Category Archives: Daily Market Update

Daily Market Update – June 12, 2014 (Close)

After a rare triple digit loss and no new record being set, the morning’s market doesn’t appear to be quite ready to follow through with more of the same. It doesn’t really appear to be ready to do much of anything, actually.

There still remains no identifiable catalyst to move the market in either direction and if yesterday’s thesis was correct, that Eric Cantor’s primary election loss was the culprit for the market decline, there’s no real reason for continuing pessimism. Those kind of stories don’t usually have much in the way of lasting power, even if they were accurate in the first place.

On the other hand, it’s the unforeseen that really shake things up and today, the most likely culprit for the market ringing up another triple digit loss is the rapidity of the deterioration in Iraq.

When oil and precious metals start to look appealing that’s not the best of environments of stocks.

While the market has been by and large unexciting and moving in smallish kind of steps, the same can’t be said for individual stocks, especially when earnings are in focus.

Today it’s LuLuLemon.

It started yesterday when its founder, who arguably started a slide in shares months ago when he made comments that were very disparaging of potential and actual customers, decided to pull his support of the current Chairman of the Board, saying that his interests weren’t aligned with the “core values” of the company.

Every time Chip Wilson, the founder, seems to open his mouth, if you’re a shareholder you feel as if your core values were violated.

Yesterday was no different, and came one day before earnings were to be released.

The Board expressed their disagreement with the founder and stemmed yesterday’s loss, but this morning’s diminished guidance is punishing shares and adding to their already depressed levels.

This, without the added drama of an errant founder, has been the story of many stocks the past few earnings seasons.

Despite a market that has been climbing higher many stocks are left behind or sent into tailspins and are taking longer to recover than ever before. as the market moves higher it does so on the backs of stocks rotating in and out of favor rather than pulling most along higher to varying degrees.

While there may be something unhealthy at LuLuLemon a market not trickling down to its component members is also something that may not be as robust as it seems.

While the volatility continues to be interpreted as reflecting investor “complacency,” I think that it’s hard to accept that interpretation. Very few are taking anything for granted which is unlike other periods when markets were making new highs. There is much more nervousness than is being acknowledged and that has to include the professional investor community which is reportedly under-performing the broad market.

In the case of hedge fund managers they are lifting some of their traditional hedging techniques in efforts to catch up to the market, while at the same time increasing their exposure to adverse events by having done so.

That should give them plenty of reason to be nervous.

While those make me wary, it doesn’t make me overly nervous.

The lack of enthusiasm for this market has to be taken as some sort of positive sign, but it is still very difficult to justify committing all to the prospect of the crowd being wrong. The way today worked out it may be even more difficult making that commitment, but as is usually the case suddenly some positions start to look more appealing.

Does the situation in Iraq really make Lowes and MasterCard less desirable?

For now, there’s little reason to make a directional bet and little basis for the belief that there will be any kind of clear directional path.

At the moment I’m not willing to bet much new money and may even want to recycle less than the already low levels as assignments occur.

The next two days will be ones looking for the opportunities to rollover stocks, although there aren’t too many for this week and perhaps realize some assignments in preparation for next week’s monthly option cycle end.

Hopefully next Wednesday FOMC statement and ensuing press conference by Janet Yellen won’t disrupt prices too much and leave us in a good position to make some decisions for July 2014.

.

Daily Market Update – June 12, 2014 (9:00 AM)

After a rare triple digit loss and no new record being set, the morning’s market doesn’t appear to be quite ready to follow through with more of the same. It doesn’t really appear to be ready to do much of anything, actually.

There still remains no identifible catalyst to move the market in either direction and if yesterday’s thesis was correct, that Eric Cantor’s primary election loss was the culprit for the market decline, there’s no real reason for continuing pessimism. Those kind of stories don’t usually have much in the way of lasting power, even if they were accurate in the first place.

While the market has been by and large unexciting and moving in smallish kind of steps, the same can’t be said for individual stocks, especially when earnings are in focus.

Today it’s LuLuLemon.

It started yesterday when its founder, who arguably started a slide in shares months ago when he made comments that were very disparaging of potential and actual customers, decided to pull his support of the current Chairman of the Board, saying that his interests weren’t aligned with the “core values” of the company.

Every time Chip WIlson, the founder, seems to open his mouth, if you’re a shareholder you feel as if your core values were violated.

Yesterday was no different, and came one day before earnings were to be released.

The Board expressed their disagreement with the founder and stemmed yesterday’s loss, but this morning’s diminished guidance is punishing shares and adding to their already depressed levels.

This, without the added drama of an errant founder, has been the story of many stocks the past few earnings seasons.

Despite a market that has been climbing higher many stocks are left behind or sent into tailspins and are taking longer to recover than ever before. as the market moves higher it does so on the backs of stocks rotating in and out of favor rather than pulling most along higher to varying degrees.

While there may be something unhealthy at LuLuLemon a market not trickling down to its component members is also something that may not be as robust as it seems.

While the volatility continues to be interpreted as reflecting investor “complacency,” I think that it’s hard to accept that interpretation. Very few are taking anything for granted which is unlike other periods when markets were making new highs. There is much more nervousness than is being acknowledged and that has to include the professional investor community which is reportedly under-performing the broad market.

In the case of hedge fund managers they are lifting some of their traditional hedging techniques in efforts to catch up to the market, while at the same time increasing their exposure to adverse events by having done so.

That should give them plenty of reason to be nervous.

While those make me wary, it doesn’t make me overly nervous.

The lack of enthusiasm for this market has to be taken as some sort of positive sign, but it is still very difficult to justify committing all to the prospect of the crowd being wrong.

For now, there’s little reason to make a directional bet and little basis for the belief that there will be any kind of clear directional path.

At the moment I’m not willing to bet much new money and may even want to recycle less than the already low levels as assignments occur.

The next two days will be ones looking for the opportunities to rollover stocks, although there aren’t too many for this week and perhaps realize some assignments in preparation for next week’s monthly option cycle end.

Hopefully next Wednesday FOMC statement and ensuing press conference by Janet Yellen won’t disrupt prices too much and leave us in a good position to make some decisions for July 2014.

.

Daily Market Update – June 11, 2014 (Close)

This morning’s pre-open trading brings something rarely seen lately.

The morning appeared to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels. It actually lasted that way, essentially unchanged from its initial near triple digit drop all throughout the day.

Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary.

That’s a stretch.

Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss.

That sounds reasonable. I’d follow their forecasting to the end of the world.

If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks.

For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets.

As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums.

While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume.

Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change.

Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may have potentially offered some reason to  add new positions, but today it didn’t offer that many reasons.

I wasn‘t really counting on it, so I’m not too disappointed that nothing much happened today.

I don’t know if  Eric Cantor can say the same.

Daily Market Update – June 11, 2014 (9:00 AM)

This morning’s pre-open trading brings something rarely seen lately.

The morning appears to be ready to open with some moderate losses and as a result the volatility is actually creeping up just a bit from its all time low levels.

Always needing a reason to explain even that which has no need for explanation, this is so far being blamed on the anticipated legislative gridlock that would ensue as a result of the unexpected loss of Eric Cantor in yesterday’s Virginia 7th District Congressional primary.

That’s a stretch.

Besides, it’s not as if things would get noticeably more grid locked, as legislation didn’t exactly flow smoothly with Eric Cantor in a position of leadership. But as far as predicting the future impact of this event, it may be useful to realize that those who predicted an easy and runaway Cantor victory are now predicting the aftermath of the loss.

That sounds reasonable. I’d follow their forecasting to the end of the world.

If indeed that primary upset is to blame for some mild nervousness this morning, it shouldn’t last very long, particularly since no really large unresolved items remain on the legislative agenda that would be expected to adversely impact the markets or even individual stocks.

For all of the talk and controversy around immigration legislation there’s little reason to believe its passage, defeat or delay would in any way move the markets.

As far as those issues that would possibly impact markets, such as budgets, debt ceilings and government shutdowns the loss of Cantor and his replacement by a Tea Party member may simply be the stimulus to bring the traditional arms of both parties to the realization that they have to work together and actually show accomplishments rather than throw tantrums.

While this morning has seen a tiny increase in volatility, you now increasingly hear discussion of volatility and how its low level is making it difficult to find and execute trades, which is an especially big deal for those whose livelihood is based upon trading volume.

Ordinarily you would think that the market reaching new highs day in and day out would attract all sorts of money and drive volume higher and higher, but that just hasn’t been the case and unless there’s some sort of break-out higher, it doesn’t appear as if that’s going to change.

Being a Wednesday, my expectation is usually for a slow personal trading day. However, market weakness, if it continues into the session may offer some reason to  add new positions.

I’m not counting on it, but of Eric Cantor can lose, then anything may be possible.

Daily Market Update – June 10, 2014 (Close)

It’s a Tuesday, so the market is supposed to be going higher, except for the fact that as soon as anyone realizes that such a pattern seems to exist, it begins to break down.

So for the past couple of Tuesdays you wouldn’t have been well served by following that pattern, that like so many doesn’t really have much of a basis in anything logical or rational.

The problem, however, is that while we’ve been talking about that pattern as having been in place for the past couple of months, it actually has many, many years of data behind it lending support to the notion that Tuesdays are far better market days than logic would dictate.

Yesterday was the kind of day that you would have thought would be the logical outcome in a week that really has very little planned news releases or scheduled events. It started quietly in the pre-opening trading and continued that way throughout the session.

Other than the three Federal Reserve Governors that gave talks yesterday and who aren’t generally among the most influential of the various voices, there aren’t even any more such scheduled events the rest of the week to move markets.

To its credit the market did almost set another new high and almost stayed true to its Tuesday self, but probably was more influenced by the nothingness that is supposed to characterize this week.

While I’m always wary of weeks that have lots of scheduled events I think that I get more concerned with these kind of quiet weeks that almost seem to be a sort of vacuum. While scheduled events can and certainly do move markets, they’re usually not the catalysts for anything that’s really sustained.

The reason for that is that the market reacts to data, although sometimes the reaction itself is irrational, but the flow of new data immediately changes the mindset. So often you see conflicting data one day after a market mover and the market responds in a completely different direction, as if the previous data had never existed.

However, in a vacuum there is no data, You’re left with your own insecurities and fears and if anything sets off a reaction it can simply feed on itself with nothing of factual basis coming along the way to counteract the fear.

Not that I expect that to be the case this week, because if I did I would have really been stockpiling cash.

Instead, it’s just another reason to be wary of a market that continues to set new highs but does so in a very tentative manner and with very low volume.

I’m still willing to bring cash reserves down a bit but there aren’t too many positions beckoning. With nearly 100 that I follow it is difficult to make a compelling case as frequently as I would like, but it is getting easier and easier to resist the lure of having money in the bank that wants to go out and have a good time.

Someone has to pay the price when that happens on an indiscriminate basis. It’s often hard enough to have to pay the price when everything seems to be well thought out, but add to that giving in to primal needs and you have some major headaches in the making.

Today, my headache was dealing with a crashing server that started acting up yesterday.

Finally by about 3 PM, after intermittent outages that usually lasted for a minute or so it looks as if the replacement was installed, so hopefully I won’t find myself ranting to myself or incessantly clicking the refresh button tomorrow, although a Wednesday, given its own pattern of slow trading would have been the perfect day to have gotten bogged down.

Daily Market Update – June 10, 2014 (9:30 AM)

It’s a Tuesday, so the market is supposed to be going higher, except for the fact that as soon as anyone realizes that such a pattern seems to exist, it begins to break down.

So for the past couple of Tuesdays you wouldn’t have been well served by following that pattern, that like so many doesn’t really have much of a basis in anything logical or rational.

The problem, however, is that while we’ve been talking about that pattern as having been in place for the past couple of months, it actually has many, many years of data behind it lending support to the notion that Tuesdays are far better market days than logic would dictate.

Yesterday was the kind of day that you would have thought would be the logical outcome in a week that really has very little planned news releases or scheduled events. It started quietly in the pre-opening trading and continued that way throughout the session.

Other than the three Federal Reserve Governors that gave talks yesterday and who aren’t generally among the most influential of the various voices, there aren’t even any more such scheduled events the rest of the week to move markets.

While I’m always wary of weeks that have lots of scheduled events I think that I get more concerned with these kind of quiet weeks that almost seem to be a sort of vacuum. While scheduled events can and certainly do move markets, they’re usually nit the catalysts for anything that’s really sustained.

The reason for that is that the market reacts to data, although sometimes the reaction itself is irrational, but the flow of new data immediately changes the mindset. So often you see conflicting data one day after a market mover and the market responds in a completely different direction, as if the previous data had never existed.

However, in a vacuum there is no data, You’re left with your own insecurities and fears and if anything sets off a reaction it can simply feed on itself with nothing of factual basis coming along the way to counteract the fear.

Not that I expect that to be the case this week, because if I did I would have really been stockpiling cash.

Instead, it’s just another reason to be wary of a market that continues to set new highs but does so in a very tentative manner and with very low volume.

I’m still willing to bring cash reserves down a bit but there aren’t too many positions beckoning. With nearly 100 that I follow it is difficult to make a compelling case as frequently as I would like, but it is getting easier and easier to resist the lure of having money in the bank that wants to go out and have a good time.

Someone has to pay the price when that happens on an indiscriminate basis. It’s often hard enough to have to pay the price when everything seems to be well thought out, but add to that giving in to primal needs and you have some major headaches in the making.

Daily Market Update – June 9, 2014 (Close)

Well this was a strange day.

Vexed by server problems on and off for much of the morning, Trading Alerts sent to Comcast accounts (only those beginning with the letter “R”) getting sent back as spam and a leaking hot tub.

Good thing there was very little planned for this week in the market. I already had my hands full..

As far as planned news, data releases or earnings there won’t be too much going on. Lots of eyes will simply be trained on shares of Apple which begin trading on a post-split basis today.

Following its run much higher after the announcement of the split and increased dividend, it’s hard to argue that substantive product releases or product news were responsible for that climb, so it will be interesting to see how those post-split shares respond to their new affordability, particularly since so many have expected that the actual split will lead to further price appreciation.

Great theories always meet their match in reality.

The week began at yet another new high, although the pre-open is almost at the flat line with absolutely nothing to react to other than some merger and buyout news. But that didn’t matter, because there was enough in the pipeline to make another new high by the time it was all over.

However, as opposed to the gains of last Thursday and Friday, this was back to the earlier pattern of a timid gain.

After a week that saw more assignments than new positions opened for the first time in a little while my cash reserves have risen above where they opened the previous week and despite the increasing highs, I am willing to spend some of that down but I think it’s time to be also increasingly selective.

Over the past month it has been clear that the advancing market isn’t taking everything along as the number of new highs isn’t keeping up with the overall market, as is usually the case when there is broad market strength.

In what is becoming a broken record, my preference again this week would be to find opportunities to sell calls on existing, yet uncovered positions and roll over as much as possible if assignments aren’t likely.. Again, with a fair number of positions set to expire this week I would like to diversify by date of contract expiration, but with volatility so low it’s hard to justify the additional time for the low additional premiums that result.

Ideally, with also a number of positions set to expire next week as the monthly contract ends, it would be nice to begin finding contracts for June 27, 2014 and beyond, but those opportunities are sparse, all falling victim to the low volatility environment.

With stock prices still so high and premiums so low there is a skew of the risk-reward proposition such that the risk attenuation offered by selling calls is decreased relative to the risk associated with buying shares at or near their highs.

The response to that challenge is to either look for positions that haven’t participated as much in the market rally and by extension don’t have as much to fall or give back or look for those that have participated and may have higher premiums in reflection of the increased risk below.

Tough call, but like most everything going an all or none route is probably not a good idea, so there may be reason to look at the extremes when thinking about how to redeploy some cash until the market makes a real statement and does something more than just tentative moves higher.

Stocks to watch this week include Family Dollar Stores, following news after Friday’s close that Carl Icahn had taken a large stake.

Fortunately, the DOH traded shares were rolled over on Friday, but with the low volatility it was difficult getting a trade with a net credit without going out quite a bit in time. Even then the net credit was not because of the additional time, but because earnings were to be released that week. With the announcement on Friday there was likely to be greater volatility built into the premium so it wasn’t unusual to discover there were some be greater rollover opportunities than there were this past Friday.

What I had hoped to do and what became possible was to rollover the $60 lot that expires next week, specifically to try and either capture the dividend or to get some additional premium in the event of early assignment and then move on with some new found and unexpected cash. Then came the opportunity to do the same with the $65 call that was created last Friday as part of a rollover.

In the first case by rolling up from $60 to $65 there was the need to take on a $4.10 debit, but iof shares are assigned early after tomorrow’s clse, which is likely if FDO stays welss above the strike, there will be an additional $0.90 squeezed out of the trade, although the $0.39 dividend won’t be captured.

For the re-rollover of the $65 contract that additional premium squeezed out was $0.50 in return for likely giving up the dividend, although with a $66.50 strike it may be a little less likely to be assigned early at the current levels.

All in all, it was an unusual trading day to go along with the rest of the day’s events, but at least now I can soak away, because the hot tub repair guy has got it all under control.

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

There’s very little planned for this week.

As far as planned news, data releases or earnings there won’t be too much going on. Lots of eyes will simply be trained on shares of Apple which begin trading on a post-split basis today.

Following its run much higher after the announcement of the split and increased dividend, it’s hard to argue that substantive product releases or product news were responsible for that climb, so it will be interesting to see how those post-split shares respond to their new affordability, particularly since so many have expected that the actual split will lead to further price appreciation.

Great theories always meet their match in reality.

The week begins at yet another new high, although the pre-open is almost at the flat line with absolutely nothing to react to other than some merger and buyout news.

After a week that saw more assignments than new positions opened for the first time in a little while my cash reserves have risen above where they opened the previous week and despite the increasing highs, I am willing to spend some of that down but I think it’s time to be also increasingly selective.

Over the past month it has been clear that the advancing market isn’t taking everything along as the number of new highs isn’t keeping up with the overall market, as is usually the case when there is broad market strength.

In what is becoming a broken record, my preference again this week would be to find opportunities to sell calls on existing, yet uncovered positions. Again, with a fair number of positions set to expire this week I would like to diversify by date of contract expiration, but with volatility so low it’s hard to justify the additional time for the low additional premiums that result.

Ideally, with also a number of positions set to expire next week as the monthly contract ends, it would be nice to begin finding contracts for June 27, 2014 and beyond, but those opportunities are sparse, all falling victim to the low volatility environment.

With stock prices still so high and premiums so low there is a skew of the risk-reward proposition such that the risk attenuation offered by selling calls is decreased relative to the risk associated with buying shares at or near their highs.

The response to that challenge is to either look for positions that haven’t participated as much in the market rally and by extension don’t have as much to fall or give back or look for those that have participated and may have higher premiums in reflection of the increased risk below.

Tough call, but like most everything going an all or none route is probably not a good idea, so there may be reason to look at the extremes when thinking about how to redeploy some cash until the market makes a real statement and does something more than just tentative moves higher.

Stocks to watch this week include Family Dollar Stores, following news after Friday’s close that Carl Icahn had taken a large stake.

Fortunately, the DOH traded shares were rolled over on Friday, but with the low volatility it was difficult getting a trade with a net credit without going out quite a bit in time. Even then the net credit was not because of the additional time, but because earnings were to be released that week. WIth the announcement on Friday there is likely to be greater volatility built into the premium so there may be greater rollover opportunities than there were this past Friday.

Today we’ll look to see whether there may be some opportunity to rollover the $60 lot that expires next week, specifically to try and either capture the dividend or to get some additional premium in the event of early assignment and then move on with some new found and unexpected cash.

Daily Market Update – June 6, 2014 (8:30 AM)

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

Today’s possible outcomes include:

Assignments:  JPM, MET

Rollovers:  FDO, GPS, LOW

Expirations:  BMY, BMY, EBAY, HFC,

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

Daily Market Update – June 5, 2014 (Close)

The ECB announcement, which had been talked about for more than a week, came off as expected and the market appeared to be showing no interest, continuing to trade with a modest upside biaas the announcement was made.

For the most part, modest moves, whether higher of lower have characterized the pre-opening sessions lately, as well as the regular trading sessions, so it appeared as if the ECB had absoluely no impact.

Very little has had an impact on the market as a whole, although individual stocks have been beaten up more than usual lately and have been staying down longer than usual.

Since the ECB news was widely expected, it’s not too surprising that the morning seemed to be showing no impact. In what I can’t quite understand, the overnight deposit rate in the EU is now negative, while the lending rate is down to 0.15%.

The latter is even better than some of those no interest loans from your credit card company, especially since there’s no origination fee. You just have to belong to the EU.

You would think that such low rates would have an incredible stimulatory effect on the economy, but if you look at own own banking experience in the aftermath of the financial meltdowns in 2007 and 2008, that really hasn’t been the case. While our own markets went much higher after easy money became available to the banking system, it wasn’t because of any ensuing economic boom. It’s not too likely that the same kind of market growth will be seen in the European markets and there’s certainly no expectation that multi-national businesses will experience much benefit from increased spending.

So that leaves tomorrow’s Employment Situation Report as the final test for the week that saw another record close on the S&P 500 yesterday and shows no sign of giving up on the climb.

At least that’s what you would have thought, until 10:16 AM, when the market abruptly turned around from it’s morning low point, which had the DJIA down about 20 points and the S&P 500 down 5 points from yesterday’s close.

The conventional wisdom is that this market was once again moved by the casual thoughts of hedge fund manager David Tepper, who said he now had less to worry about, except that those words came almost two hours after the turnaround started. In fact, the S&P went up only another 2 points after his comments and the DJIA went up just another 9 points.

So you can be the judge.

We still do have tomorrow to deal with.

Lately the talk has started looking at the growth in employment from a cynical perspective, beginning to question whether the recent large numbers have been sufficient or at least meaningful.

While I don’t expect much to happen with tomorrow’s announcement, that kind of skepticism can get magnified in the event that the reported number comes in as a disappointment, particularly now that weather is out of the equation.

But none of that changes what has been the goal this week.

What has gotten in the way of achieving the goal have been the tepid moves seen. Ideally, the time to sell new calls is when there is a strong move higher in a stock, but those have been few and far between, as most have simply just showed up this week and are going through the motions.

TOday was a real contra-distinction to the past couple of weeks and it was nice to see any kind of conviction.

With next week’s weekly contracts appearing today a nice move higher was especially welcome in that it more broadly trickled down to the market’s components that have been essentially left out of the party. At least there was some opportunity to take advantage of that strength today and hopefully there will be some mopre tomorrow.

For now, it’s just sitting back and waiting for any sign or any signal.

Daily Market Update – June 5, 2014 (8:45 AM)

The ECB announcement, which had been talked about for more than a week, came off as expected and the market appears to be showing no interest, continuing to trade with a modest upside bias. FOr the most part, modest moves, whether higher of lower have characterized the pre-opening sessions lately, as well as the regular trading sessions.

Very little has had an impact on the market as a whole, although individual stocks have been beaten up more than usual lately and have been staying down longer than usual.

Since the ECB news was widely expected, it’s not too surprising that the morning seems to be showing no impact. In what I can’t quite understand, the overnight deposit rate in the EU is now negative, while the lending rate is down to 0.15%.

The latter is even better than some of those no interest loans from your credit card company, especially since there’s no origination fee. You just have to belong to the EU.

You would think that such low rates would have an incredible stimulatory effect on the economy, but if you look at own own banking experience in the aftermath of the financial meltdowns in 2007 and 2008, that really hasn’t been the case. While our own markets went much higher after easy money became available to the banking system, it wasn’t because of any ensuing economic boom. It’s not too likely that the same kind of market growth will be seen in the European markets and there’s certainly no expectation that multi-national businesses will experience much benefit from increased spending.

So that leaves tomorrow’s Employment Situation Report as the final test for the week that saw another record close on the S&P 500 yesterday and shows no sign of giving up on the climb.

Lately the talk has started looking at the growth in employment from a cynical perspective, beginning to question whether the recent large numbers have been sufficient or at least meaningful.

While I don’t expect much to happen with tomorrow’s announcement, that kind of skepticism can get magnified in the event that the reported number comes in as a disappointment, particularly now that weather is out of the equation.

But none of that changes what has been the goal this week.

What has gotten in the way of achieving the goal have been the tepid moves seen. Ideally, the time to sell new calls is when there is a strong move higher in a stock, but those have been few and far between, as most have simply just showed up this week and are going through the motions.

With next week’s weekly contracts appearing today any nice move higher that more broadly trickles down to the market’s components may finally offer that opportunity.

For now, it’s just sitting back and waiting for any sign or any signal.

Daily Market Update – June 4, 2014 (Close)

With the exception of the monthly release of the FOMC statement, Wednesdays tend to be quiet trading days. Even the ADP employment statistics don’t do very much to shake up the market and today seemed to be no exception in the early morning and stayed true to that path.

At different times over the years different economic statistics have had acute importance. There was a time when it was the money supply. Then there was a time when it was the trade deficit. Inflation rate was once an important measure and so on and on.

This week there are still two potentially big events to come, but I don’t think that either will have too much of an impact, yet there’s very little reason to chance that belief.

A real contrarian would believe that all of the negative sentiment going around, even as we hit new highs, can be nothing more than a signal to commit even more to the long side.

While the crowd usually isn’t right, there has to be the realization that sometimes even the crowd gets it right.

How unusual is it that a market that continually reaches new highs does so on such consistently light volume?

This morning looked to get off to a mildly negative start and it wasn’t  too likely that the market would commit very strongly in either direction in advance of the ECB announcement and then the Employment Situation Report.

As the morning started, I didn’t think that it too unlikely that I’d be adding any new positions this week, although I believed that to be the case yesterday, as well. The difference is that today was Wednesday and that tends to be a slow trading day for me, as well as for the markets. For many positions the new option contracts don’t come out until tomorrow and the premium for just three days, especially in a low volatility environment makes it very difficult to justify taking on the risk. For a 7 day contract? Perhaps. But 3 days? Not likely.

One thing that caught my interest yesterday was a report by Goldman Sachs on commodities, which have basically been the bane of my recent existence.

They are shifting to a more bullish stance on commodities and they have been an influential voice in the past, although not always right and not always right away. Certainly not today.

This time, though, I hope they’re right and soon, too.

Not only for the direct impact on commodity prices, but also on the indirect impact which would be reflected in increasing industrial activity and economic growth.

Not much happens overnight, but if anything, I’m patient and hopeful that this time Goldman has gotten it right. If they have, it’s not too likely that the current stock market has anticipated that kind of growth and that could be a catalyst to go even higher, as it’s otherwise difficult to see what the catalyst would be.

This morning, as for the past 2 days, I was hopeful for some opportunities to find new cover for some positions, but as the market has been so quiet and trading within such a narrow range, there haven’t been too many of those opportunities, so it has been a very slow week, made sustainable only by last week’s rollovers.

As with most event driven markets, that situation could easily change tomorrow or Friday, or on both days. Hopefully, the week will be one that finds no disappointment in the awaited reports and some of the market’s climb higher trickles down to more stocks and carries them along for a change.

Too many have been left behind and the market has been very unforgiving while holding grudges for far too long.

Daily Market Update – June 4, 2014 (9:00 AM)

With the exception of the monthly release of the FOMC statement, Wednesdays tend to be quiet trading days. Even the ADP employment statistics don’t do very much to shake up the market and today seems to be no exception.

At different times over the years different economic statistics have had acute importance. There was a time when it was the money supply. Then there was a time when it was the trade deficit. Inflation rate was once an important measure and so on and on.

This week there are still two potentially big events to come, but I don’t think that either will have too much of an impact, yet there’s very little reason to chance that belief.

A real contrarian would believe that all of the negative sentiment going around, even as we hit new highs, can be nothing more than a signal to commit even more to the long side.

While the crowd usually isn’t right, there has to be the realization that sometimes even the crowd gets it right.

This morning looks to get off to a mildly negative start and it’s not too likely that the market would commit very strongly in either direction in advance of the ECB announcement and then the Employment Situation Report.

At the moment, I think that it’s unlikely that I’ll be adding any new positions this week, although I believed that to be the case yesterday, as well. The difference is that today is Wednesday and that tends to be a slow trading day for me, as well as for the markets. For many positions the new option contracts don’t come out until tomorrow and the premium for just three days, especially in a low volatility environment makes it very difficult to justify taking on the risk. For a 7 day contract? Perhaps. But 3 days? Not likely.

One thing that caught my interest yesterday was a report by Goldman Sachs on commodities, which have basically been the bane of my recent existence.

They are shifting to a more bullish stance on commodities and they have been an influential voice in the past, although not always right.

This time, I hope they’re right.

Not only for the direct impact on commodity prices, but also on the indirect impact which would be reflected in increasing industrial activity and economic growth.

Not much happens overnight, but if anything, I’m patient and hopeful that this time Goldman has gotten it right. If they have it’s not too likely that the current stock market has anticipated that kind of growth and that could be a catalyst to go even higher, as it’s otherwise difficult to see what the catalyst would be.

This morning, as for the past 2 days, I’m hopeful for some opportunities to find new cover for some positions, but as the market has been so quiet and trading within such a narrow range, there haven’t been too many of those opportunities, so it has been a very slow week, made sustainable only by last week’s rollovers.

As with most event driven markets, that situation could easily change tomorrow or Friday, or on both days. Hopefully, the week will be one that finds no disappointment in the awaited reports and some of the market’s climb higher trickles down to more stocks and carries them along for a change.

Daily Market Update – June 3, 2014 (Close)

For a change, this week seems to have a lot of news, but that doesn’t mean that much is expected to happen.

The biggest news yesterday was that the once really important ISM Manufacturing Index had to be corrected twice in one day due to an error in the calculation. There’s probably not too much reason that should happen, but neither the original release nor the revisions had much of an impact on the market which traded very lazily throughout the day, although did close at record highs once again.

With today being a Tuesday the reasonable expectation would be that the market would move higher. That’s especially expected because its also a week that contains the release of the Employment Situation Report, which has its own pattern.

However, as the morning’s futures  were shaping up, it looked as if Tuesday might not be paying too much attention to the playbook and hard as it may be to believe this Tuesday ended without setting a new record.

Still, it’s hard to discount the fact that yesterday was another new high, although it continued the incremental pattern of just adding a little more onto the top of the pile.

What’s needed to inspire confidence is blowing through the top. While on the surface that might seem as an open invitation to then plumb the depths, instead it usually encourages additional buying behavior.

The same isn’t necessarily the case in a downward moving market and one that is seemingly inflicting “death by a thousand cuts.” In that kind of case a large sell-off on top of all of those incremental losses, also called a “capitulation” is thought to be necessary to herald turning the corner and moving higher again.

Ultimately, it’s those slow gains or losses that create nervousness and despite the low level of volatility suggesting that the expectations of any kind of blow-out is low, there is quite a bit of nervousness. The low trading volume is one reflection of people not jumping in and eager to participate.

I’m in that camp and am reluctant to embrace the climbs higher and higher.

I saw a great statistic about 30 minutes from the end of yesterday’s close that may have altered somewhat by the close, but was telling.

“….another new record high close imminent for the S&P 500, with 41% of NYSE stocks advancing and 42% below their 50-day moving averages.”

 Where’s the good news in that unless you are lucky enough to be holding those select stocks that are actually moving higher?

In essence, the higher moving market is somewhat of an illusion and that’s why you’re not seeing or hearing anyone beating their chests proclaiming to have conquered or bested the market.

So that reluctance to embrace the climb higher is likely to be manifested by limited new purchases this week, as that seems to be the “new normal.”

Back when the market was rising and everything was going along for the ride it wasn’t unusual to have 10 or more new purchases in a single week, due to the prevalence of assignments.

But now, the market continued to rise, but is leaving many stocks behind and so the need to replace assigned positions is lessened for now.

As long as rollovers can get executed that’s not an issue, in fact, it is preferable. It allows income generation while still being able to keep reserves in the event of real opportunity. However, conceptually, the behavior isn’t encouraging for market prospects as a whole.

A healthy market is firing on all cylinders. This one is very tentative and I much prefer functioning in a market with clarity, even if that clarity points lower.

Again, today was the kind of day that I was more interested in finding any opportunity to sell new options on existing positions, although I wouldn’t have wanted to completely ignore any apparent opportunity that may have come along, but not many did.

Just as well, I wasn’t overly eager to spend too much along the way, anyway.

That may be the closest anyone gets to a “win-win” in this market.

Daily Market Update – June 3, 2014 (9:15 AM)

For a change, this week seems to have a lot of news, but that doesn’t mean that much is expected to happen.

The biggest news yesterday was that the once really important ISM Manufacturing Index had to be corrected twice in one day due to an error in the calculation. There’s probably not too much reason that should happen, but neither the original release nor the revisions had much of an impact on the market which traded very lazily throughout the day, although did close at record highs once again.

With today being a Tuesday the reasonable expectation would be that the market would move higher. That’s especially expected because its also a week that contains the release of the Employment Situation Report, which has its own pattern.

So far, as the morning’s futures are shaping up, it looks as if Tuesday may not be paying too much attention to the playbook.

Still, it’s hard to discount the fact that yesterday was another new high, although it continued the incremental pattern of just adding a little more onto the top of the pile.

What’s needed to inspire confidence is blowing through the top. While on the surface that might seem as an open invitation to then plumb the depths, instead it usually encourages additional buying behavior.

The same isn’t necessarily the case in a downward moving market and one that is seemingly inflicting “death by a thousand cuts.” In that kind of case a large sell-off on top of all of those incremental losses, also called a “capitulation” is thought to be necessary to herald turning the corner and moving higher again.

Ultimately, it’s those slow gains or losses that create nervousness and despite the low level of volatility suggesting that the expectations of any kind of blow-out is low, there is quite a bit of nervousness. The low trading volume is one reflection of people not jumping in and eager to participate.

I’m in that camp and am reluctant to embrace the climbs higher and higher.

I saw a great statistic about 30 minutes from the end of yesterday’s close that may have altered somewhat by the close, but was telling.

“….another new record high close imminent for the S&P 500, with 41% of NYSE stocks advancing and 42% below their 50-day moving averages.”

 Where’s the good news in that unless you are lucky enough to be holding those select stocks that are actually moving higher?

In essence, the higher moving market is somewhat of an illusion and that’s why you’re not seeing or hearing anyone beating their chests proclaiming to have conquered or bested the market.

So that reluctance to embrace the climb higher is likely to be manifested by limited new purchases this week, as that seems to be the “new normal.”

Back when the market was rising and everything was going along for the ride it wasn’t unusual to have 10 or more new purchases in a single week, due to the prevalence of assignments.

But now, the market continued to rise, but is leaving many stocks behind and so the need to replace assigned positions is lessened for now.

As long as rollovers can get executed that’s not an issue, in fact, it is preferable. It allows income generation while still being able to keep reserves in the event of real opportunity. However, conceptually, the behavior isn’t encouraging for market prospects as a whole.

A healthy market is firing on all cylinders. This one is very tentative and I much prefer functioning in a market with clarity, even if that clarity points lower.

Again, today will be a day that I’ll be much more interested in finding any opportunity to sell new options on existing positions, although wouldn’t completely ignore any apparent opportunity that may come along, but I’m not overly eager to spend too much along the way.