but the pre-opening futures appeared to have completed its party mode and was back to awaiting something more tangible and then preparing itself for tomorrow’s results of the independence referendum vote in Scotland, which could easily go either way and could easily send markets in either direction and in unknown magnitude.

For the sake of Hilsenrath’s reputation and my stock holdings, I hoped that he would be right about the Federal Reserve continuing on its same path and not giving any hint of an acceleration.

Mostly I cared about my stocks.

As it turned out, the best thing for stocks was Janet Yellen.

Specifically, it was Janet Yellen speaking. While some began wondering why her press conference was running so long, they failed to notice that while she spoke the market liked what it was hearing. As soon as she stopped the market gave up much of those gains.

The timing of this week’s series of events, including Friday’s IPO is somewhat unfortunate as the monthly options expire this Friday and many of the positions could stand to see some strength going into that date, rather than seeing continued uncertainty and ambivalence.

I had been looking for any possible rollover opportunities prior to the 2 PM announcement, but didn’t not want to eliminate the possibility of some assignments by rolling over too early, thereby limiting cash available to begin next week’s trading activity.

Sometimes you have to roll the dice, instead and at least the rug wasn’t pulled out from under the market.

And my stocks.

Hopefully the voters of Scotland will be every bit as mindful of my needs as our Federal Reserve.

Daily Market Update – September 17, 2014 (8:45 AM)

While yesterday’s 100 point gain seems inexplicable, given that the uncertainties for the week are all set to begin this afternoon, I suppose that the 3 day settlement time defined when selling would have to end for those needing to raise money to participate in Friday’s huge Alibaba IPO, may have played a role.

That, at least, would have put some kind of a stop to the rampant selling that went on in many high profile positions that had racked up big gains this year, but doesn’t really account for buying that came in yesterday, unless there are still bargain hunters out there, who took advantage of those same decliners the day after.

Still, yesterday was a nice surprise and it would be wonderful if it could continue today up until and then through the actual time of the FOMC statement release.

Yesterday’s rally was said to be related to Jon Hilsenrath, of the Wall Street Journal, stating a belief that there would be no change in the wording of the FOMC statement that would have indicated the possibility of interest rate hikes coming sooner rather than later.

Hilsenrath seemed to have had an inside track into the Bernanke Federal Reserve’s thinking, and his “scoops” could and did move markets, but even then there were some misses.

He hasn’t established his Yellen Federal Reserve credentials yet, but the market acted as if he was the real thing and knew precisely what wording was going to be contained in this afternoon’s statement.

Ultimately, I don’t understand all of the concern. It is similar to what occurred when the market was concerned about the time table for tapering to Quantitative Easing. We all knew that QE had to end and we all know that interest will someday begin to rise. The pre-occupation with the difference a month or two can make in the initiation of those increases is about as ridiculous as the worries over whether tapering would be done over 6 months or 8 months.

We’ll find out whether Hilsenrath was correct, but the pre-opening futures appear to have completed its party mode and is back to awaiting something more tangible and then preparing itself for tomorrow’s results of the independence referendum vote in Scotland, which could easily go either way and could easily send markets in either direction and in unknown magnitude.

For the sake of Hilsenrath’s reputation and my stock holdings, I do hope that he is right about the Federal Reserve continuing on its same path and not giving any hint of an acceleration.

Mostly I care about my stocks.

The timing of this series of events, including Friday’s IPO is somewhat unfortunate as the monthly options expire this Friday and many of the positions could stand to see some strength going into that date, rather than seeing continued uncertainty and ambivalence.

I’ll be looking for any possible rollover opportunities prior to the 2 PM announcement, but would not want to eliminate the possibility of some assignments by rolling over too early, thereby limiting cash available to begin next week’s trading activity.

Sometimes you have to roll the dice, instead.

Daily Market Update – September 16, 2014 (Close)

There is so much news packed into the latter half of this week that the market should have considered taking a few days off in preparation.

What really makes this week interesting is that the news is coming from all directions and none of it is additive, although if all pointing in the same direction can end up being very significant.

First, there’s monetary policy news coming from the FOMC. Then there’s political news come from Great Britain and Scotland and finally there’s stock market news coming from the all-time largest IPO offering on Friday and its reception in the secondary market, as well as the manner in which the IPO is executed.

So it’s hard to imagine much of significance happening today as most people wouldn’t want to make any kind of significant commitment in advance of what may be an avalanche of news, any specific bit of such news that could take the market in any direction.

But the market did tack on 100 Dow points today, despite what should have been a day for caution.

Why? Ostensibly because the Wall STreet Journal’s Jon Hilsenrath, who was considered to be the best at divining what the FOMC under Bernanke was thinking, may now have added Yellen to his mind powers.

At least that may be what the market believes as it reacted to Hilsenrath’s opinion that the wording in tomorrow’s statement that could hint at a more speedy introduction of rate hikes if changed, would remain unchanged.

Got that?

At least that deflected some of the Alibaba talk.

Yesterday so much of what was being discussed was how Friday’s upcoming Alibaba IPO could dry up liquidity, although I’m not certain why that was such a late consideration, as it seemed reasonably obvious from the time that the “roadshow” began last week.

As you would expect the money to get shares of Alibaba at or after the IPO has to come from somewhere and it’s extraordinarily unlikely that those who have been sitting on the sidelines with cash are going to be the ones pumping money into those shares. Rather, people tend to take profits first and then just re-circulate the money.

So it shouldn’t have come as too much of a surprise that some of the biggest momentum names, specifically the ones that may have generated some nice capital gains for some people, would be the ones to feel the pressure, especially insofar as you may need settled funds or margin to make the purchase if offered an allocation.

The timing also shouldn’t have been too much of a surprise as it takes three days for settlement and the IPO is on Friday.

Funny how that all worked out.

Having executed two opening positions yesterday I wasn’t too certain that I was going to be actively looking to add anything to that, other than hoping to capitalize on any upward movement on existing, but uncovered positions. As the day progressed there really wasn’t much inviting as far as new positions would go, but I did enjoy the move higher.

Although the morning once again looked as if it would be opening with a downward bias, this time it didn’t last too long, perhaps also helped out by most of the IPO driven selling having been concluded.

While today ended up being more exciting and certainly more profitable than expected, tomorrow morning will likely be sedate as everyone awaits the afternoon’s FOMC release. While awaiting that release the first of the weekly challenges arises as trying to decide whether to attempt rollovers of positions that may have a chance of being assigned on Friday, in an attempt to avoid any nasty surprises.

Part of that quandary is answered by the still relatively high premiums for those contracts expiring on Friday, due to all of the uncertainty and the relatively low premiums for next week, once the uncertainty is history.

For now, that means more of the same. Just sitting back and seeing what direction and sentiment the market takes and going from there while hoping for the best and not feeling guilty if able to capitalize on anything.

Daily Market Update – September 16, 2014 (9:00 AM)

There is so much news packed into the latter half of this week that the market should have considered taking a few days off in preparation.

What really makes this week interesting is that the news is coming from all directions and none of it is additive, although if all pointing in the same direction can end up being very significant.

FIrst, there’s monetary policy news coming from the FOMC. Then there’s political news come from Great Britain and Scotland and finally there’s stock market news coming from the all-time largest IPO offering on Friday and its reception in the secondary market, as well as the manner in which the IPO is executed.

So it’s hard to imagine much of significance happening today as most people wouldn’t want to make any kind of significant commitment in advance of what may be an avalanche of news, any specific bit of such news that could take the market in any direction.

Yesterday so much of what was being discussed was how Friday’s upcoming Alibaba IPO could dry up liquidity, although I’m not certain why that was such a late consideration, as it seemed reasonably obvious from the time that the “roadshow” began last week.

As you would expect the money to get shares of Alibaba at or after the IPO has to come from somewhere and it’s extraordinarily unlikely that those who have been sitting on the sidelines with cash are going to be the ones pumping money into those shares. Rather, people tend to take profits first and then just re-circulate the money.

So it shouldn’t have come as too much of a surprise that some of the biggest momentum names, specifically the ones that may have generated some nice capital gains for some people, would be the ones to feel the pressure, especially insofar as you may need settled funds or margin to make the purchase if offered an allocation.

The timing also shouldn’t have been too much of a surprise as it takes three days for settlement and the IPO is on Friday.

Funny how that all worked out.

Having executed two opening positions yesterday I’m not certain that I’m going to be actively looking to add anything to that, other than hoping to capitalize on any upward movement on existing, but uncovered positions.

This morning once again looks as if it will be opening with a downward bias, but I would imagine that most of the IPO driven selling is now done.

Unfortunately, all of that means that it may be a very boring day today and maybe even for part of the day tomorrow. Part of the quandary that awaits in advance of the first of the weekly challenges is whether to attempt rollovers of positions that may have a chance of being assigned on Friday, in an attempt to avoid any nasty surprises.

Part of that quandary is answered by the still relatively high premiums for those contracts expiring on Friday, due to all of the uncertainty and the relatively low premiums for next week, once the uncertainty is history.

For now, that means more of the same. Just sitting back and seeing what direction and sentiment the market takes and going from there while hoping for the best.

Daily Market Update – September 15, 2014 (Close)

There is so much news scheduled for this week that the beginning of it seems anticlimactic. except that it’s happening before the anticipated events.

Pre-climactic, maybe?

After the previous week’s disappointments there wasn’t much reason to want to start off the week doing much other than being an observer. It’s hard to justify committing much toward new positions, even perhaps being a little less inclined to plow assigned cash back into the market as readily as I normally would be inclined.

With a large number of positions already scheduled to expire this week and with them being at risk for any number of events, beginning with Wednesday’s FOMC statement and ending with the Ali Baba IPO, the most logical approach to the week is to not put too much of available cash reserves at risk. However, if new positions are added there might be at least some good reason to consider option expirations into the October cycle through the use of expanded options, where available.

That’s a little more tenable as volatility is beginning to creep higher as the market has been heading lower and that process was started last week as most of the rollovers bypassed this week’s expiration, taking advantage of a little bit of awakening in forward week premiums.

As the week was ready to begin it appeared that there was a very mild downward bias, but those early indications so often mean very little unless they’re very pronounced. Otherwise the low volume that creates those early indications doesn’t really give an accurate picture of how things will open, much less unfold as the day begins trading for real.

Today, the same could have been said for the entire morning, as it really didn’t foretell of the decent turnaround that was to come in the latter half of the afternoon that forgot to bring momentum stocks along for the ride higher.

This being the final week of the monthly option cycle usually brings some different considerations. While there are some final weeks of a monthly option cycle that I wouldn’t mind seeing a retreat in prices this is definitely not one of them. After last week’s weakness none of the positions set to expire this week were helped out and another week of weakness puts those positions in some difficulty with regard to either rollover or assignment.

So while I like seeing an increase in volatility, this week my preference would be to let that volatility increase take a breather, but I think that the week is destined to provide definitive moves in one direction or another, although the sum total of those moves may not be very impressive once all of the dust settles.

Today was really a pretty fascinating day as the market and volatility went in the same direction and while volatility increased that increase didn’t appear to really work its way into option premiums. Often times when the market and the volatility index travel in the same direction on any given day and do so by more than a small, trivial amount, there’s usually some catch up that is bound to occur quickly, as the volatility ultimately has to obey some adherence to the mathematical definition that underlies it and traders will bring it back to those standards if it deviated under the influence of imperfect humans.

Knowing that doesn’t really help however, as it would be nice to know the direction, but no one will tell me.

With the FOMC really kicking off the potential risks for the weak, followed the next day by results of Scotland’s independence referendum, there may be good reason to look for any rollover opportunities prior to Wednesday afternoon.

That may be possible for any position that has expanded weekly options, just as it will be a possibility for those that have only monthly options available. Trading, therefore, this week, may follow a different pattern than is the norm, in addition to limiting new purchases and preferentially going to forward week contracts for any new positions.

As far as those rollovers go, those that may use the October monthly contract will also have to factor in the beginning of another earnings season, which starts in just a few weeks.

For now I would be exceedingly happy to just create any kind of covered position that I can for anything that remains uncovered. However, like last week, which maintained its downward bias through the entire week, I don’t think there will be too much opportunity to do so, despite this afternoon’s encouraging comeback.

So, as is the case for any of these weeks that have known risks, my plan is to sit back and see what if anything develops, cognizant of the reality that when there are risks there are also rewards possible.

Hopefully the market is aware of that, as well, and there aren’t too many who are anxious to secure their paper gains at any cost and then be content to watch from the sidelines.

Daily Market Update – September 15, 2014 (9:00 AM)

There is so much news scheduled for this week that the beginning of it seems anticlimactic. except that it’s happening before the anticipated events.

After the previous week’s disappointments there isn’t much reason to want to start off the week doing much other than being an observer. It’s hard to justify committing much toward new positions, even perhaps being a little less inclined to plow assigned cash back into the market as readily as I normally would be inclined.

With a large number of positions already scheduled to expire this week and with them being at risk for any number of events, beginning with Wednesday’s FOMC statement and ending with the Ali Baba IPO, the most logical approach to the week is to not put too much of available cash reserves at risk. However, if new positions are added there might be at least some good reason to consider option expirations into the October cycle through the use of expanded options, where available.

That’s a little more tenable as volatility is beginning to creep higher as the market has been heading lower and that process was started last week as most of the rollovers bypassed this week’s expiration, taking advantage of a little bit of awakening in forward week premiums.

As the week is ready to begin it appears that there is a very mild downward bias, but those early indications mean very little unless they’re very pronounced. Otherwise the low volume that creates those early indications doesn’t really give an accurate picture of how things will open, much less unfold as the day begins trading for real.

While there are some final weeks of a monthly option cycle that I wouldn’t mind seeing a retreat in prices this is definitely not one of them. After last week’s weakness none of the positions set to expire this week were helped out and another week of weakness puts those positions in some difficulty with regard to either rollover or assignment.

So while I like seeing an increase in volatility, this week my preference would be to let that volatility increase take a breather, but I think that the week is destined to provide definitive moves in one direction or another, although the sum total of those moves may not be very impressive once all of the dust settles.

With the FOMC really kicking off the potential risks for the weak, followed the next day by results of Scotland’s independence referendum, there may be good reason to look for any rollover opportunities prior to Wednesday afternoon.

That may be possible for any position that has expanded weekly options, just as it will be a possibility for those that have only monthly options available. Trading, therefore, this week, may follow a different pattern than is the norm, in addition to limiting new purchases and preferentially going to forward week contracts for any new positions.

As far as those rollovers go, those that may use the October monthly contract will also have to factor in the beginning of another earnings season, which starts in just a few weeks.

For now I would be exceedingly happy to just create any kind of covered position that I can for anything that remains uncovered. However, like last week, which maintained its downward bias through the entire week, I don’t think there will be too much opportunity to do so.

So, as is the case for any of these weeks that have known risks, my plan is to sit back and see what if anything develops, cognizant of the reality that when there are risks there are also rewards possible.

Hopefully the market is aware of that, as well, and there aren’t too many who are anxious to secure their paper gains at any cost and then be content to watch from the sidelines.