Category Archives: Daily Market Update

Daily Market Update – September 2, 2014 (8:30 AM)

The big story this morning is that the traders are back now that Labor Day has come and gone.

It’s really not as if anyone went away for the summer, it’s just that they had other things to do besides trading all day long. Market volume was abysmally low during the climb higher and the only really elevation in trading activity came during the very brief decline earlier in the summer.

But this week people start coming back and volume should also be increasing, as if they had absolutely no ability to conduct business from the Hamptons.

Fortunately there was nothing on a geo-political front occurring during this past long holiday weekend to shake things up, because that could have been a messy way to get a shortened week off to a start. As a result the market looks as if it will get off to a really benign start and there’s very little scheduled news during the week to create expectations for market reactions in either direction..

Although there is the monthly Employment Situation Report on Friday and a number of Federal Reserve Governors will be speaking during the week, including the one most recent dissenting voter, there’s not likely to be much in the way of surprise coming from these scheduled events.

That, again, puts the spotlight on geo-political events and that could also take markets in either direction, although with the NATO meeting this week it’s hard to see how anything could move the markets higher as a result of those events, unless an acquiescent Putin is the end result. However, if the market has any ability to draw upon its recent past, it will realize that the appearance of any kind of acquiescence or agreeability is just a precursor to another bit of disagreeable action.

But what are you going to do? Wait until something happens? That’s actually not a bad idea, except to predicate everything on waiting is probably not a good way to go, but keeping something back for any kind of surprise isn’t necessarily a bad strategy.

Recycling money from assignments is an intermediate approach to dealing with uncertainty. It’s not really committing new money and it doesn’t have to include all of the recently freed up cash, although it easily could and even more.

As usual, when I have funds from assignments looking to be recycled I like to see the market get off to a weak start for the week, but lately that hasn’t been the case, as August had a four week winning streak, with each week getting off to a good start, so I’m not likely to recycle all of it this week.

However, with only a single position set to expire this week that means that there is little to be rolled over into next week, which itself has a mere three positions set to expire. That means I do need to populate this week’s list of income producing stocks and either create the possibility of freeing up cash for next week or at least creating additional income streams from the rollover of any new positions. As a result I’ll probably be looking for new positions with expirations coming this week rather than thinking about the use of expanded options or the monthly. While I would have liked to focus on dividend paying positions, there aren’t too many worthy ones this week that could be of any use.

With the market appearing to get off to a very flat start there’s not much reason to aggressively get into the hunt. Instead, as has been the recent pattern, I’ll wait to see if there is any kind of direction to be established. The downside to waiting, however, is that premiums are already extremely low thanks to the non-existent volatility and are further driven to their depths by having lost one day of time value with the holiday passed.

As far as a constellation of factors goes, those forming this week aren’t very propitious.

The market is at all time highs,  premiums are at all time lows and we are being held hostage by events external to the market in far off lands.

Not my favorite way to get a week off to a start, but somehow it usually works out anyway.

Daily Market Update – August 29, 2014 (8:30 AM)

The Week in Review will be posted by 6:00 PM and the Weekend Update will be posted by Monday 12 Noon.

Today’s possible outcomes or trades, include:

Assignments: C

Rollovers:  HAL, TMUS, WFM

Expirations: ANF (put), BBY (put), CHK,

The following positions were ex-dividend this week: HAL, HFC (special), HFC, K, LO, and SBGI

The following positions are ex-dividend next week COH (9/5), MOS (9/2)

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

Daily Market Update – August 28, 2014 (Close)

While the market will be closed this coming Monday in celebration of Labor Day, there was a nearly 20 minute period of time yesterday when the S&P 500 stayed in a 0.10 range. You would have been excused for believing that the Labor Day holiday had already arrived.  I actually rebooted my computer twice, because I thought the program had frozen.

Still the S&P 500 was able to set another new record, using every bit of the 0.10 point trading range to close precisely that amount higher.

This morning gave initial appearances of taking a break from the past three weeks of recovery from the transient decline that had everyone preparing for Armageddon and introducing the word “volatility” into their lexicons.

With the release of GDP statistics and Jobless claims a little later in the morning the futures had not changed very much. They continued to point to a lower open, despite some improvement in the GDP, after a couple of very disappointing reports earlier in the year.

With economic news not being much of a factor lately, the only real thing that the market has responded to has been geo-political news and in the past week it seems to have turned a blind eye to events, or at least their reporting, perhaps after having learned from a series of reactions and over-reactions.

Somewhat amazingly the market hasn’t seemed to care about the vary same kind of news that had so consistently upended it in recent weeks, even when there appears to be independent corroboration, thereby elevating the state from that of rumor.. Despite some dour news in the Ukraine – Russia conflict, there appears to be no real reaction, with an apparent expectation that everyone will come out singing praises of peace.

I don’t know how realistic that image is, but as summer ebbs and a Russian winter looms there is certainly bound to be a different kind of offensive that will tax everyone’s credulity regarding Russian intentions and that can only further depress European economies.

On a positive note that could see a shift into US equities, but that’s all in the future and lately the market seems to have stopped discounting the future as it used to do back in the old days.

Other than a shift of money, either from Europe or from the mythical money that may be on the sidelines it’s hard to see what the catalyst will be for the next phase higher. Listening to those who continue to pound on the “historically low P/E multiple,” one has to wonder why they haven’t factored in EPS data that’s been elevated from widespread and aggressive buyback programs that have served to keep that multiple low.

With this week now having entered into that period that I usually start looking for rollover opportunities, but with relatively little to potentially roll over, and still having cash to spend, there is still a possibility of adding some new positions with either a very short term time frame or more likely, with expirations next week, which currently has only a single position set to expire. That was the situation behind today’s sale of Abercrombie and Fitch puts after earnings were released.

Since next week is already a shortened one who knows what opportunities will pop up and just how puny the premiums might be unless those opportunities happen very early in what’s left of the week. So with that in mind, I would like to see that kind of opportunity present itself as this week hasn’t had too much in the way of option income generating activity, although there have been more than the usual number of dividend payers.

The latter, however, doesn’t really count until those funds actually get deposited. For now, they’re only deductions from net asset value, but during a phase of very low option premiums they are more important than ever in trying to develop a predictable stream of income from existing or new assets, as long as their value gets recovered by shares over a short time frame.

Daily Market Update – August 28, 2014 (9:00 AM)

While the market will be closed this coming Monday in celebration of Labor Day, there was a nearly 20 minute period of time yesterday when the S&P 500 stayed in a 0.10 range. You would have been excused for believing that the Labor Day holiday had already arrived.  I actually rebooted my computer twice, because I thought the program had frozen.

Still the S&P 500 was able to set another new record, using every bit of the 0.10 point trading range to close precisely that amount higher.

This morning is giving initial appearances of taking a break from the past three weeks of recovery from the transient decline that had everyone preparing for Armageddon and introducing the word “volatility” into their lexicons.

With the release of GDP statistics and Jobless claims a little later in the morning the futures had not changed very much. They continued to point to a lower open, despite some improvement in the GDP, after a couple of very disappointing reports earlier in the year.

With economic news not being much of a factor lately, the only real thing that the market has responded to has been geo-political news and in the past week it seems to have turned a blind eye to events, or at least their reporting, perhaps after having learned from a series of reactions and over-reactions.

Somewhat amazingly the market hasn’t seemed to care about the vary same kind of news that had so consistently upended it in recent weeks, even when there appears to be independent corroboration, thereby elevating the state from that of rumor.. Despite some dour news in the Ukraine – Russia conflict, there appears to be no real reaction, with an apparent expectation that everyone will come out singing praises of peace.

I don’t know how realistic that image is, but as summer ebbs and a Russian winter looms there is certainly bound to be a different kind of offensive that will tax everyone’s credulity regarding Russian intentions and that can only further depress European economies.

On a positive note that could see a shift into US equities, but that’s all in the future and lately the market seems to have stopped discounting the future as it used to do back in the old days.

With this week now having entered into that period that I usually start looking for rollover opportunities, but with relatively little to potentially roll over, and still having cash to spend, there is still a possibility of adding some new positions with either a very short term time frame or more likely, with expirations next week, which currently has only a single position set to expire.

Since next week is already a shortened one who knows what opportunities will pop up and just how puny the premiums might be unless those opportunities happen very early in what’s left of the week. So with that in mind, I would like to see that kind of opportunity present itself as this week hasn’t had too much in the way of option income generating activity, although there have been more than the usual number of dividend payers.

The latter, however, doesn’t really count until those funds actually get deposited. For now, they’re only deductions from net asset value, but during a phase of very low option premiums they are more important than ever in trying to develop a predictable stream of income from existing or new assets, as long as their value gets recovered by shares over a short time frame.

Daily Market Update – August 27, 2014 (Close)

The S&P 500 doesn’t get the attention from most people that the DJIA does, but it got its fair share yesterday as it eked out a close above 2000 for the very first time.

The milestone was celebrated on the national news, whereas it rarely gets otherwise mentioned, other than being briefly posted on screen along with other closing prices, When the DJIA hits a new record high, its announcement is obligatory, but not so for the S&P 500.

Yesterday was different, though. The world loves a round number and inevitably discussion will begin regarding the amount of time taken to double that index comparing it to previous round numbers. 500 in 1995, which was quickly doubled and 1000 in 1998, which was finally doubled after 16 years.

This morning the chairman of the S&P 500 Index Committee commented, in passing, that money was coming off the sidelines. Unfortunately, there was no follow-up to that comment, neither to clarify it, question it or interpret it.

It would be hard to imagine a doubling at the same pace as occurred between 1995 and 1998, which was fueled by the dot com boom, but now in hindsight the 16 years taken to get to this point seems so long and so slow, but along the way there were a few obstacles, such as the dot com bust and the financial crisis.

The belief by David Blitzer of S&P 500 that money is now coming off the sidelines should either make people very happy or very cautious. There’s reason to be both, but it’s the time frame for each that is the challenge.

Whether to be ebullient or cautious depends on whether the psychological component of investing, which also includes following pure emotion, trumps technical and fundamental analyses. If you’ve been keeping your cash on the sidelines and taking the number 2000 as an indication to do otherwise, its probably the latter

The early morning indication is of no follow through to yesterday’s gain, which was already in the process of being winnowed from the day’s earlier levels.

As the market came to its close it ended the day having traded in an incredibly flat tape. In fact, the SPDR S&P 500 traded in a $0.01 range for an 18 minute period.

That’s flat.

It’s hard to say what has been responsible for the sizeable gains of the past three weeks. The most likely explanation is that it is either the expected bounce back from the mini-correction which itself appeared to be related to geo-political news or the complete absence of such news in the past few weeks.

If following previous patterns of returning from mini-corrections the market will be seeking even higher levels from here. If there is, indeed, new money coming from the sidelines, that would also mean that there’s fuel for that sort of rally.

Normally, the first key to  that sort of increased participation is inflow into mutual funds and then increasing trading volume. Unfortunately, with the summer now coming to an end, it may be difficult to discern any sidelines cash fueled increase in trading volume from what would normally be expected once the summer has ended.

That means the first sign of anything percolating may simply be continued price acceleration.

So, do you get ahead of the curve or do you believe that the scenario is too simplistic?

I have no clue, but generally being reluctant to chase prices, I have a hard time biting at the lure being dangled. I don’t mind sitting back and letting the heavy lifting being done by the market and being the beneficiary for now.

With very few positions set to expire this week, it may end up being the quietest week of the year, unless some more new covered positions can be created, which might be the best benefit of a continued market climb.

Daily Market Update – August 27, 2014 (9:00 AM)

The S&P 500 doesn’t get the attention from most people that the DJIA does, but it got its fair share yesterday as it eked out a close above 2000 for the very first time.

The milestone was celebrated on the national news, whereas it rarely gets otherwise mentioned, other than being briefly posted on screen along with other closing prices, When the DJIA hits a new record high, its announcement is obligatory, but not so for the S&P 500.

Yesterday was different, though. The world loves a round number and inevitably discussion will begin regarding the amount of time taken to double that index comparing it to previous round numbers. 500 in 1995, which was quickly doubled and 1000 in 1998, which was finally doubled after 16 years.

This morning the chairman of the S&P 500 Index Committee commented, in passing, that money was coming off the sidelines. Unfortunately, there was no follow-up to that comment, neither to clarify it, question it or interpret it.

It would be hard to imagine a doubling at the same pace as occurred between 1995 and 1998, which was fueled by the dot com boom, but now in hindsight the 16 years taken to get to this point seems so long and so slow, but along the way there were a few obstacles, such as the dot com bust and the financial crisis.

The belief by David Blitzer of S&P 500 that money is now coming off the sidelines should either make people very happy or very cautious. There’s reason to be both, but it’s the time frame for each that is the challenge.

Whether to be ebullient or cautious depends on whether the psychological component of investing, which also includes following pure emotion, trumps technical and fundamental analyses. If you’ve been keeping your cash on the sidelines and taking the number 2000 as an indication to do otherwise, its probably the latter

The early morning indication is of no follow through to yesterday’s gain, which was already in the process of being winnowed from the day’s earlier levels.

It’s hard to say what has been responsible for the sizeable gains of the past three weeks. The most likely explanation is that it is either the expected bounce back from the mini-correction which itself appeared to be related to geo-political news or the complete absence of such news in the past few weeks.

If following previous patterns of returning from mini-corrections the market will be seeking even higher levels from here. If there is, indeed, new money coming from the sidelines, that would also mean that there’s fuel for that sort of rally.

Normally, the first key to  that sort of increased participation is inflow into mutual funds and then increasing trading volume. Unfortunately, with the summer now coming to an end, it may be difficult to discern any sidelines cash fueled increase in trading volume from what would normally be expected once the summer has ended.

That means the first sign of anything percolating may simply be continued price acceleration.

So, do you get ahead of the curve or do you believe that the scenario is too simplistic?

I have no clue, but generally being reluctant to chase prices, I have a hard time biting at the lure being dangled. I don’t mind sitting back and letting the heavy lifting being done by the market and being the beneficiary for now.

With very few positions set to expire this week, it may end up being the quietest week of the year, unless some more new covered positions can be created, which might be the best benefit of a continued market climb.

Daily Market Update – August 26, 2014 (Close)

Yesterday was just another day in what suddenly is becoming the same runaway train as has been seen throughout the past two years.

I don’t spend too much time looking at charts, but you do have to be impressed by the S&P 500 chart of the past two years. I’m far from a technician, but it’s hard to not notice a periodicity that demonstrates market dips, generally every 2 to 4 months and then predictable bounces higher.

Then, on top of that, it’s hard not to notice the fact that the lows encountered at each of those pullbacks are higher than the previous lows and the highs are higher than the previous highs.

For the technician that’s certainly a sign of more good things to come.

Certainly those who lived by the  credo “don’t fight the Fed” were well rewarded for believing in that correlation, while those who similarly believed “don’t fight the trend” were equally rewarded.

The latter, though, is harder to abide, as there are so many invitations to try and game or time the trend, especially when it is punctuated by reasonably predictable ups and downs. Even with regular patterns there can still be some variation in periodicity and magnitude that can be sought to be exploited.

That was also the case from 2004 to early 2008 and then suddenly it wasn’t. But today, despite coming down from its intra-day highs, it still is.

With the S&P 500 hitting 2000 for the first time, the rally continued as the DJIA also hit a new high and the NASDAQ is closer to its generation ago high than many of us would have ever thought would occur in our lifetimes.

What really presents the challenge is similar to deciding whether small tremors, such as may be felt in California on such a regular basis are going to be harbingers for the big one.

Looking back at that 2004 to 2008 era with the great advantage of hindsight its tempting to suggest that the tremor felt in July 2007 may have taken the market to a low point that was below the line established by the previous two low points.

What does that mean?

Last night I was at a county hearing and had an opportunity to question an “expert” on his studies that he had portrayed as being of a scientific nature and had taken great pains to describe his methodology. His conclusions were then based upon these studies which were presumed to have validity, based upon systematic analysis.

He kept referring to the data he gathered as “facts,” with the expectation that there could only be one conclusion drawn from facts, when in fact, they were nothing more than data points. Facts are subject to interpretation, while data points are subject to analysis and then interpretation. and were subject to interpretation.

Upon questioning, he admitted that his conclusion, which were very firmly held, was based on only 4 data points and, in fact, there was no statistically significant validity to his claims, as he had also not performed any kind of statistical analysis there being so few points. Upon questioning, it was also clear that despite the manner in which he represented himself, he had no concept of simple and basic statistical concepts.

That, of course, didn’t stop him from the liberal use of the word “significant,” until ultimately questioned about its use.

The technical analysis and chart study isn’t very different.

The suggestion is there, but the validity is missing.

Still, it’s hard to argue with observable “facts.” The market keeps moving higher, despite attempts, that are half-hearted at best.

The question becomes one of recognizing the tremor that counts. The more tremors we experience that turn out to be meaningless, the more likely we are to ignore that which happens around us.

But the question “what does that mean?” again is worth asking.

Despite a market that seems to be very nervous about any challenges and despite a market that demonstrates a desire to ignore those challenges as quickly as possible, there is reason to continue having a foot in both worlds. One that exercises some caution and one that is hopeful of the trend continuing.

If you have cash that means there is reason to use it and reason to not use it all.

If there are profits? Take them. If there are profits to be made? Take the opportunities.

The uncertainty and the potential for opportunity are the only certainties. I plan to pay attention to both as the summer is soon a distant memory and some more serious activity comes our way.

Daily Market Update – August 26, 2014 (9:00 AM)

Yesterday was just another day in what suddenly is becoming the same runaway train as has been seen throughout the past two years.

I don’t spend too much time looking at charts, but you do have to be impressed by the S&P 500 chart of the past two years. I’m far from a technician, but it’s hard to not notice a periodicity that demonstrates market dips, generally every 2 to 4 months and then predictable bounces higher.

Then, on top of that, it’s hard not to notice the fact that the lows encountered at each of those pullbacks are higher than the previous lows and the highs are higher than the previous highs.

For the technician that’s certainly a sign of more good things to come.

Certainly those who lived by the  credo “don’t fight the Fed” were well rewarded for believing in that correlation, while those who similarly believed “don’t fight the trend” were equally rewarded.

The latter, though, is harder to abide, as there are so many invitations to try and game or time the trend, especially when it is punctuated by reasonably predictable ups and downs. Even with regular patterns there can still be some variation in periodicity and magnitude that can be sought to be exploited.

That was also the case from 2004 to early 2008 and then suddenly it wasn’t.

What really presents the challenge is similar to deciding whether small tremors, such as may be felt in California on such a regular basis are going to be harbingers for the big one.

Looking back at that 2004 to 2008 era with the great advantage of hindsight its tempting to suggest that the tremor felt in July 2007 may have taken the market to a low point that was below the line established by the previous two low points.

What does that mean?

Last night I was at a county hearing and had an opportunity to question an “expert” on his studies that he had portrayed as being of a scientific nature and had taken great pains to describe his methodology. His conclusions were then based upon these studies which were presumed to have validity, based upon systematic analysis.

He kept referring to the data he gathered as “facts,” with the expectation that there could only be one conclusion drawn from facts, when in fact, they were nothing more than data points. Facts are subject to interpretation, while data points are subject to analysis and then interpretation. and were subject to interpretation.

Upon questioning, he admitted that his conclusion, which were very firmly held, was based on only 4 data points and, in fact, there was no statistically significant validity to his claims, as he had also not performed any kind of statistical analysis there being so few points. Upon questioning, it was also clear that despite the manner in which he represented himself, he had no concept of simple and basic statistical concepts.

That, of course, didn’t stop him from the liberal use of the word “significant,” until ultimately questioned about its use.

The technical analysis and chart study isn’t very different.

The suggestion is there, but the validity is missing.

Still, it’s hard to argue with observable “facts.” The market keeps moving higher, despite attempts, that are half-hearted at best.

The question becomes one of recognizing the tremor that counts. The more tremors we experience that turn out to be meaningless, the more likely we are to ignore that which happens around us.

But the question “what does that mean?” again is worth asking.

Despite a market that seems to be very nervous about any challenges and despite a market that demonstrates a desire to ignore those challenges as quickly as possible, there is reason to continue having a foot in both worlds. One that exercises some caution and one that is hopeful of the trend continuing.

If you have cash that means there is reason to use it and reason to not use it all.

If there are profits? Take them. If there are profits to be made? Take the opportunities.

The uncertainty and the potential for opportunity are the only certainties. I plan to pay attention to both as the summer is soon a distant memory and some more serious activity comes our way.

Daily Market Update – August 25, 2014 (Close)

Looking back, last week was an odd one.

Looking ahead, this week may be equally so, but for different reasons.

I don’t really recall the last time that not a single new position was from the Weekend Update playlist, but last Monday’s strong weekly opening saw immediate jumps in the playlist components and made them less desirable.

That part was true for today, as well.

Couple that with last week being another week of just a few scant new position purchases and there was little opportunity to follow the script.

This week appeared to be ready to get off to a moderately positive start as there was no substantive geo-political news over the weekend, no blockbuster comments coming from Jackson Hole and little on the scheduled economic news front to act as a potential challenge.

That all sounded good, especially if your sights are set on a very short term horizon.

But the continued strength led to a different problem, especially in an already volume challenged environment. No one wanted to trade.

With a lot of assignments last week I had cash to take advantage of any opportunities that may have appeared, but there weren’t very many willing buyers of options and there was lots of price rigidity. But as the week got ready to open I found myself not particularly interested in too much risk, anyway, and wanted to be focused more on blue chips, with the possible exception of some earnings related trades, that as usual have elevated risk.

However, because there are so few rollover opportunities as we enter this week and also so few opportunities for assignment to help offset some of the funding necessary for next week, there was reason to try and establish some new weekly positions, as it is true that it takes money to make money.

But as with most of those weekly scripts there has to be room for re-writes that take a measure of what appears before you. At the week’s outset I would have loved the idea of accumulating more dividends and focusing on blue chips, but that could easily be subject to change.

Today, no one appeared very willing to move on price. As the volatility is so very low and the premiums are fairtly pathetic, increasingly every penny becomes more significant part of the return and is ahrder and harder to let go.

With relatively few positions already in place that are set to expire this Friday, I wasn’t thinking of spending too much time looking at expanded weekly contracts, whose premiums are severely challenged by the continuing low volatility environment. By the same token, with a number of positions already having contracts expiring at the cycle’s end, I also wasn’t too not anxious to add to those with four weeks still left to go. However, some of the potential trades for this week, such as McDonalds, which is also ex-dividend, may be better as a monthly trade, to also attempt to capitalize on the possibility for capital appreciation as well.

That’s part of the theme of this week’s playlist, as the majority of the positions have under-performed the S&P 500 over the past two months and may have some capability of making up for those losses, at least in relative terms.

Since it really is a fool’s game to try and time markets or even individual stocks, some of those depressed positions may still need some time to acquit themselves and the monthly contracts may be better suited, despite the low premiums.

It’s always nice to have a plan, it’s just too bad that there is no shortage of factors to alter the plan and no shortage of conflicting considerations in its implementation.

P.S. On a bookkeeping note, if you have shares of Holly Frontier and had sold calls on that position, your contracts have been adjusted by $0.50 to reflect the special $0.50 dividend, that is made on a quarterly basis, yet is somehow still “special.” Because of that nature the strike levels are all adjusted to reflect the distribution of that additional dividend, as long as it’s more than $0.125/share..

Holly Frontier will also go ex-dividend on August 28th for its regular $0.32 quarterly dividend, so the threshold price target is $50.82, before any rational person would consider making an early exercise in order to capture the dividend. However, the use of the September 20 option means that a truly rational person would likely want to see a price somewhat greater than $50.82, due to the additional time value remaining in the option, that may make its trading more valuable than capturing a dividend.

Daily Market Update – August 25, 2014 (8:30 AM)

Looking back, last week was an odd one.

I don’t really recall the last time that not a single new position was from the Weekend Update playlist, but last Monday’s strong weekly opening saw immediate jumps in the playlist components and made them less desirable.

Couple that with another week of just a few scant new position purchases and there was little opportunity to follow the script.

This week appears to be ready to get off to a moderately positive start as there was no substantive geo-political news over the weekend, no blockbuster comments coming from Jackson Hole and little on the scheduled economic news front to act as a potential challenge.

That all sounds good, especially if your sights are set on a very short term horizon.

With a lot of assignments last week there is cash to take advantage of any opportunities that may appear, but as the week gets ready to open I find myself not particularly interested in too much risk and may be focused more on blue chips, with the possible exception of some earnings related trades, that as usual have elevated risk.

However, because there are so few rollover opportunities as we enter this week and also so few opportunities for assignment to help offset some of the funding necessary for next week, there is reason to try and establish some new weekly positions, as it is true that it takes money to make money.

But as with most of those weekly scripts there has to be room for re-writes that take a measure of what appears before you. At the week’s outset I would love the idea of accumulating more dividends and focusing on blue chips, but that could easily change.

With relatively few positions already in place that are set to expire this Friday, I will probably not spend too much time looking at expanded weekly contracts, whose premiums are severely challenged by the continuing low volatility environment. By the same token, with a number of positions already having contracts expiring at the cycle’s end, I’m not anxious to add to those with four weeks still left to go. However, some of the potential trades for this week, such as McDonalds, which is also ex-dividend, may be better as a monthly trade, to also attempt to capitalize on the possibility for capital appreciation as well.

That’s part of the theme of this week’s playlist, as the majority of the positions have under-performed the S&P 500 over the past two months and may have some capability of making up for those losses, at least in relative terms.

Since it really is a fool’s game to try and time markets or even individual stocks, some of those depressed positions may still need some time to acquit themselves and the monthly contracts may be better suited, despite the low premiums.

It’s always nice to have a plan, it’s just too bad that there is no shortage of factors to alter the plan and no shortage of conflicting considerations in its implementation.

P.S. On a bookkeeping note, if you have shares of Holly Frontier and had sold calls on that position, your contracts have been adjusted by $0.50 to reflect the special $0.50 dividend, that is made on a quarterly regular basis, yet is somehow still “special.” Because of that nature the strike levels are all adjusted to reflect the distribution of that additional dividend, as long as it’s more than $0.125/share..

Holly Frontier will also go ex-dividend on August 28th for its regular $0.32 quarterly dividend, so the threshold price target is $50.82, before any rational person would consider making an early exercise in order to capture the dividend. However, the use of the September 20 option means that a truly rational person would likely want to see a price somewhat greater than $50.82, due to the additional time value remaining in the option, that may make its trading more valuable than capturing a dividend.

                                                                                                                                   

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

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

Today’s possible outcomes include:

Assignments: BBY, DD, DG, DOW, EBAY, MET

Rollovers:  WAG, WFM

Expirations:   BX, LVS

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

Daily Market Update – August 21, 2014 (Close)

After all of the talk last week about how it was going to be the best performing in the previous 6 weeks, all it took was a single murmuring of some armed conflict to derail that locomotive. Never mind that the reports were never verified.

In a world where there’s not video tape of absolutely everything that goes on, there’s nothing to have confirmed that market rattling news. Nor were there any denials from the other side, though, so above all, it was confusion that reigned and the market hates confusion.

When you’re on edge anything can set you off.

Still, the week acquitted itself very nicely, despite the sell-off to end the week.

Without any real confirmation of everything just escalating into Armageddon, this week, if it ended after just 3 days of trading would have left last week in the dust, even if Friday was excluded from the results.

Now that the fourth trading day is in the record books the dust is even thicker. Much thicker.

The market had started this morning up 1.6% for the week and added on another 0.3%. Now only the challenge of some mis-spoken words coming from anyone’s lips that may be attending the Kansas City Federal Reserve’s meeting in Jackson Hole is scheduled to get in the way. If all goes as hoped and no one pulls the rug out then this stands to be the best week in 4 months and again laying claim to even more new closing record highs..

After Bernanke skipping last year’s meeting the eyes are once again focused there as Janet Yellen will be in attendance and is scheduled to deliver prepared remarks tomorrow. I don’t know how long they have been holding that meeting, but I found myself in Jackson Hole some 32 and 33 years ago, both times  in August and don’t remember any Federal Reserve types hanging out in the campground or the Cowboy Bar, but we may have just missed each other. There’s also a chance that I wasn’t paying too much attention,  but it was at least a year later before I had any interest in anything at all.

With attention focusing on the annual event out west the market looks to continue some of the previous three days worth of gains.

What has made this week interesting is that all for but a few minutes after the FOMC statement the market hasn’t really made any attempt to reverse the gains or take any profits.

That’s in fairly sharp contrast to the way the market has very tentatively found its way getting to new high after new high. If you’re a bull you will take comfort in the fact that the climb came bit by bit and had some mild reversals along the way.

“Slow and steady wins the race,” is the basic tenet at play and it should inspire confidence.

Still, despite all of the reasons to remain long in the market, albeit with some cash on the sideline in the event there is an opportunity to capitalize on any mis-steps, it’s clear that there are lots of nerves as there are lots of tender spots around the globe.

For now, none of that matters until it does. Today, it certainly didn’t matter, as it was another day of precious metals and interest rates, the competition, both heading lower.

With only a minimal number of new positions opened this week now comes the critical time to begin planning for the coming week which depends on some assignments to help rejuvenate cash and rollovers to put some discretionary cash into the pile.

While watching the market climb higher and assets growing along with the market, the only really tangible evidence of good times is action and the ability to do the rollovers and sell those options.

Hopefully tomorrow will have its share of good and tangible news, but if not, there’s always a Cowboy Bar around the corner to drown those sorrows.

Daily Market Update – August 21, 2014 (9:00 AM)

After all of the talk last week about how it was going to be the best performing in the previous 6 weeks, all it took was a single murmuring of some armed conflict to derail that locomotive. Never mind that the reports were never verified.

In a world where there’s not video tape of absolutely everything that goes on, there’s nothing to have confirmed that market rattling news. Nor were there any denials from the other side, though, so above all, it was confusion that reigned and the market hates confusion.

When you’re on edge anything can set you off.

Still, the week acquitted itself very nicely, despite the sell-off to end the week.

Without any real confirmation of everything just escalating into Armageddon, this week, if it ended after just 3 days of trading would have left last week in the dust, even if Friday was excluded from the results.

So far, the market is up 1.6% for the week and has only the challenge of some mis-spoken words coming from anyone’s lips that may be attending the Kansas City Federal Reserve’s meeting in Jackson Hole. If all goes as hoped and no one pulls the rug out then this stands to be the best week in 4 months and again within a hair’s breadth of more new records.

After Bernanke skpping last year’s meeting the eyes are once again focused there as Janet Yellen will be in attendance and is scheduled to deliver prepared remarks tomorrow. I don’t know how long they have been holding that meeting, but I found myself in Jackson Hole some 32 and 33 years ago, both times  in August and don’t remember any Federal Reserve types hanging out in the campground or the Cowboy Bar, but we may have just missed each other. There’s also a chance that I wasn‘t paying too much attention,  but it was at least a year later before I had any interest in anything at all.

With attention focusing on the annual event out west the market looks to continue some of the previous three days worth of gains.

What has made this week interesting is that all for but a few minutes after the FOMC statement the market hasn’t really made any attempt to reverse the gains or take any profits.

That’s in fairly sharp contrast to the way the market has very tentatively found its way getting to new high after new high. If you’re a bull you will take comfort in the fact that the climb came bit by bit and had some mild reversals along the way.

“Slow and steady wins the race,” is the basic tenet at play and it should inspire confidence.

Still, despite all of the reasons to remain long in the market, albeit with some cash on the sideline in the event there is an opportunity to capitalize on any mis-steps, it’s clear that there are lots of nerves as there are lots of tender spots around the globe.

For now, none of that matters until it does.

With only a minimal number of new positions opened this week now comes the critical time to begin planning for the coming week which depends on some assignments to help rejuvenate cash and rollovers to put some discretionary cash into the pile.

While watching the market climb higher and assets growing along with the market, the only really tangible evidence of good times is action and the ability to do the rollovers and sell those options.

Hopefully the next two days will have its share of good and tangible news, but if not, there’s always a Cowboy Bar around the corner to drown those sorrows.

Daily Market Update – August 20, 2014 (Close)

After two strong days that found the market reveling in the absence of any significant geo-political news, it appeared that this morning is going to get off to a flat start, but that didn’t last too long.

A flat start wouldn’t have been unusual on the morning of a scheduled FOMC statement release, especially one that’s expected to continue a year long string of fairly benign and inconsequential restatements of policy.

Where there may be some excitement is in Jackson Hole, where on Friday Federal Reserve Chairman Janet Yellen will be making some remarks at the annual retreat of the Kansas City Federal Reserve.

While she probably won’t say anything intended to excite anyone or catch anyone off guard, it’s usually a case of interpretation or sometimes an off the cuff remark or less than perfectly crafted answer to a question.

Sometimes, however, insights into a thought process can take people off guard or start speculation running wild as to the true beliefs that may underlie the public demonstration of idea s and beliefs.

While Janet Yellen is considered to be “dovish,” the new Vice-Chairman, the influential and highly regarded Stanley Fischer is considered to be a “hawk.” However, after some surprising dovish comments by Fischer in a recent speech in Sweden it should probably come as no surprise that  regardless of how any of these economists may be pigeon-holed they will still act based upon data, despite some potential for philosophical bias. However, our expectations have little flexibility for anything that deviates from those expectations.

Coming on Friday, those remarks may have some impact on a day that we can also reasonably expect something to happen on the Russia – Ukraine front. Either of those could move the markets which by now had started the morning within about 1% of their highs and finished the day brushing up right against those highs.

That’s an amazing turnaround from barely a week ago when suddenly everyone had discovered the concept of volatility and were all agog about the 30% and higher increase in volatility in the course of just a few days.

Looking at volatility now, which generally moves inversely with the market, you wonder where all of the noise has gone and why no one is pointing to the 30+% reduction in volatility in the past few days.

Over the next few days as we digest the FOMC and await the Jackson Hole meeting there isn’t much in the way of expectation for any significant activity. The first few days of this week have already seen the S&P 500 advance 1.3% on top of last week’s 1.2%. Add another 0.3% today and now we’re on track for the best week in 4 months. Up until last Friday’s sell-off that week was headed toward being the best in the previous 6 weeks, but ended up just missing that distinction.

But we’ll see.

Thus far, despite the strong advance higher the existing portfolio positions are still keeping pace, which gets to be very challenging once that advance gets to or exceeds the 1% level. That was certainly the case last week when existing positions badly trailed the index .

Any opportunity to generate additional portfolio income would help to keep pace with the market, but the low volatility is making it hard to justify the sale of calls on some positions, as the premiums are just so low that the offer such little income or protection in exchange for ceding some advance in share value.

As long as the market is moving higher and taking most positions along with it there’s little reason to accept a pittance and receive little in return, but as we’ve seen time and time again, all of the environment that you see around you can change in an instant.

All it takes is a mis-placed word here or there in a prepared text or a casual comment. Or maybe just another rumor of conflict or peace coming out of some corner of the world that most of us have never considered, but has suddenly set the world back into the glory days of  the cold war that we thought we had won.

In the meantime there’s no reason to not enjoy the move higher, although you might enjoy things even more if our collective expectations come under attack.

Daily Market Update – August 20, 2014 (8:00 AM)

After two strong days that found the market reveling in the absence of any significant geo-political news, it appears that this morning is going to get off to a flat start.

That itself isn’t unusual on the morning of a scheduled FOMC statement release, especially one that’s expected to continue a year long string of fairly benign and inconsequential restatements of policy.

Where there may be some excitement is in Jackson Hole, where on Friday Federal Reserve Chairman Janet Yellen will be making some remarks at the annual retreat of the Kansas City Federal Reserve.

While she probably won’t say anything intended to excite anyone or catch anyone off guard, it’s usually a case of interpretation or sometimes an off the cuff remark or less than perfectly crafted answer to a question.

Sometimes, however, insights into a thought process can take people off guard or start speculation running wild as to the true beliefs that may underlie the public demonstration of idea s and beliefs.

While Janet Yellen is considered to be “dovish,” the new Vice-Chairman, the influential and highly regarded Stanley Fischer is considered to be a “hawk.” However, after some surprising dovish comments by Fischer in a recent speech in Sweden it should probably come as no surprise that  regardless of how any of these economists may be pigeon-holed they will still act based upon data, despite some potential for philosophical bias. However, our expectations have little flexibility for anything that deviates from those expectations.

Coming on Friday, those remarks may have some impact on a day that we can also reasonably expect something to happen on the Russia – Ukraine front. Either of those could move the markets which by now are within about 1% of their highs.

That’s an amazing turnaround from barely a week ago when suddenly everyone had discovered the concept of volatility and were all agog about the 30% and higher increase in volatility in the course of just a few days.

Looking at volatility now, which generally moves inversely with the market, you wonder where all of the noise has gone and why no one is pointing to the 30% reduction in volatility in the past few days.

Over the next few days as we await both the FOMC and the Jackson Hole meeting there isn’t much in the way of expectation for any significant activity. The first few days of this week have already seen the S&P 500 advance 1.3% on top of last week’s 1.2%. Up until last Friday’s sell-off that week was headed to wrd being the best in the previous 6 weeks, but ended up just missing that distinction. At the moment, as we get ready to begin the third day of trading this week, we are already poised to proclaim this as being the best performance in the past 7 weeks.

But we’ll see.

Thus far, despite the strong advance higher the existing portfolio positions are still keeping pace, which gets to be very challenging once that advance gets to or exceeds the 1% level. That was certainly the case last week when existing positions badly trailed the index .

Any opportunity to generate additional portfolio income would help to keep pace with the market, but the low volatility is making it hard to justify the sale of calls on some positions, as the premiums are just so low that the offer such little income or protection in exchange for ceding some advance in share value.

As long as the market is moving higher and taking most positions along with it there’s little reason to accept a pittance and receive little in return, but as we’ve seen time and time again, all of the environment that you see around you can change in an instant.

All it takes is a mis-placed word here or there in a prepared text or a casual comment. Or maybe just another rumor of conflict or peace coming out of some corner of the world that most of us have never considered, but has suddenly set the world back into the glory days of  the cold war that we thought we had won.

In the meantime there’s no reason to not enjoy the move higher, although you might enjoy things even more if our collective expectations come under attack.