Category Archives: Daily Market Update

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

It’s often said that the market discounts the future and reflects the situation six months from now.

With another revision of the first quarter’s GDP now indicating a negative 2.9% GDP if you could go back in time by about 6 months, I would bet you that those investing would be pretty unhappy to discover that they were following a fantasy and plowing their money into that fantasy.

Except that there may now be much consequence for that kind of misrepresentation of the health of the economy.

With all of the reasons to believe that the economy had been growing, albeit slowly, it was believed to be growing and the market chugged along in anticipation that it would keep going that way.

The real optimists would shrug this off and simply say that six months from now our economy will be even more robust than it is today and that alone makes it reasonable to invest in stocks.

You do have to wonder whether such large revisions begin to put some seminal metrics into the same league as those provided, and regularly derided, by the Chinese government. Those numbers are routinely dismissed despite the fact that they will move the markets on the day of their release and then so frequently those moves are quickly reversed as investors remember that the data often has no basis in fact.

This morning as the revision came out the immediate response was negative, but that fairly quickly corrected itself. Coming off yesterday’s very surprising loss that accelerated into the close you might believe that any negative news would be magnified, but that’s not appearing to be the case.

Approaching mid-week, this is shaping up to be one of the slowest trading weeks that I can recall, especially when having so much to spend.

What I thought were relative bargains yesterday got caught up in the sell-off that characterized the afternoon and that has to be a concern for additional positions that may be considered for purchase. Given the current environment it would be nice to see something tangible to provide confidence that the market can sustain itself at these levels.

Despite assurances from the Federal Reserve that would favor stocks over bonds, the deluge of IPO offerings leaves a bad taste for many who remember that as being a clarion call for bad things to come.

While there may be a basis for that belief the rise of the market has been fairly slow, regular and sustained and isn’t the kind that could be grouped together with past speculative bubbles.

While the Employment Situation Report hasn’t been very important lately, I think that next week’s report may conceivably become a market mover if it doesn’t significantly advance the thought that there are many more people in a position to spend their money and support economic growth.

With what remains of this week, I hope that there is some opportunity to rollover positions or get some assignments, but my preference at this point would be to see rollovers as a means of generating income stream, rather than adding to the already ample cash reserve.

To its credit, given the horrible revision of this morning and sell-offs in Asia, the preliminary read on this morning’s market isn’t terribly bad, so you never really do know what awaits.

Turning away from the stock ticker may be done only at peril.

Daily Market Update – June 24, 2014 (Close)

There wasn’t too much that gave any reason to think that the market would behave much differently today than it did to begin the week.

My hope was that wouldn’t extend itself into my personal actions, because I can’t really recall the last time a week started without a single trade of any kind being made.

With the appearances of another flat start to the trading day it was hard to see where the contrast to yesterday was going to come from.

Any one who has a reason to give for the strong sell-off that materialized and then picked up steam in the early afternoon is just making it up. Nothing changed, although someone will surely point to some obscure signal on the charts and try to make everybody believe that they are idiots.

Ultimately the ending market change for the day isn’t very significant, as it’s what transpired in-between that has much in the way of importance. Yesterday was one of those days where there wasn’t much going on in-between the opening and closing bells.

Today was one of those days when there was lots of intra-day movement. If you’re selling options your favorite scenario is when there’s lots of movement but you don’t really go anywhere, especially if it happens all in the same day and you also happen to be lucky enough to have timed it just right.

When talking about volatility it also is not simply a case of looking at the beginning and at the end. It is really a measure of the variation that takes place in going from Point A to Point B. Yesterday was one of those days when the distance between those two points was nearly a straight line and with very little variance from the path.

Part of the reason that it was difficult making any trades yesterday was the lack of clarity regarding any short term directional move. Directly related to that was the extremely low premiums that were being offered for contracts of any kind. Neither call buyers nor put buyers had any real commitment or strongly held belief in their thesis and they surely weren’t willing to pay and put their money where their silent mouths used to be.

Trying to seek out decent premiums by looking at expanded weekly options, such as for next week’s shortened trading week, didn’t really offer anything worth pursuing, although news like an 8% drop in Dubai overnight could have some trickle down effects, such as necessitating sale of US assets in order to meet Dubai asset margin requirements.

But that’s pretty farfetched for the moment, although it could increase the uncertainty that feeds premiums.

Not that I want to be the guy that offers a reason for today’s sell-off, but that’s at least something to consider. It’s not an obscure technical, but it’s the best I could do.

For the remainder of the week I’m still hopeful that something will occur or at least some opportunities will make themselves known, but it may end up being an unusually slow week from every perspective.

Having money to invest makes it difficult to accept that fact, although as long as the portfolio does well it’s a little easier to have some patience when it comes to deploying that cash, although I and many others do like the flow of income that’s generated from activity and won’t simply generate itself, other than from the occasional dividend payment that finally gets credited to the account.

While no trades were made yesterday I still had my eyes on both Deere and Dow Chemical in order to capture those dividends. Unfortunately, my preference would have been looking at the July 3, 2014 expiration, but neither offered expanded weekly options and the monthly options weren’t offering the kind of reward that warranted the 4 week commitment. In fact, if bullish and shares do climb in value, those low premiums could end up being costly while awaiting expiration or a chance to close the positions early.

More unfortunately the market decided to accelerate its losses after the purchase of Dow Chemical shares, but there’s still tomorrow and many days after.

So with today in the books and it being a rare one sided day to the downside it will likely begin all kinds of speculation as to whether this is finally the correction that we’ve all been waiting for.

I for one really don’t want to hear any potential retreat in prices being referred to as “healthy,” at this point.

Even with lots of cash still looking for redeployment, I’d rather see some lack of health as long as that translated into a growing bottom line. If today was healthy I really don’t want any part of it.

.

Daily Market Update – June 24, 2014 (9:15 AM)

There’s not too much that gives any reason to think that the market will behave much differently today than it did to begin the week.

Hopefully that doesn’t extend itself into my personal actions, because I can’t really recall the last time a week started without a single trade of any kind being made.

With the appearances of another flat start to the trading day it’s hard to see where the contrast to yesterday is going to come from.

Ultimately the ending market change for the day isn’t very significant, as it’s what transpired in-between that has much in the way of importance. Yesterday was one of those days where there wasn’t much going on in-between the opening and closing bells.

When talking about volatility it also is not simply a case of looking at the beginning and at the end. It is really a measure of the variation that takes place in going from Point A to Point B. Yesterday was one of those days when the distance between those two points was nearly a straight line and with very little variance from the path.

Part of the reason that it was difficult making any trades yesterday was the lack of clarity regarding any short term directional move. Directly related to that was the extremely low premiums that were being offered for contracts of any kind. Neither call buyers nor put buyers had any real commitment or strongly held belief in their thesis and they surely weren’t willing to pay and put their money where their silent mouths used to be.

Trying to seek out decent premiums by looking at expanded weekly options, such as for next week’s shortened trading week, didn’t really offer anything worth pursuing, although news like an 8% drop in Dubai overnight could have some trickle down effects, such as necessitating sale of US assets in order to meet Dubai asset margin requirements.

But that’s pretty farfetched for the moment, although it could increase the uncertainty that feeds premiums.

For the remainder of the week I’m still hopeful that something will occur or at least some opportunities will make themselves known, but it may end up being an unusually slow week from every perspective.

Having money to invest makes it difficult to accept that fact, although as long as the portfolio does well it’s a little easier to have some patience when it comes to deploying that cash, although I and many others do like the flow of income that’s generated from activity and won’t simply generate itself, other than from the occasional dividend payment that finally gets credited to the account.

While no trades were made yesterday I still do have my eyes on both Deere and Dow Chemical in order to capture those dividends. Unfortunately, my preference would have been looking at the July 3, 2014 expiration, but neither offered expanded weekly options and the monthly options weren’t offering the kind of reward that warranted the 4 week commitment. In fact, if bullish and shares do climb in value, those low premiums could end up being costly while awaiting expiration or a chance to close the positions early.

Of course, if today ends up like yesterday and no trades are made, I’ll still get some solace from looking at the bottom line, as yesterday was worthwhile compared to the S&P 500, but that sort of thing can’t really be expected to continue in a passively held portfolio unless you’re either very lucky or very well informed.

I can’t count on either so my hope is that some activity will return before I no longer have any excuse to keep putting off the vegetable garden weeding.

Daily Market Update – June 23, 2014 (Close)

Not a single trade to start the week.

When did that last happen? I’ll save you the need to check your archives. It just hasn’t happened. I even had new trades coming out on the Monday after my heart attack when I basically had to hijack a wireless heart monitor to get a signal in a London hospital.

Based on the economic calendar it looked as if this may be a quiet week as the new monthly option cycle begins, but I wasn’t expecting a start like this one. Not only is there little of importance, but maybe because this is the first week of summer, there’s just very little in general. A big part of that is that not a single Federal Reserve Governor is giving a speech this week, so there is less likelihood of having someone in a position to actually impact policy saying something that’s either a slip of the tongue or gets to be mis-interpreted by anyone with a nervous finger or algorithm.

In addition, earnings season is pretty much at its end as the next season will get set to begin in about two weeks. While any given company can do as Intel did a couple of weeks ago and unexpectedly announce improved guidance that can propel markets or severely diminished guidance to shock markets, it’s not too likely that will happen.

Unless there are some real unforeseen surprises the only thing that may upset the market will be continued unraveling in Iraq and a significant rise in oil prices.

While growing US energy production makes us less hostage to oil, the reality is that our prices are still part of a worldwide market and if supply dries up in a world that’s increasingly thirsty for crude oil it will drive up our prices, as well, and slow things down on our end. While it would take a while for that to really show up on our economy the fears would begin immediately and could easily dampen the enthusiasm that Janet Yellen rekindled last week when she made it pretty clear that stocks were the way to go for now.

Not in so many words, but if you live in a world where the choice is between stocks and bonds, she gave little reason to believe that interest rates would be heading higher in 2014. Considering that much of the stock market weakness in 2014 has been related to the 10 year rate approaching 3%, you can draw a conclusion that if rates stay low then the market has reason to keep moving up even as Federal Reserve tapering continues.

This week I’m holding more cash than in about 3 months and put not even the slightest dent into that cash, but more importantly did nothing to generate any income, either.

The combating forces this week are much like they seem to be most every week.

With the market at more new highs and with so many stocks near their personal highs just how much do you believe that the pattern keeps continuing? Where do you find value?

Any effort in second guessing the forward movement of the market has proven wrong and I’ve definitely been on that side of things. Despite being pessimistic about the ability of the market to continue that pattern that hasn’t meant hibernating and completely abdicating the need to participate.

With money, but not to burn, in hand, I don’t envision this week being any different in terms of my willingness to let some of it go and try to generate some revenue.

The past few weeks have been relatively slow ones in opening new positions, but I expected this one would be somewhat more active, as I was willing to take cash down to about 25%. As a defensive move I wouldn’t be completely adverse to seeking July contracts instead of weekly ones, but with volatility still so low and the short term prospects seeming positive, it’s hard to justify tying up assets.

In hindsight I may believe differently, but for the moment it makes more sense to live for today.

With that said, but already having a number of positions set to expire this week, there may at least be some reason to look for a little diversification, perhaps toward next week’s shortened trading contracts.

In addition to that bit of defensiveness I wouldn’t mind continuing to look for dividend opportunities although those two will frequently find their stocks at or near their yearly highs.

But given all of these considerations none of them, nether individually nor in combination, have been unique. They have been the ones faced nearly early week for about the past two years.

That makes it a little easier to approach this coming week if only there’s something to get me to be able to push the “Submit” button.

Daily Market Update – June 23, 2014 (9:00 AM)

Based on the economic calendar it looks as if this may be a quiet week as the new monthly option cycle begins. Not only is there little of importance, but maybe because this is the first week of summer, there’s just very little in general. A big part of that is that not a single Federal Reserve Governor is giving a speech this week, so there is less likelihood of having someone in a position to actually impact policy saying something that’s either a slip of the tongue or gets to be mis-interpreted by anyone with a nervous finger or algorithm.

In addition, earnings season is pretty much at its end as the next season will get set to begin in about two weeks. While any given company can do as Intel did a couple of weeks ago and unexpectedly announce improved guidance that can propel markets or severely diminished guidance to shock markets, it’s not too likely that will happen.

Unless there are some real unforeseen surprises the only thing that may upset the market will be continued unraveling in Iraq and a significant rise in oil prices.

While growing US energy production makes us less hostage to oil, the reality is that our prices are still part of a worldwide market and if supply dries up in a world that’s increasingly thirsty for crude oil it will drive up our prices, as well, and slow things down on our end. While it would take a while for that to really show up on our economy the fears would begin immediately and could easily dampen the enthusiasm that Janet Yellen rekindled last week when she made it pretty clear that stocks were the way to go for now.

Not in so many words, but if you live in a world where the choice is between stocks and bonds, she gave little reason to believe that interest rates would be heading higher in 2014. Considering that much of the stock market weakness in 2014 has been related to the 10 year rate approaching 3%, you can draw a conclusion that if rates stay low then the market has reason to keep moving up even as Federal Reserve tapering continues.

This week I’m holding more cash than in about 3 months.

The combating forces this week are much like they seem to be most every week.

With the market at more new highs and with so many stocks near their personal highs just how much do you believe that the pattern keeps continuing?

Any effort in second guessing the forward movement of the market has proven wrong and I’ve definitely been on that side of things. Despite being pessimistic about the ability of the market to continue that pattern that hasn’t meant hibernating and completely abdicating the need to participate.

With money, but not to burn, in hand, I don’t envision this week being any different in terms of my willingness to let some of it go and try to generate some revenue.

The past few weeks have been relatively slow ones in opening new positions, but I expect this one will be somewhat more active, as I’m willing to take cash down to about 25%. As a defensive move I wouldn’t be completely adverse to seeking July contracts instead of weekly ones, but with volatility still so low and the short term prospects seeming positive, it’s hard to justify tying up assets.

In hindsight I may believe differently, but for the moment it makes more sense to live for today.

With that said, but already having a number of positions set to expire this week, there may at least be some reason to look for a little diversification, perhaps toward next week’s shortened trading contracts.

In addition to that bit of defensiveness I wouldn’t mind continuing to look for dividend opportunities although those two will frequently find their stocks at or near their yearly highs.

But given all of these considerations none of them, nether individually nor in combination, have been unique. They have been the ones faced nearly early week for about the past two years.

That makes it a little easier to approach this coming week.

Daily Market Update – June 20, 2014 (8:30 AM)

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

The possible outcomes today include:

Assignments: BX, CY, CY, FAST, GME, IP, LO, MET, RIG

Rollovers: LB, LOW

Expiration:  DRI, WY

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

Daily Market Update – June 19, 2014 (Close)

With the market getting a nice boost from Janet Yellen during her press conference, as it seemed as if interest rates would continue to stay low until at least the end of 2014, all that needs to be done now is maintain those gains to be able to end the June 2014 option cycle in good position.

While it’s never a good idea to begin spending the money that may never materialize it again is the question of where the next catalyst is going to come from. Of course, the question of when is also important, especially since it can pop up at any moment.

The precious metals, for example, showed today just how true that can be. Why it elected to do so on such a delayed basis is pretty unclear, if you’re like most others that are some how trying to associate it with yesterday’s news. More likely it’s associated with world instability that is heading toward a crescendo, rather than an interlude.

With another S&P 500 record close being established yesterday and with volatility, as expected, hitting another new low, it’s hard to envision anything adversely impacting the current path, even though any rational person should know better.

The old expression “don’t fight the Fed” has lots of truth to it and gives reason to believe that there will be some continuation of market strength.

The challenge, if there are widespread assignments this Friday is to know just how strongly to embrace a market that just doesn’t seem to know how to give anything back.

With potentially lots of money available for re-investment you have to wonder just how aggressively to throw it back into the market at these levels and place it at risk.

In many ways it’s not much different from inheriting a big chunk of money. Usually the worst thing to do is to go and put it all at one time to work. While doing so may mean having the good fortune of entering at a market low, it could also have the bad luck of entering at a market high.

There are probably very few people, despite the recent endorsement by the Federal Reserve, who would consider the market to be at it lows and would probably believe that we are closer to near term highs than we are to near term lows.

So that has to color any ideas of how that money, if it is indeed realized this Friday, gets used beginning next week.

Basically, I’m not expecting a wild spending spree, but I would like to see some more activity than over the past few weeks, although I would like to get back to one of my goals of reducing the total number of open positions, as well as the number of uncovered positions.

With the FOMC statement out of the way the only known remaining challenge for the week is tomorrow’s quadruple witching day.

Unlike 20 or more years ago when the process wasn’t as orderly as it is these days, those were really frightening days and huge moves were expected.

These days they tend to be pretty tame, but the slightest little snfu could have really magnified effects that quickly ripple through the markets.

As a precursor to tomorrow, today looks to get off to a sedate start and there’s no good reason to overlook opportunities that may occur today because eyes are on tomorrow’s expiration.

I don’t expect too much action today, but you never know and so having learned to never be surprised, it seemed as if today there was some opportunity to add shres of MasterCard and maybe, more importantly, close the SInclair Broadcasting position.

That one is all speculative, in that it is a good, solid company that has lots of growth ahead of it, but it may fall prey to some short term pressure if the Supreme Court decision, which may come as early as today opr tomorrow, finds in favor of Aereo, the start up that captures broadcast television transmissions and charges people for the use of their mobile device.

With the contract ending tomorrow and worth the chance that an adverse decision could come tomorrow, it just wasn’t worth a roll of the dice.

Sometimes you just have to take your profits and live for another day.

Note: Price updates will be delayed today

Daily Market Update – June 19, 2014 (8:30 AM)

With the market getting a nice boost from Janet Yellen during her press conference, as it seemed as if interest rates would continue to stay low until at least the end of 2014, all that needs to be done now is maintain those gains to be able to end the June 2014 option cycle in good position.

While it’s never a good idea to begin spending the money that may never materialize it again is the question of where the next catalyst is going to come from. Of course, the question of when is also important, especially since it can pop up at any moment.

With another S&P 500 record close being established yesterday and with volatility, as expected, hitting another new low, it’s hard to envision anything adversely impacting the current path, even though any rational person should know better.

The old expression “don’t fight the Fed” has lots of truth to it and gives reason to believe that there will be some continuation of market strength.

The challenge, if there are widespread assignments this Friday is to know just how strongly to embrace a market that just doesn’t seem to know how to give anything back.

With potentially lots of money available for re-investment you have to wonder just how aggressively to throw it back into the market at these levels and place it at risk.

In many ways it’s not much different from inheriting a big chunk of money. Usually the worst thing to do is to go and put it all at one time to work. While doing so may mean having the good fortune of entering at a market low, it could also have the bad luck of entering at a market high.

There are probably very few people, despite the recent endorsement by the Federal Reserve, who would consider the market to be at it lows and would probably believe that we are closer to near term highs than we are to near term lows.

So that has to color any ideas of how that money, if it is indeed realized this Friday, gets used beginning next week.

Basically, I’m not expecting a wild spending spree, but I would like to see some more activity than over the past few weeks, although I would like to get back to one of my goals of reducing the total number of open positions, as well as the number of uncovered positions.

With the FOMC statement out of the way the only known remaining challenge for the week is tomorrow’s quadruple witching day.

Unlike 20 or more years ago when the process wasn’t as orderly as it is these days, those were really frightening days and huge moves were expected.

These days they tend to be pretty tame, but the slightest little snfu could have really magnified effects that quickly ripple through the markets.

As a precursor to tomorrow, today looks to get off to a sedate start and there’s no good reason to overlook opportunities that may occur today because eyes are on tomorrow’s expiration.

I don’t expect too much action today, but you never know.

Daily Market Update – June 18, 2014 (Close)

With nothing noteworthy this morning it looks as if the market may be in a state of suspended animation until 2 PM when the FOMC statement is released.

In the few seconds afterward computers will scan the statement for any changes in wording or the frequency of certain words and may trigger buy or sell programs that can then, moments later, seem like they were the wrong initial decisions.

So sane people sit back and wait to see what’s left as things begin to settle.

And that is exactly the way the script was enacted, except that there wasn’t too much of a knee-jerk and that’s because there was really no material difference in the words or wording in the release.

At precisely 2 PM the market started moving higher and then took a little breather until about 10 minutes into the press conference, when the prepared statement was completed.

What was clear was that unless the FOMC moved the needle away from their $10 Billion in monthly tapering, perhaps adjusting in one direction or another by the loose $5 Billion so many were focused upon, there shouldn’t have been much reason to see any kind of marked reaction to the release.

Today’s post – 2 PM activity was nicely enhanced by the Chairman’s press conference, an activity started by Ben Bernanke, in his desire to make the thoughts behind the decisions to be more transparent.

Off hand, I can’t recall any slips of the tongue or inadvertent comments made by Bernanke during any of those press conferences that got the markets to over-react or misinterpret intent, but Janet Yellen may be remembered for a while for some misunderstandings during her first press conference.

But perhaps as with Ben Bernanke, who likely was part of some similar responses, that too will eventually be forgotten. But for now, the memory of that first Yellen press conference as Federal Reserve Chairman is still too fresh, so there is a continued expectation for some sort of slip and there are those who are standing ready to sell if they sense the slightest bit of negativity.

So far this has been a fairly dull week with extraordinarily little variance and range in trading. While that may change tomorrow and perhaps even on Friday, due to the quadruple witching, the bigger picture of low variation still seems to be intact, as there continues to be an absence of any catalyst to shake things up. Even with market movement coming out during today’s events, they’re not likely to have much lasting impact.

Even tomorrow may be an entirely different story.

For the past two years nothing has really had a substantive impact for more than a handful of trading sessions. While the early stages of conflict in Crimea got the market a little nervous for a few days, so far events in Iraq have done nothing to convince people to secure some profits and watch from the sidelines.

Even the revised GDP late last month did nothing to detract from the pervasive optimism that characterizes this market and the belief that there is very little risk for a reversal of fortune. With only expectations for economic growth going forward, even if only at a slow pace, there’s little reason to expect anything other than the current path.

So today is more of the same. Unless some screaming opportunity comes along, this being a Wednesday, the likelihood of adding a new position is small. This being an FOMC Wednesday makes it even smaller.

In the event that today’s events move the market strongly forward any chance to sell options on uncovered positions would be a well received gift. That market strength would also be a nice way to feel more secure about seeing sufficient assignments this Friday to be in a good position to start off the July 2014 option cycle with cash in hand.

With that in mind it now remains an exercise in sanity and patience for the next two days.

Daily Market Update – June 18, 2014 (9:00 AM)

With nothing noteworthy this morning it looks as if the market may be in a state of suspended animation until 2 PM when the FOMC statement is released.

In the few seconds afterward computers will scan the statement for any changes in wording or the frequency of certain words and may trigger buy or sell programs that can then, moments later, seem like they were the wrong initial decisions.

So sane people sit back and wait to see what’s left as things begin to settle.

Unless the FOMC moves the needle away from their $10 Billion in monthly tapering, perhaps adjusting in one direction or another by the loose $5 Billion so many were focused upon, there shouldn’t be much reason to see any kind of marked reaction to the release.

Today’s post – 2 PM activity will be potentially enhanced by the Chairman’s press conference, an activity started by Ben Bernanke, in his desire to make the thoughts behind the decisions to be more transparent.

Off hand, I can’t recall any slips of the tongue or inadvertent comments made by Bernanke during any of those press conferences that got the markets to over-react or misinterpret intent, but Janet Yellen may be remembered for a while for some misunderstandings during her first press conference.

But perhaps as with Ben Bernanke, who likely was part of some similar responses, that too will eventually be forgotten. But for now, the memory of that first Yellen press conference as Federal Reserve Chairman is still too fresh, so there is a continued expectation for some sort of slip and there are those who are standing ready to sell if they sense the slightest bit of negativity.

So far this has been a fairly dull week with extraordinarily little variance and range in trading. While that may change today and perhaps even on Friday, due to the quadruple witching, the bigger picture of low variation still seems to be intact, as there continues to be an absence of any catalyst to shake things up. Even if something comes out during today’s events, they’re not likely to have much lasting impact.

For the past two years nothing has really had a substantive impact for more than a handful of trading sessions. While the early stages of conflict in Crimea got the market a little nervous for a few days, so far events in Iraq have done nothing to convince people to secure some profits and watch from the sidelines.

Even the revised GDP late last month did nothing to detract from the pervasive optimism that characterizes this market and the belief that there is very little risk for a reversal of fortune. With only expectations for economic growth going forward, even if only at a slow pace, there’s little reason to expect anything other than the current path.

So today is more of the same. Unless some screaming opportunity comes along, this being a Wednesday, the likelihood of adding a new position is small. This being an FOMC Wednesday makes it even smaller.

In the event that today’s events move the market strongly forward any chance to sell options on uncovered positions would be a well received gift. That market strength would also be a nice way to feel more secure about seeing sufficient assignments this Friday to be in a good position to start off the July 2014 option cycle with cash in hand.

With that in mind it now remains an exercise in sanity and patience for the next few hours and perhaps the next few days.

Daily Market Update – June 17, 2014 (9:30 AM)

With the past few Tuesdays not having followed the pattern of moving higher that expectation has disappeared and the market looks as if it will begin trading on the mildly lower side, pretty much as it has done almost every day for the past few weeks.

With the FOMC statement to be released tomorrow it’s also not too likely that there will be much in the way of committed trading today or tomorrow in its advance. That that was the theory last month and the market also broke with its Tuesday advancing pattern, but surprisingly traded much strong on Wednesday in advance of the statement’s release..

Suddenly, however, there is some discussion about a possible surprise being contained in tomorrow’s FOMC statement and it all revolves around $5 billion.

Where that $5 billion comes in is that the taper was a process to reduce the $85 billion of monthly Federal Reserve purchases of Treasuries and other debt instruments that was to be done $10 billion at a time during each month until the entire $85 billion in purchases was concluded.

Apparently the people of the Federal Reserve are comfortable with managing an economy in the trillions but they may not have realized that 85 isn’t evenly divisible by 10, so that leaves a month where there may be a possibility of reducing Federal Reserve purchases by $15 billion instead of the $10 we had become accustomed to seeing.

That $5 billion may make some people nervous and may be the reason given if there is a sell off following tomorrow’s statement release if the amount of taper is increased to $5 billion.

None of that makes much sense.

No one is arguing the opposite occurring if the Fed decides to instead have only a $5 billion taper in a single month, perhaps to conclude the program or even split that last $5 billion price into the remaining 5 months expected for the taper to continue its run.

With a couple of new purchases yesterday I’m not certain of how many more there will be this week.

This may end up being a very quiet week for adding new positions and instead focuses on trying to position current positions for the next monthly cycle.

While the fate of those positions appears to be good in terms of a combination of assignments and rollovers I don’t particularly like having so many at risk at one time, subject to a singular event just two days before expiration.

I keep harping and bemoaning the low volatility, but one of the other detriments to low volatility is that it  cheapens the premiums disproportionately for forward weeks, making it difficult to justify selling longer term options in an attempt to diversify holdings by time.

While there are some open contracts for next week and even July, it would be better if there were more even distribution by expiration date. That would make it easier to ride out any sudden moves higher or lower and still collect a reasonable fee for having sold the option contracts. But for the past few months that hasn‘t been the case and weeks like this one creep up hoping to survive any potential surprises or knee-jerk reactions.

So today isn’t likely to be one in which I expect to do much trading, but would still welcome even a gratuitous Tuesday advance that might increase the chances of selling some calls on uncovered positions.

I’m not expecting much, but in most markets you’re most likely to be disappointed when you have expectations.

Daily Market Update – June 16, 2014 (Close)

After a few weeks of little happening, this week has lots to come. If there was a vacuum last week, it is in the process of cracking this week as external and internal events are in focus.

The first event was actually brewing over the weekend and despite the continued loss of stability in Iraq and the likelihood of greater conflict, disruption of oil supplies and whatever other things might be tangentially related, the market appears to have ignored those events as it got ready to start a new week.

After the first full day of trading there was absolutely no evidence that anyone really cared about what was going on in Iraq, even as oil prices reacted and escalation seemed likely.

In addition to that continued uncertainty we have the monthly FOMC statement due on Wednesday, Janet Yellen’s ensuing press conference and a quadruple witching on Friday.

With some big merger news to begin the week the market was still looking to begin with a mildly weak opening and other than for a brief moment when it was down about 50 points it never really wavered from the flat line for most of the day.

Not having replenished cash reserves this past week and having lots scheduled for expiration this Friday, the likelihood is that I won’t be looking to open too many new positions, but where possible would want to look at an expiration using an expanded weekly option.

With so many positions set to expire as the monthly cycle ends I’m especially wary of Wednesday’s FOMC event. That’s really the case as this week starts off with many of the expiring contracts appearing to have good likelihood of assignment.

A flat or mildly positive week this week would be ideal for being able to get a nice combination of assignments and rollovers, but that’s just not the way things work. While I never give up on hoping or trying to mentally will the market to move in a specific direction, I’m not certain it really helps.

As for about the past 6 months there’s not much reason to suspect that there would be anything substantively different in the wording of the FOMC statement, but you never know how the market will react for the remainder of that day and for the next day, as well.

Compound that with the press conference to follow and you have increased possibility of a significant reaction, especially if there are any misplaced comments or fuzzily communicated thoughts. So far, that has happened only once during Yellen’s tenure and she does tend to speak in a very deliberative manner, but it is a two way street. It’s not just what she says but it’s also in how the words are parsed and interpreted. Reality may be a bystander when it comes to the interpretations.

Because of that potential risk there may be some reason to look at rolling over some positions, if the opportunities present themselves, prior to the FOMC statement release.

That’s something that I consider doing before each such FOMC but rarely actually do, especially as the forward week’s premiums are usually insufficient to offset whatever still remains on the current week’s premiums and make the trade itself worthwhile.

That, too, is something that would change with an increase in volatility.

For yet another week I would be very happy to generate the week’s revenue from selling calls on currently uncovered positions, but last week was a disappointment in that regard, even while the rest of the week went nicely, despite the market’s weakness.

Hopefully the opportunity to do so will present itself but that would require a turnaround from the early morning futures and pre-open trading. AS it turned out at least two opportunities did appear, but they were small premiums as the market isn’t pricing in any kind of movement.

Otherwise the plan is to stick to relatively low risk new positions or those not too likely to be influenced by international conflict and keep some fingers crossed.

The purchase of additional shares in Las Vegas Sands was entirely for a chance to get its dividend and in the belie that iraq won’t have too much of an undue impact. The Lowes purchase was more in the line of perceived low risk, especually after a recent 5% decline from where shares were last assigned just a week ago.

We’ll see what tomorrow may bring.

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

After a few weeks of little happening, this week has lots to come. If there was a vacuum last week, it is in the process of cracking this week as external and internal events are in focus.

The first event was actually brewing over the weekend and despite the continued loss of stability in Iraq and the likelihood of greater conflict, disruption of oil supplies and whatever other things might be tangentially related, the market appears to have ignored those events as it gets ready to start a new week.

In addition to that continued uncertainty we have the monthly FOMC statement, Janet Yellen’s press conference and a quadruple witching on Friday.

With some big merger news to begin the week the market was still looking to begin with a mildly weak opening.

Not having replenished cash reserves this past week and having lots scheduled for expiration this Friday, the likelihood is that I won’t be looking to open too many new positions, but where possible would want to look at an expiration using an expanded weekly option.

With so many positions set to expire as the monthly cycle ends I’m especially wary of Wednesday’s FOMC event. That’s really the case as this week starts off with many of the expiring contracts appearing to have good likelihood of assignment.

A flat or mildly positive week this week would be ideal for being able to get a nice combination of assignments and rollovers, but that’s just not the way things work. While I never give up on hoping or trying to mentally will the market to move in a specific direction, I’m not certain it really helps.

As for about the past 6 months there’s not much reason to suspect that there would be anything substantively different in the wording of the FOMC statement, but you never know how the market will react for the remainder of that day and for the next day, as well.

Compound that with the press conference to follow and you have increased possibility of a significant reaction, especially if there are any misplaced comments or fuzzily communicated thoughts. So far, that has happened only once during Yellen’s tenure and she does tend to speak in a very deliberative manner, but it is a two way street. It’s not just what she says but it’s also in how the words are parsed and interpreted. Reality may be a bystander when it comes to the interpretations.

Because of that potential risk there may be some reason to look at rolling over some positions, if the opportunities present themselves, prior to the FOMC statement release.

That’s something that I consider doing before each such FOMC but rarely actually do, especially as the forward week’s premiums are usually insufficient to offset whatever still remains on the current week’s premiums and make the trade itself worthwhile.

That, too, is something that would change with an increase in volatility.

For yet another week I would be very happy to generate the week’s revenue from selling calls on currently uncovered positions, but last week was a disappointment in that regard, even while the rest of the week went nicely, despite the market’s weakness.

Hopefully the opportunity to do so will present itself but that would require a turnaround from the early morning futures and pre-open trading.

Otherwise the plan is to stick to relatively low risk new positions or those not too likely to be influenced by international conflict and keep some fingers crossed.

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Daily Market Update – June 13, 2014 (9:00 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:  none

Rollovers:  GME

Expirations:   EBAY, EBAY, HFC, PFE

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

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