Category Archives: Daily Market Update

Daily Market Update – May 20, 2014 (Close)

With an occasional exception over the past 3 months Tuesdays have been a day for markets to move higher.

Eddy Elfenbein, of Crossing Wall Street, keeps track of statistical oddities and in the past has shown that there actually is a predilection by day of the week, for positive market performance, that transcends a mere three month period of observation.

Tuesdays have a reasonably long history of good performance, although you would be hard pressed to call it anything other than an anomaly. There isn’t much reason to suspect that a single day of the week would repeatedly be better than any other day of the week.

I haven’t figured out f there’s any way to take advantage of that, as the statistics don’t look at what kind of machinations may take place during each of those days and only looks at the end result, but today is one of those days that I’d like to see the pattern continue.

While yesterday saw a handful of new covered positions get sold there are far too many more sitting and not generating income. A few nice days higher could help remedy that, but the pre-open futures trading is giving no indication of a market set to move higher.

But today wasn’t one of those nice Tuesdays.

Instead, while the flow of earnings reports is now slowed, there are still more reports to come for another month and the ones coming through this morning are doing nothing to move the market higher.

While Dicks Sporting Goods, Staples and Home Depot are all retailers, they represent very different segments of retail and none of them have much good news to share this morning. While Home Depot isn’t getting sold off too heavily in the pre-open and eventually was one of the few gaining positions during the regular trading session. the others are looking at large losses and if the recent pattern holds their share price recovery will be slower than is usually the case.

With a broad range of retailers consistently presenting disappointing earnings or seeing profits rise, but in the face of falling revenues, you do have to wonder where the economic growth is hiding. It can’t all be concentrating itself in Nordstroms. Yet this disconnect between the reality and the perception is rarely mentioned, much less discussed.

Today, however, that changed and it was a prominent topic of discussion all through the day. Somehow, it had gone unnoticed up until this point, as so many have been left deluded by the impact of share buybacks and simply accepted the unequal comparisons of one quarter to the next, with EPS being reported on fewer and fewer shares in the public float.

After yesterday’s late day push higher the market was within about 0.3% of another new S&P 500 record before the morning’s trading began, as it pays no attention to the economy. While it’s often said that the market discounts the future if you look back 6 months, when the S&P 500 stood at 1800 I suppose you can make a case for today’s 1885 level, but if you go out a year in time it gets much harder to justify a 15% advance.

However, most would agree that the economy isn’t exactly humming along at the moment and that there’s still plenty of room for further economic growth ahead. Maybe that’s the fuel that has been advancing the market and will continue doing so. 

The anticipation of further growth to get us back to historical standards may be the driving factor, because we’re certainly not at a stage when the economy is red hot and the markets can be expected to start slowing down as less acceleration of growth becomes more likely.

But what does any of that mean for today or this week?

Not too much.

The plan remains the same. Not too many new positions, maybe a purchase here or there and just the hope that some of these good for nothing positions can begin to support themselves, even if it’s only something symbolic, as from an occasional DOH trade or two.

At least there’s always hope.

Daily Market Update – May 20, 2014 (9:00 AM)

With an occasional exception over the past 3 months Tuedays have been a day for markets to move higher.

Eddy Elfenbein, of Crossing Wall Street, keeps track of statistical oddities and in the past has shown that there actually is a predilection by day of the week, for positive market performance, that transcends a mere three month period of observation.

Tuesdays have a reasonably long history of good performance, although you would be hard pressed to call it anything other than an anomaly. There isn’t much reason to suspect that a single day of the week would repeatedly be better than any other day of the week.

I haven’t figured out f there’s any way to take advantage of that, as the statistics don’t look at what kind of machinations may take place during each of those days and only looks at the end result, but today is one of those days that I’d like to see the pattern continue.

While yesterday saw a handful of new covered positions get sold there are far too many more sitting and not generating income. A few nice days higher could help remedy that, but the pre-open futures trading is giving no indication of a market set to move higher.

Instead, while the flow of earnings reports is now slowed, there are still more reports to come for another month and the ones coming through this morning are doing nothing to move the market higher.

While Dicks Sporting Goods, Staples and Home Depot are all retailers, they represent very different segments of retail and none of them have much good news to share this morning. While Home Depot isn’t getting sold off too heavily in the pre-open, the others are looking at large losses and if the recent pattern holds their share price recovery will be slower than is usually the case.

With a broad range of retailers consistently presenting disappointing earnings or seeing profits rise, but in the face of falling revenues, you do have to wonder where the economic growth is hiding. It can’t all be concentrating itself in Nordstroms. Yet this disconnect between the reality and the perception is rarely mentioned, much less discussed.

After yesterday’s late day push higher the market is within about 0.3% of another new S&P 500 record, as it pays no attention to the economy. While it’s often said that the market discounts the future if you look back 6 months, when the S&P 500 stood at 1800 I suppose you can make a case for today’s 1885 level, but if you go out a year in time it gets much harder to justify a 15% advance.

However, most would agree that the economy isn’t exactly humming along at the moment and that there’s still plenty of room for further economic growth ahead. Maybe that’s the fuel that has been advancing the market and will continue doing so. 

The anticipation of further growth to get us back to historical standards may be the driving factor, because we’re certainly not at a stage when the economy is red hot and the markets can be expected to start slowing down as less acceleration of growth becomes more likely.

But what does any of that mean for today or this week?

Not too much.

The plan remains the same. Not too many new positions, maybe a purchase here or there and just the hope that some of these good for nothing positions can begin to support themselves, even if it’s only something symbolic, as from an occasional DOH trade or two.

Daily Market Update – May 19, 2014 (Close)

For the optimist there was reason to be so this morning.

The market closed strongly in the final two hours to end the week  That alone was comforting and gave reason to look forward to the start of the next week’s trading.

But beyond that with news over the weekend about AT&T’s proposed buyout of DirectTV and Pfizer’s newly sweetened offer for AstraZeneca. Put the two of those together and you had the appearances of “Merger Monday” re-appearing in our markets.

The good feeling that comes from mergers and buyouts often has a way of spreading through the markets as speculators start wondering which company will be the next target. Eventually that kind of speculation wears thin very quickly, but at least in its early stages most everyone is happy.

But the pre-open futures didn’t seem to be as optimistic and the market was pointing lower as both AstraZeneca and AT&T were much lower and only Pfizer was showing some kind of modest gain, as its offer again was being spurned, or at least the manner in which AstraZeneca was trading would indicate that the door has been closed.

If that’s the case there has to be some other blockbuster merger to move the market. As it is, I don’t  understand the economics of the AT&T buyout of DirectTV. While AT&T definitely needs that business in order to compete with Verizon and a future Comcast/Time Warner Cable union, the revenue from DirectTV can only fall as it will be offered at lower cost bundled packages to existing AT&T customers, as will AT&T service be bundled at a lower price to existing DirectTV customers.

$50 billion? I hope Verizon goes down in sympathy with AT&T because they appear now to have the advantage with regard to share price prospects once the news of Warren Buffett’s investment is digested.

With the S&P 500 less than a 1% away from another new high and after having set two of those just last week, this most recent leg of the upward climb has been very unusual. You hear very little optimism and you hear very few traders gloating about their results. Reportedly, the vast majority of hedge funds are under-performing the market, which is unusual given the syncopated nature of the climb higher. Their under-performance last year is understandable, but this year you would think that the really smart money would have an advantage by using the various tools to hedge an uncertain market.

Most Mondays the challenge is to find new income producing positions for the week. That’s especially true when a new monthly cycle is set to begin, as it was ready to do so this morning.

Instead, with only a few assignments last week and cash reserves being only marginally increased, I’m far more interested in seeing existing positions generate some income rather than spending cash down to lower levels.

Last week after the sharp downturn in prices on Wednesday and Thursday and no meaningful recovery on Friday, it ended up not being a terribly difficult decision to forego any rollover opportunities, as the option market seemed to be anticipating a late rally and the prices to close out option positions were just too expensive. Add to that the low volatility in forward weeks and you had the combination of relatively high prices to close positions and low prices received for selling new positions.

Sometimes I’d rather take my chances and this was one of those rare times.

So far, after the first day of the week it was another slow trading day by Monday standards, yet it was almost as busy as all of last week and at least a few positions did receive cover and will help put some foie gras on the table.

Maybe tomorrow I can trade the flatware for silverware.

Daily Market Update – May 19, 2014 (9:00 AM)

For the optimist there was reason to be so this morning.

The market closed strongly in the final two hours to end the week  That alone was comforting and gave reason to look forward to the start of the next week’s trading.

But beyond that with news over the weekend about AT&T’s proposed buyout of DirectTV and Pfizer’s newly sweetened offer for AstraZeneca. Put the two of those together and you had the appearances of “Merger Monday” re-appearing in our markets.

The good feeling that comes from mergers and buyouts often has a way of spreading through the markets as speculators start wondering which company will be the next target. Eventually that kind of speculation wears thin very quickly, but at least in its early stages most everyone is happy.

But the pre-open futures don’t seem to be as optimistic and the market is pointing lower as both AstraZeneca and AT&T are much lower and only Pfizer is showing some kind of modest gain, as its offer again is being spurned, or at least the manner in which AstraZeneca is trading would indicate that the door has been closed.

If that’s the case there has to be some other blockbuster merger to move the market. As it is, I don’t  understand the economics of the AT&T buyout of DirectTV. While AT&T definitely needs that business in order to compete with Verizon, the revenue from DirectTV can only fall as it will be offered at lower cost bundled packages to existing AT&T customers, as will AT&T service be bundled at a lower price to existing DirectTV customers.

$50 billion? I hope Verizon goes down in sympathy with AT&T because they appear now to have the advantage with regard to share price prospects once the news of Warren Buffett’s investment is digested.

With the S&P 500 less than a 1% away from another new high and after having set two of those just last week, this most recent leg of the upward climb has been very unusual. You hear very little optimism and you hear very few traders gloating about their results. Reportedly, the vast majority of hedge funds are under-performing the market, which is unusual given the syncopated nature of the climb higher. Their under-performance last year is understandable, but this year you would think that the really smart money would have an advantage.

Most Mondays the challenge is to find new income producing positions for the week. That’s especially true when a new monthly cycle is set to begin, as it does this morning.

Instead, with only a few assignments last week and cash reserves being only marginally increased, I’m far more interested in seeing existing positions generate some income rather than spending cash down to lower levels.

Last week after the sharp downturn in prices on Wednesday and Thursday and no meaningful recovery on Friday, it ended up not being a terribly difficult decision to forego any rollover opportunities, as the option market seemed to be anticipating a late rally and the prices to close out option positions were just too expensive. Add to that the low volatility in forward weeks and you had the combination of relatively high prices to close positions and low prices received for selling new positions.

Sometimes I’d rather take my chances and this was one of those rare times.

Daily Market Update – May 16, 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.

The possible outcomes for today include:

Assignments:   STX

Rollovers:   RIG, SBUX

Expirations:  BMY, CY, FAST, FCX, FDO, GM, LLY, MET, SBUX, TXN

With the large price drops of the past two days my preference is to allow expiration on many positions rather than incur the expense of rollover trades when premiums are low using entry level strike proces. The next week may warrant DOH trades unless market strength appears to be likely.

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

Daily Market Update – May 15, 2014 (Close)

The morning could have been a disaster with both Wal-Mart and Cisco reporting disappointing earnings, especially since yesterday was a triple digit loss and had no silver linings to spin.

But Cisco proves that if you’ve done something wrong its just better to come clean and maybe people will be less upset with you. Maybe they might even compliment you on your honesty and forthrightness. At least no one will be disappointed when you live up to your lowered expectations.

In this case everyone was whispering that Cisco was going to report really bad numbers. Instead, Cisco reported really bad numbers, but just not as bad as they said they would be.

That’s the sort of thing that gets you rewarded.

Wal-Mart on the other hand reported its fifth straight quarter of decreasing revenues and profits. There was no really good way to spin that sort of thing.

While there’s no good way for the company to explain its results those looking to spin the data can always say that Wal-Mart’s falling revenues are simply a sign of the shift away from the low end of retailing as people are going back to work and have more discretionary income.

Sounds good, except Macys revenues are down, so too are Kohls. No one shops at Sears and people stayed away from Target for a while after their credit card breach, so one has to wonder where all of that discretionary money is going. If the belief that Wal-Mart is home to lower end consumers is accurate you wouldn’t likely believe that this afternoon’s report from Nordstrom’s would show it to be the beneficiary of shoppers moving away from Wal-Mart.

Amazon? You wouldn’t know it from the stock price lately.

At some point someone will be asking about that big disconnect between retail and the belief that economic growth is taking place and is the underpinning for an ever rising stock market.

At any rate Cisco and Wal-Mart appear to be balancing one another out in the pre-open trading and the market wasn’t showing much follow-through to yesterday’s sell-off, although it dis have a negative bias.

I was hoping that the market would either stay trendless this morning or move higher so that the monthly option cycle can come to a respectable conclusion. The pre-open futures were flat, but the minute the opening bell rang the market just headed lower and lower, making yesterday look like a rally by comparison.

After yesterday’s sell-off it just got a little more difficult to get respectable, but there’s always tomorrow, especially if Janet Yellen infuses some more Federal Reserve hand holding sentiment into the mix. this evening. While I’m not counting too much on the positive impact of her words after trading hours, there’s always the possibility if she does say something monumental.

 Although that can cut both ways, as we’ve also seen that an occasional intemperate use of words can frighten or confuse investors. After today’s sell off it may be more plausible that Yellen might look to say something of comfort to help lift spirits.

With that potential uncertainty in the equation, where possible I was looking for any potential rollovers today, rather than tomorrow, as there are a fair number of positions set to expire. But with pricing heading lower it was relatively expensive to do the rollovers, especially with forward premiums still so low.

Looking at potential trades today I felt as if I would rather take my chances with lots of new uncovered positions next week rather than get very little premium in return for encumbering them for the week, especially since there really was little reason for yesterday and today’s declines.

So far this has been an extraordinarily slow trading week. Fortunately there were ample rollovers and assignments  from the previous week to fuel my profligate spending and ways this week, but now the hope returns to where it always does on Thursdays and Fridays, only not as hopeful as it usually tends to be.

Maybe tomorrow there will be a little more intellect ruling trading than emotion. If not, next week will be a long one and likely to have as little activity as this week.

Daily Market Update – May 15, 2014 (9:30 AM)

The morning could have been a disaster with both Wal-Mart and Cisco reporting disappointing earnings, especially since yesterday was a triple digit loss and had no silver linings to spin.

But Cisco proves that if you’ve done something wrong its just better to come clean and maybe people will be less upset with you. Maybe they might even compliment you on your honesty and forthrightness. At least no one will be disappointed when you live up to your lowered expectations.

In this case everyone was whispering that Cisco was going to report really bad numbers. Instead, Cisco reported really bad numbers, but just not as bad as they said they would be.

That’s the sort of thing that gets you rewarded.

Wal-Mart on the other hand reported its fifth straight quarter of decreasing revenues and profits. There was no really good way to spin that sort of thing.

While there’s no good way for the company to explain its results those looking to spin the data can always say that Wal-Mart’s falling revenues are simply a sign of the shift away from the low end of retailing as people are going back to work and have more discretionary income.

Sounds good, except Macys revenues are down, so too are Kohls. No one shops at Sears and people stayed away from Target for a while after their credit card breach, so one has to wonder where all of that discretionary money is going. If the belief that Wal-Mart is home to lower end consumers is accurate you wouldn’t likely believe that this afternoon’s report from Nordstrom’s would show it to be the beneficiary of shoppers moving away from Wal-Mart.

Amazon? You wouldn’t know it from the stock price lately.

At some point someone will be asking about that big disconnect between retail and the belief that economic growth is taking place and is the underpinning for an ever rising stock market.

At any rate Cisco and Wal-Mart appear to be balancing one another out in the pre-open trading and the market isn’t showing much follow-through to yesterday’s sell-off, although it does have a negative bias.

Hopefully, the market will either stay trendless this morning or move higher so that the monthly option cycle can come to a respectable conclusion.

After yesterday’s sell-off it just got a little more difficult to get respectable, but there’s always tomorrow, especially if Janet Yellen infuses some more Federal Reserve hand holding sentiment into the mix. this evening. While I’m not counting too much on the positive impact of her words after trading hours, there’s always the possibility if she does say something monumental.

 Although that can cut both ways, as we’ve also seen that an occasional intemperate use of words can frighten or confuse investors.

With that potential uncertainty in the equation, where possible I’ll be looking for any potential rollovers today, rather than tomorrow, as there are a fair number of positions set to expire.

So far this has been an extraordinarily slow trading week. Fortunately there were ample rollovers and assignments  from the previous week to fuel my profligate spending and ways this week, but now the hope returns to where it always does on Thursdays and Fridays.

It’s time to make some money.

Daily Market Update – May 14, 2014 (Close)

With Macys and Deere now out of the way, having reported earnings this morning, there’s wasn’t much left until the entire process starts all over again in July. While there will still be some more earnings reports ahead next week and until about the end of June, most of the consequential companies will have reported by this week. Wal-Mart and Cisco are among the important ones still left to come this week and though they represent disparate parts of the economy they are both important indicators.

It’s difficult to put a positive spin on this earnings season, although the previous two quarters somehow were spun that way. This time, however, optimistic guidance isn’t broadly being provided to help shares after disappointing earnings. In the past two quarters there was a general practice of providing positive guidance which offset the actual earnings and helped to propel stocks higher, often reversing initial earnings related drops.

This earnings season is notable for its relatively little forward looking optimism. There’s not been a sense of good things ahead, neither in retail nor in manufacturing despite reports of increasing employment and low interest rates, which would generally be considered as a formula for economic expansion and spending.

Whatever improvements in EPS data may have be seen would have to be adjusted for the number of shares in float, which has widely been decreasing owing to all of those buy backs.

The good news stories and the positive moves higher have been relatively few these past weeks even though common sense would seem to suggest that higher profits should be resulting at least in part from higher revenues and not just from cost cutting.

Still, it’s new record after new record.

It’s hard to fight the tape and no one wants to be left out, but I’ve had a hard time justifying much in the way of new purchases this week as the party has moved on, although you do have to admit that there hasn’t been much conviction in the process, despite Monday’s strong move.

This morning seemed to be ready to open with a less effusive market, but everyone may now be waiting for another Janet Yellen bump, as she is scheduled to speak tomorrow evening and may set the tone to end the May 2014 cycle, hopefully on an up note.

As always, whenever the end of the monthly option cycle is at hand I just want to see as many as possible positions get assigned or rolled over and be in a good position to start the next cycle. The rollovers get you on the ground running and the assignments give you the luxury of being able to act when it feels appropriate.

While the week’s expiring contracts appear to be reasonably well positioned the prospects of even a single misinterpreted word on Thursday evening could be enough to cause a market seizure, especially since it is a monthly expiration day the next morning.

Of course, when today’s trading finally settled we could now use a Yellen bump, as it turns out that wanting another new record to be set doesn’t mean that it will happen.

Because of that further possibility of a single mis-spoken word on Thursday night there may be reason to consider some action on Thursday, particularly with regard to rollovers. In general, it’s better to roll something over that may otherwise have been assigned, than it is to wait and lose the opportunity and then which the contract expire after some sort of sell-off.

Today being a Wednesday, which is usually a slow day for me, in general and then compounded by an ambivalence to participate in making new purchases, I didn’t expect to be doing much today, either. Other than a single rollover there wasn’t much to do other than watch the weeds growing in the vegetable garden.

As in the past few days, any opportunity to sell new cover would have been greatly appreciated, but I think the week will start tomorrow and come to its crescendo on Friday.

Since it’s been reasonably profitable just sitting and passively watching the market do its thing, I haven’t got too much to complain about, but I’d much rather be an active participant and be able to take some of the credit.

Today, despite the broad market weakness wasn’t that bad of a day and thus far this has been an acceptable week, but it all comes down to Thursday and Friday, as so often seems to be the case.

Daily Market Update – May 13, 2014 (Close)

While yesterday was one of those rare Mondays that was almost devoid of trading, it was a nice day to sit back and watch the market do some heavy lifting.

It still seems a little incongruous that both the DJIA and S&P 500 set even more new highs yesterday when there’s really very little to support that kind of enthusiasm, especially when it’s also apparent that there’s so much nervousness around.

That’s an odd combination and I can’t really call a similar period over the past 30 years, other than for today, when new records were once again set on both the DJIA and S&P 500.

Every bull market and every climb higher has its naysayers and doubters, but you don’t often see so many doubters and so many actions that seem counter to the moves higher, such as the real pronounced NASDAQ weakness.

Generally, weakness in that sector is an early signal of an upcoming market top and not a signal to keep climbing higher and higher.

Today was looking to get off to a slow start, but at least there was the possibility of some continued follow through to yesterday’s strength, which was long overdue, despite reaching all of those new highs. Once it was all over it was a pretty benign day, but it did build a little on what had preceded it.

I may remain content to add little in the way of new positions this week if that kind of strength can continue as we enter into the final meaningful week of this earnings season. So far, there has been very little to get excited about. Even though some big retailer names report this week, the overall retail numbers are down and that can’t be a good thing, unless all of retail is now being concentrated in the likes of Wal-Mart, Macys and Nordstroms.

It’s also not as if Keuring Green Mountain Coffee Roasters, which continues to rise after its earnings report is reflective of our economy. It’s just reflective of questionable taste in coffee and Coke’s deep pockets and little to show for it.

With the May 2014 option cycle ending this week I would love to see a fair number of assignments as I’d like to add to my cash reserves. Making new highs may be the starting point for going even higher, but it may also be an inflection point and be the start of a reversal.

If the latter of those two possibilities is so, let it start next week.

Either way, it’s good to be prepared and cash is the best way to be able to play either of those scenarios.

In the meantime, yesterday was a little disappointing, despite the nice addition to the bottom line, because of the inability to put through some new cover on existing positions. I was hoping that it would be a little different today as I’d have liked to get some more positions set up for weekly expiration as part of the June 2014 cycle.

In the event of any weakness today I was prepared to get enticed and pick up some items that were on the weekly list, as well as looking at other opportunities, but I expected that it would be a fairly quiet day and that I’d still be holding onto cash reserves for the most part.

Otherwise, sit back along with me and hopefully enjoy as some more heavy lifting would be a nice thing to watch while sipping on some good coffee for the rest of the week.

Daily Market Update – May 13, 2014 (9:30 AM)

While yesterday was one of those rare Mondays that was almost devoid of trading, it was a nice day to sit back and watch the market do some heavy lifting.

It still seems a little incongruous that both the DJIA and S&P 500 set even more new highs yesterday when there’s really very little to support that kind of enthusiasm, especially when it’s also apparent that there’s so much nervousness around.

That’s an odd combination and I can’t really call a similar period over the past 30 years.

Every bull market and every climb higher has its naysayers and doubters, but you don’t often see so many doubters and so many actions that seem counter to the moves higher, such as the real pronounced NASDAQ weakness.

Generally, weakness in that sector is an early signal of an upcoming market top and not a signal to keep climbing higher and higher.

Today is looking to get off to a slow start, but at least there’s the possibility of some continued follow through to yesterday’s strength, which was long overdue, despite reaching all of those new highs.

I may remain content to add little in the way of new positions this week if that kind of strength can continue as we enter into the final meaningful week of this earnings season. So far, there has been very little to get excited about. Even though some big retailer names report this week, the overall retail numbers are down and that can’t be a good thing, unless all of retail is now being concentrated in the likes of Wal-Mart, Macys and Nordstroms.

It’s also not as if Keuring Green Mountain Coffee Roasters, which continues to rise after its earnings report is reflective of our economy. It’s just reflective of questionable taste in coffee.

With the May 2014 ending this week I would love to see a fair number of assignments as I’d like to add to my cash reserves. Making new highs may be the starting point for going even higher, but it may also be an inflection point and be the start of a reversal.

Either way, it’s good to be prepared and cash is the best way to be able to play either of those scenarios.

In the meantime, yesterday was a little disappointing, despite the nice addition to the bottom line, because of the inability to put through some new cover on existing positions. Hopefully that will be a little different today as I’d like to get some more positions set up for weekly expiration as part of the June 2014 cycle.

In the event of any weakness today I may get enticed and pick up some items that are on the weekly list, as well as looking at other opportunities, but still expect that it will be a fairly quiet day and that I’ll be holding onto cash reserves for the most part.

Otherwise, sit back and hopefully enjoy as some more heavy lifting would be a nice thing to watch while sipping on some good coffee.

Daily Market Update – May 12, 2014 (Close)

There’s not too much on the schedule this week and while there are still some big names left to report, particularly major retailers,  it’s going to be hard to imagine how anyone will be able to put a positive spin on the recent pattern of earnings releases.

While Janet Yellen does speak on Thursday and lately her words have been reassuring, it’s just too late in the week, unless she has some real blockbuster in store for us.

I’m not counting on that happening.

What has really become clear is that despite all of the stock buy backs and the enhancements offered to the standard metric of earnings, earnings per share, comparable numbers haven’t set the world on fire. If anything, the market which for the previous quarters had overlooked the apples to oranges comparisons was now taking a more critical look at earnings and forward guidance.

What continually seems confusing is how there can be a belief that the economy is expanding yet earnings are mediocre and more importantly, forward guidance isn’t generally indicating optimism. It’s difficult to reconcile those seemingly contradictory points.

Yet employment statistics seem to indicate the creation of new jobs and a falling unemployment rate. While  perhaps buoyed by decreasing participation you would still anticipate that the rise in employment would begin to have some impact on the fortunes of retailers, especially on the lower and mid-tier end.

At least this week there will be lots of opportunity to see if that’s going to be the case as many do report, all the way from Wal-Mart to Nordstrom and the nation’s retailer, Macys.

With the DJIA hitting yet another high last week, in a week that the overall market saw a decline and a continued devastation of the NASDAQ, it’s hard to get overly enthusiastic, but somehow the market just decided to start the week with another triple point gain and hit new highs in both the DJIA and S&P 500 and the NASDAQ’s gain was nearly double that of those, after weeks of badly trailing them.

With my personal cash sitting at 29% I was willing to get down to about 20% for the week, but didn’t do too much to make that happen today. Certainly with a market jumping out of the gate I wasn’t prepared to chase positions, but even in a flailing market I hadn‘t expected to add much more than 4 new positions for the week. Rather than add new positions I would have been much more interested in seeing the market confront all of the reasons that it shouldn’t go any higher and then just go higher. I’d have been very happy to have the opportunity to then sell new covers on existing positions rather than add to the exposure.

Sometimes passivity works and today was definitely a day for passivity, as I watched and watched, with barely any trades, but also with no complaints, other than not having sold any additional call contracts.

But selling new calls has been a hard goal as the market has been unduly punishing not just the real high fliers but most anyone coming in short on the numbers. With guidance being less sanguine it has been rare to see companies reporting mediocre earnings to see their share performance rescued by positive guidance. Instead, it has been more like a 0ne – two punch. Additionally, for those that have fallen it’s been notable that the typical bounce backs have been much more muted, delayed or even absent.

Instead, something unusual has been happening. Instead of some bounce back and attenuation of losses, we’ve been seeing sellers just piling on and compounding the pain. While you might make a case that investors are simply taking their money and rotating elsewhere, especially into more traditionally safe sectors, that pattern hasn’t really held up for more than a portion of a single trading session.

None of that makes me very optimistic, but I am happy to see this particular earnings season wind down and also see the use of “weather” as an excuse for earnings to enter into the history books.

Based on the latest pattern of alternating higher and lower weeks, we’re due to go higher this week. However, as far as patterns go, last week’s string of higher Tuesday’s was demolished with a large loss, so I’m not putting too much faith into those purely coincidental events that seem to get lots of attention.

Today was simply a nice day and with broadly based advances. Why did it act the way it did? Who knows? In fact, I don’t think I really heard anyone offer a guess today, because there’s really no good reason for it to have happened.

However, if traders choose to believe the validity of those patterns, then this week, as long as we’re due to go higher, I fully embrace them putting their money where those beliefs are and I’d be happy to collect the residual benefit of their actions.

Daily Market Update – May 12, 2014 (9:15 AM)

There’s not too much on the schedule this week and while there are still some big names left to report, particularly major retailers,  it’s going to be hard to imagine how anyone will be able to put a positive spin on the recent pattern of earnings releases.

While Janet Yellen does speak on Thursday and lately her words have been reassuring, it’s just too late in the week, unless she has some real blockbuster in store for us.

I’m not counting on that happening.

What has really become clear is that despite all of the stock buy backs and the enhancements offered to the standard metric of earnings, earnings per share, comparable numbers haven’t set the world on fire. If anything, the market which for the previous quarters had overlooked the apples to oranges comparisons was now taking a more critical look at earnings and forward guidance.

What continually seems confusing is how there can be a belief that the economy is expanding yet earnings are mediocre and more importantly, forward guidance isn’t generally indicating optimism. It’s difficult to reconcile those seemingly contradictory points.

Yet employment statistics seem to indicate the creation of new jobs and a falling unemployment rate. While  perhaps buoyed by decreasing participation you would still anticipate that the rise in employment would begin to have some impact on the fortunes of retailers, especially on the lower and mid-tier end.

At least this week there will be lots of opportunity to see if that’s going to be the case as many do report, all the way from Wal-Mart to Nordstrom and the nation’s retailer, Macys.

With the DJIA hitting yet another high last week, in a week that the overall market saw a decline and a continued devastation of the NASDAQ, it’s hard to get overly enthusiastic.

With my personal cash sitting at 29% I am willing to get down to about 20% for the week. That means that I’m not expecting to add much more than 4 new positions for the week. Rather than add new positions I would be much more interested in seeing the market confront all of the reasons that it shouldn’t go any higher and then just go higher. I’d be very happy to have the opportunity to then sell new covers on existing positions rather than add to the exposure.

Sometimes passivity works.

But selling new calls has been a hard goal as the market has been unduly punishing not just the real high fliers but most anyone coming in short on the numbers. With guidance being less sanguine it has been rare to see companies reporting mediocre earnings to see their share performance rescued by positive guidance. Instead, it has been more like a 0ne – two punch. Additionally, for those that have fallen it’s been notable that the typical bounce backs have been much more muted, delayed or even absent.

Instead, something unusual has been happening. Instead of some bounce back and attenuation of losses, we’ve been seeing sellers just piling on and compounding the pain. While you might make a case that investors are simply taking their money and rotating elsewhere, especially into more traditionally safe sectors, that pattern hasn’t really held up for more than a portion of a single trading session.

None of that makes me very optimistic, but I am happy to see this particular earnings season wind down and also see the use of “weather” as an excuse for earnings to enter into the history books.

Based on the latest pattern of alternating higher and lower weeks, we’re due to go higher this week. However, as far as patterns go, last week’s string of higher Tuesday’s was demolished with a large loss, so I’m not putting too much faith into those purely coincidental events that seem to get lots of attention.

However, if traders choose to believe the validity of those patterns, then this week, as long as we’re due to go higher, I fully embrace them putting their money where those beliefs are and I’d be happy to collect the residual benefit of their actions.

MONDAY:   Not much in store this week, but those do have a way od becoming eventful, nonetheless. A mildly positive open may be at hand and would be welcome, especially if setting the stage to return to a positive Tuesday and a positive week.

TUESDAY:     No immediate follow through to yesterday’s nice gains, but at least there’s some hope as earnings season, for the most part, comes to its eand this week.

WEDNESDAY:  Early morning earnings from big names don’t seem to offer impetus to move higher, but new records are the norm this week, thus far

THURSDAY:    Wal-Mart and Cisco look as if they’re balancing one another this morning and as we’ve recently been seeing big moves don’t appear to have follow-through the next morning. In today’s case that would be good.

FRIDAY:  Unfortunately, not likely to be too busy with rollovers today as the best two days of strong declines have taken a toll on assignments and rollovers