Category Archives: Daily Market Update

(see all trades this option cycle)

Daily Market Update – January 22, 2014 (10:45 AM)

Earnings continue this morning and most of the early talk was about once invincible IBM, which will open weighing heavily on the DJIA.

While there’s still a lot of earnings to go, following the script set by the financials over the past few earnings seasons, the remaining sectors have been lagging, even when expectations are lowered.

One factor mentioned this morning was the cautious mood expressed by those reporting good earnings.

Certainly, when you hear that forward earnings may be impacted by a variety of factors even good last quarter numbers become meaningless. But if there seems to be agreement that the near term future will be challenging, what becomes the basis for sending the market higher? Where is the economic growth?

So far January 2014 seems to be taking that issue much more seriously than at any point in 2013.

This morning started in a very interesting way and saw some wild gyrations in a couple of stocks that I was following for earnings. In both cases I decided yesterday that the reward for making the trades prior to earnings didn’t offset the perceived risk.

But this morning after both Coach and Cree released earnings I was ready to make some short term trades, albeit with the sale of puts, rather than covered calls.

In one case, I was able to sell $48 puts on Coach, but before I could even get the Trading Alert sent, shares reversed direction and the premium was almost cut in half.

Then I did get a Trading Alert sent on shares of Cree. In that case, it reversed direction almost instantaneously with having sent the alert.

I always like looking at the 1 minute charts to see the really wild moves and wonder what causes such pronounced and sudden shifts. In some cases it’s panic and in other cases it’s just fear of missing out. I can’t really understand what other factors might be involved, especially when there is significant volume.

AT the time of the Cree Trading Alert, at 9:40 AM, options were trading at 0.89. By 9:42 AM it was down to $0.57, then a minute later $0.40 and then another minute later was down to $0.34.

The Coach movement was actually more dramatic, because for 2 minutes it was trading hands at about $1.70 and then went straight to $0.60 and then in another 2 minutes was at $0.37.

In the case of Coach, it has almost a 2 year history of disappointing on earnings and then simply recovering. Although it’s easy to be wrong, I didn’t expect shares to go much lower than where the pre-open trading had it. I was surprised, however, to see how quickly it had recaptured much of the early loss.

Cree, on the other hand started with a nice gain after yesterday evenings earnings release, but saw it pared a little in the pre-market.

It opened nicely higher, but then gave up much of the gain. At that point I thought it was a good time to sell puts expiring in just 3 days. Apparently at about the same time someone, possibly a single buyer, thought it was a good idea picking up shares, that maybe they thought were bargain priced. The option volume also jumped very quickly, normally suggesting that money was following other people’s money.

However, in this case, much of that option volume was in this Friday’s expiration.

That suggests that the very same people who bought shares also bought the options, because there’s otherwise too much of a risk of buying blindly options that expire in less than 3 days.

Not my problem, I suppose.

Unfortunately.

What I do know, however, is that while we hear and see significant spikes in option volume on short term contracts, most often they end up expiring worthless or are rolled over by the buyer, who adjusts his thesis by increasing the time frame.

Those are the kind of people that I like selling my options to.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 21, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 21, 2014 (Close)

With everyone of any importance being in Davos for the 2014 Global Economy meeting, it’s a good week to have almost no economic news scheduled to be released.

Instead, it’s a week of photo opportunities in the snow and dealing with the avalanche of earnings, not to be confused with actual avalanches in the Swiss mountain resort of Davos.

Starting the week is unexpected news that activist Dan Loeb is taking a stake in Dow Chemical. He was very successful recently in Yahoo!, probably getting out way too early and then not quite as successful with his interest in Sony.

Dow Chemical was a stock bought 9 times in 2013 and another 7 times in 2012. I was anxious to buy it again, but it suddenly is set to escape its longstanding mediocrity in its trading which is more than a decade long.

While I hate seeing a reliable stock get removed from rotation, this is an important bit of news, based on Dow’s market capitalization. Although Yahoo! is now a $40 billion company, it was far from that when Loeb became involved. Dow Chemical is already a $52 billion company and Loeb’s ownership is “only” about 2% of the market capitalization

That kind of commitment to a company that is closely tied with economic growth and expansion is a vote in that direction. The vote is in the way that counts most; with Loeb’s own money.

While no one has a crystal ball, Loeb’s interest in Dow Chemical is interesting in what many think is the very late stage of a stock market bull run. Clearly, Loeb doesn’t believe that the top is near.

What we don’t know is what Loeb’s time frame is, as he has shown the inclination to move on. The longer his time frame, the less relevance his actions have on how to look at tomorrow or the day after.

Given some of the details surrounding Dow Chemical’s Board of Directors, it appears as if there is almost a year before any board seats could be gained, so in the interim the changes at Dow, if any should be slow and strategic in nature.

That means that even if Dow has escaped its trading orbit and gone to a new level, it may still be attractive even at that higher level, as its option premium is likely to increase and it has a nice dividend.

But that’s a consideration for tomorrow or the day after.

Today the consideration is just how real the pre-market climb is and how much staying power it has. No doubt the Dow Chemical news adds fuel to whatever nascent buying there has been lately.

As it would turn out there was no staying power, but the market recovered most of its early losses. Ib fact, the broad market did much better than the narrow DJIA and was up for the day.

With the start of the February cycle and already having this week’s option expirations populated, as well as some for the following week, the goal will be to continue that diversification, where possible.

At about 40% in cash, I’m again willing to get down to the 25% level, but not too likely to jump in on a strong open for the week and more likely to want to stick to lower volatility names, although some of the earnings trades do look a little tempting.

For now, though, the focus is still on reasonable safety, premiums and dividends while waiting for some sign of direction that has been slow in coming since the start of the New Year.

Unfortunately, today wasn’t the kind of day to easily identify many prospects. With a trade shortened week the premiums were already 20% lower and volatility went down even further today, taking premiums with them.

As much as I wanted to grab some more dividends, I just couldn’t justify those trades today. The same applies to those positions reporting earnings after today’s closing bell or before trading tomorrow. In those cases, however, the premiums were good, but I don’t like making the trades when those stocks are moving higher.

On the other hand, as some prices did fall today, other potential opportunities may be creating themselves, such as Starbucks, which was downgraded in advance of earnings Thursday afternoon and has already fallen about 7% in the past week.

Tomorrow is another day.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 21, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 21, 2014 (9:45 AM)

With everyone of any importance being in Davos for the 2014 Global Economy meeting, it’s a good week to have almost no economic news scheduled to be released.

Instead, it’s a week of photo opportunities in the snow and dealing with the avalanche of earnings, not to be confused with actual avalanches in the Swiss mountain resort of Davos.

Starting the week is unexpected news that activist Dan Loeb is taking a stake in Dow Chemical. He was very successful recently in Yahoo!, probably getting out way too early and then not quite as successful with his interest in Sony.

Dow Chemical was a stock bought 9 times in 2013 and another 7 times in 2012. I was anxious to buy it again, but it suddenly is set to escape its longstanding mediocrity in its trading which is more than a decade long.

While I hate seeing a reliable stock get removed from rotation, this is an important bit of news, based on Dow’s market capitalization. Although Yahoo! is now a $40 billion company, it was far from that when Loeb became involved. Dow Chemical is already a $52 billion company.

That kind of commitment to a company that is closely tied with economic growth and expansion is a vote in that direction. The vote is in the way that counts most; with Loeb’s own money.

While no one has a crystal ball, Loeb’s interest in Dow Chemical is interesting in what many think is the very late stage of a stock market bull run. Clearly, Loeb doesn’t believe that the top is near.

What we don’t know is what Loeb’s time frame is, as he has shown the inclination to move on. The longer his time frame, the less relevance his actions have on how to look at tomorrow or the day after.

Given some of the details surrounding Dow Chemical’s Board of Directors, it appears as if there is almost a year before any board seats could be gained, so in the interim the changes at Dow, if any should be slow and strategic in nature.

That means that even if Dow has escaped its trading orbit and gone to a new level, it may still be attractive even at that higher level, as its option premium is likely to increase and it has a nice dividend.

But that’s a consideration for tomorrow or the day after.

Today the consideration is just how real the pre-market climb is and how much staying power it has. No doubt the Dow Chemical news adds fuel to whatever nascent buying there has been lately.

With the start of the February cycle and already having this week’s option expirations populated, as well as some for the following week, the goal will be to continue that diversification, where possible.

At about 40% in cash, I’m again willing to get down to the 25% level, but not too likely to jump in on a strong open for the week and more likely to want to stick to lower volatility names, although some of the earnings trades do look a little tempting.

For now, though, the focus is still on reasonable safety, premiums and dividends while waiting for some sign of direction that has been slow in coming since the start of the New Year.

.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 17, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

 

(see all trades this option cycle)

Daily Market Update – January 19, 2014 (Close)

The Week in Review and the Weekend Update are now posted.

Markets will be closed on Monday in honor of Dr. Martin Luther King, Jr. Day.

.

Access prior Daily Market Updates by clicking here

OTP Sector Distribution* as of January 17, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

 

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 17, 2014 (9:00 AM)

The Week in Review will be posted by 7:00 PM tonight and the Week in Review will be published by Monday 12 Noon.

Today’s possible trades or outcomes include:

Assignment: MDLZ, MOS, WY

Rollover:   ANF*, CPB, CY, DRI, FAST, LB, LXK, RIG, PM, YUM

Expiration: AGQ, GPS, WFM

* ANF puts are at $35 strike and are currently expected to expire. Otherwise, will look for equivalent opportunity to rollover those puts, preferably to a lower strike price again.

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

.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 16, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 16, 2014 (Close)

After some nice, but expected, earnings from JP Morgan, Wells Fargo and Bank of America, comes Citigroup to put a damper on the whole thing.

Morgan Stanley reports tomorrow, but isn’t likely to follow along the same path, although it, too, is an example of a high beta big money center bank and could easily have a magnified response to its earnings report. It certainly has seen its share of share gains and has something to give back in the event of disappointment, but it has an essentially different business model from some other sector mates.

At the very least it did get caught up in today’s Citigroup induced downdraft, but not enough to make it an appealing earnings related trade.

Magnified responses may be a theme this earnings season as fundamentals may get more scrutiny and there are lots of stocks that have enjoyed significant climbs in the past 15 months, as the market has carried many along for the ride.

Goldman Sachs, which used to be a favorite of mine, also reported earnings this morning. It usually makes large moves in the days before earnings and then immediately upon the news, but this time was different. It essentially did nothing, but it was mixed news that greeted the street, so perhaps a flat reaction could be justified and even be interpreted as a positive sign of a discerning, rather than emotional market.

The high beta names are going to be especially vulnerable, as Best Buy demonstrated this morning, giving up about 9 months worth of gains in the pre-market.

Lately, both the after-hours and pre-open markets have underestimated the extent of the damage, whereas in the past it was often a place to pick up relative bargains in the aftermath of people over-reacting to bad news and having price moves magnified by low volume and wider than normal spreads.

Seeing some of these big drops it is certainly tempting to want to pick up shares, but that’s where the question of “value trap versus value” enters the picture. For many high beta stocks, especially those that have never demonstrated the ability to recover from a significant price decline, they really need to prove that the fabled story isn’t finally over.

Next week, besides being a holiday shortened trading week is one that has little meaningful economic news scheduled to be released, but will be a busy one for earnings and is more likely to give us some information regarding the economy than the big money center banks are able to do.

Hopefully the next two trading days will allow a good mix of assignments and rollovers, as there may be plenty of opportunity ahead to start thinking about whether some new lower stock prices represent value or trap.

The challenge, as always when a monthly cycle approaches its end, is to get out of the process intact and be able to move forward. With more and more stocks now beginning to offer expanded weekly options there is less need to be so heavily loaded at a monthly option expiration date, such as this Friday.

Instead, the monthly options may wind up being more strategic choices to allow the cushion of time when earnings are due to be announced or when trying to capture a dividend.

Ideally, I would like to see a fairly even distribution of expiration dates between any given day and the coming monthly expiration, but that still proves to be a challenge that is in part dictated by such things as availability and the timing of earnings and dividends, but it would be a nice way to spread risk out in a market that may be prone to sudden moves.

Hopefully, those sudden moves will wait a bit. For now, steady seems to be a nice way to go.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 16, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 16, 2014 (9:30 AM)

After some nice, but expected, earnings from JP Morgan, Wells Fargo and Bank of America, comes Citigroup to put a damper on the whole thing.

Morgan Stanley reports tomorrow, but isn’t likely to follow along the same path, although it, too, is an example of a high beta big money center bank and could easily have a magnified response to its earnings report. It certainly has seen its share of share gains and has something to give back in the event of disappointment, but it has an essentially different business model from some other sector mates.

Magnified responses may be a theme this earnings season as fundamentals may get more scrutiny and there are lots of stocks that have enjoyed significant climbs in the past 15 months, as the market has carried many along for the ride.

Goldman Sachs, which used to be a favorite of mine, also reported earnings this morning. It usually makes large moves in the days before earnings and then immediately upon the news, but this time was different. It essentially did nothing, but it was mixed news that greeted the street, so perhaps a flat reaction could be justified and even be interpreted as a positive sign of a discerning, rather than emotional market.

The high beta names are going to be especially vulnerable, as Best Buy demonstrated this morning, giving up about 9 months worth of gains in the pre-market.

Lately, both the after-hours and pre-open markets have underestimated the extent of the damage, whereas in the past it was often a place to pick up relative bargains in the aftermath of people over-reacting to bad news and having price moves magnified by low volume and wider than normal spreads.

Seeing some of these big drops it is certainly tempting to want to pick up shares, but that’s where the question of “value trap versus value” enters the picture. For many high beta stocks, especially those that have never demonstrated the ability to recover from a significant price decline, they really need to prove that the fabled story isn’t finally over.

Next week, besides being a holiday shortened trading week is one that has little meaningful economic news scheduled to be released, but will be a busy one for earnings and is more likely to give us some information regarding the economy than the big money center banks are able to do.

Hopefully the next two trading days will allow a good mix of assignments and rollovers, as there may be plenty of opportunity ahead to start thinking about whether some new lower stock prices represent value or trap.

The challenge, as always when a monthly cycle approaches its end, is to get out of the process intact and be able to move forward. With more and more stocks now beginning to offer expanded weekly options there is less need to be so heavily loaded at a monthly option expiration date, such as this Friday.

Instead, the monthly options may wind up being more strategic choices to allow the cushion of time when earnings are due to be announced or when trying to capture a dividend.

Ideally, I would like to see a fairly even distribution of expiration dates between any given day and the coming monthly expiration, but that still proves to be a challenge that is in part dictated by such things as availability and the timing of earnings and dividends, but it would be a nice way to spread risk out in a market that may be prone to sudden moves.

Hopefully, those sudden moves will wait a bit. For now, steady seems to be a nice way to go.

.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 15, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 15, 2014 (Close)

After two diametrically different markets to start this week, each being attributed to remarks from FOMC members, it’s worth noting that in the next three days there are 5 more addresses scheduled by FOMC members, including outgoing Chairman Ben Bernanke.

While some were calling yesterday’s moves a “Key Reversal,” it didn’t really fit that billing, but even then those so designated days don’t always live up to their name and don’t necessarily predict future direction.

Then again, if today’s triple digit gain was foretold by the tape, I apologize, but am happy to do so, as it brings us one day closer to monthly expiration and one day closer to meeting goals.

With Bank of America also reporting good earnings the banks are continuing the same script of the past few quarters and that, too, has signified little as far as predicting the future goes.

There is clearly some nervousness in the market that is reflected in the size of moves in individual stocks as well as some of the intra-day moves being observed without obvious catalysts. While it’s still plausible to consider that some moves are the result of tax related strategies that plausibility shrinks with each day, as each day brings risk of creating a reduction in paper profits that exceeds the tax savings by deferring its payment by 12 months.

Today, for example there were large intra-day moves in Walgreen and Lexmark.

Walgreen was being prepared for a Trading Alert yesterday. Hd it been about 5 minutes earlier it would have come before a segment on CNBC about the stock, which then saw its price move higher and out of range. Later in the early evening it was featured on Jim Cramer’s “Mad Money.”

This morning after its price went higher initially, it came down to yesterday’s price point.

About an hour after the purchase shares fell about $0.40 in a 15 minute span on suddenly heavy volume, clearly someone dumping shares.

Later in the afternoon, Lexmark, which had gone nicely above its $36 strike price during trading also went down about $0.40 in 6 minutes on very heavy volume.

Go figure.

While the bank earnings have been good, Fastenal, which had pre-announced, yet again, a few weeks ago was lower, as it announced its earnings. At least this time it’s pre-open move wasn’t as severe as on previous occasions, whether up or down in direction. Fastenal is a metric of its own and lower sales are never a good sign, especially if their competition, Grainger, announces similar results next Friday.

The opening bell wasn’t as kind to shares, however. I’m still not certain why anyone is surprised when earnings are released following pre-announcement disappointments.

The good news about Fastenal is that it’s so resilient and just keeps hanging in at the $47 level. For those have have been along for the ride over the past 7 months and five bouts of ownership, the return is about 33%, even though shares haven’t budged in price.

Why can’t there be more stocks like that? It’s one of those shares that I would prefer to rollover than to see assigned. It looks as if after this morning’s reaction assignment is not in the cards. Hopefully rollover is, but the way things go, Friday is still an eternity away.

In fact, tomorrow is also an eternity away, as I wanted to sell calls on shares such as Eli Lilly today, but it doesn’t offer expanded options and the only choices available were either a paltry premium for this week or a paltry premium next month, due to having fewer strike selections and being in-between strikes.

For the rest of the week I’ll still be looking for some places to spend money, as I’m still willing to take cash reserves a little lower, especially if it looks as if a fair number may be assigned or rolled over on Friday.

The first of the potentially market moving speeches is at 12:50 PM today and the second comes well after the market’s close, so there may be some tentativeness in trading up until those speeches and perhaps a little flurry after the first then becoming tentative over concerns about what may be said in the after hours.

But then there’s another speech prior to the market’s open, so there may be offsetting messages, leading up to Ben Bernanke at 11:10 AM.

By Friday at 12:30 no one is really going to care what Jeffrey Lacker has to say, as these monthly ending option cycles tend to have lives of their own and aren’t likely to turn on a dime.

With the month now at the midway point the DJIA is less than 200 points from its all tie record, yet everyone was spooked by Monday’s 1% decline. You can easily make a case for momentum continuing to pull the market forward, but it will either be helped out or battled back by earnings.

While I’m not expecting the 6% improved earnings, at least on a share adjusted basis, I also don’t expect any great surrender, either, so there’s still likley to be some personal spending ahead.

Hopefully, a strong finish to the week will see to it that there are sufficient assignments to fuel that kind of folly.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 15, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 15, 2014 (10:00 AM)

After two diametrically different markets to start this week, each being attributed to remarks from FOMC members, it’s worth noting that in the next three days there are 5 more addresses scheduled by FOMC members, including outgoing Chairman Ben Bernanke.

While some were calling yesterday’s moves a “Key Reversal,” it didn’t really fit that billing, but even then those so designated days don’t always live up to their name and don’t necessarily predict future direction.

With Bank of America also reporting good earnings the banks are continuing the same script of the past few quarters and that, too, has signified little as far as predicting the future goes.

There is clearly some nervousness in the market that is reflected in the size of moves in individual stocks as well as some of the intra-day moves being observed without obvious catalysts. While it’s still plausible to consider that some moves are the result of tax related strategies that plausibility shrinks with each day, as each day brings risk of creating a reduction in paper profits that exceeds the tax savings by deferring its payment by 12 months.

While the bank earnings have been good, Fastenal, which had pre-announced, yet again, a few weeks ago is lower, as it announced its earnings. At least this time it’s pre-open move wan’t as severe as on previous occasions, whether up or down in direction. Fastenal is a metric of its own and lower sales are never a good sign, especially if their competition, Grainger, announces similar results next Friday.

The opening bell wasn’t as kind to shares, however. I’m still not certain why anyone is surprised when earnings are released following pre-announcement disappointments.

The good news about Fastenal is that it’s so resilient and just keeps hanging in at the $47 level. For those have have been along for the ride over the past 7 months and five bouts of ownership, the return is about 33%, even though shares haven’t budged in price.

Why can’t there be more stocks like that? It’s one of those shares that I would prefer to rollover than to see assigned. It looks as if after this morning’s reaction assignment is not in the cards. Hopefully rollover is, but the way things go, Friday is still an eternity away.

For the rest of the week I’ll still be looking for some places to spend money, as I’m still willing to take cash reserves a little lower, especially if it looks as if a fair number may be assigned or rolled over on Friday.

The first of the potentially market moving speeches is at 12:50 PM today and the second comes well after the market’s close, so there may be some tentativeness in trading up until those speeches and perhaps a little flurry after the first then becoming tentative over concerns about what may be said in the after hours.

But then there’s another speech prior to the market’s open, so there may be offsetting messages, leading up to Ben Bernanke at 11:10 AM.

By Friday at 12:30 no one is really going to care what Jeffrey Lacker has to say, as these monthly ending option cycles tend to have lives of their own and aren’t likely to turn on a dime.

With the month now at the midway point the DJIA is less than 200 points from its all tie record, yet everyone was spooked by Monday’s 1% decline. You can easily make a case for momentum continuing to pull the market forward, but it will either be helped out or battled back by earnings.

While I’m not expecting the 6% improved earnings, at least on a share adjusted basis, I also don’t expect any great surrender, either, so there’s still likley to be some personal spending ahead.

Hopefully, a strong finish to the week will see to it that there are sufficient assignments to fuel that kind of folly.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 14, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 14, 2014 (Close)

It’s hard to believe that a dovish, non-voting member of the FOMC could have said anything that would have sent the market down nearly 200 points. That was the widely blamed reason for yesterday’s market in which there really was no substantive news.

Maybe it was the carryover from the really disappointing Employment Situation numbers.

Maybe it is the really horrible retail sales statistics that makes people wonder why no one is involved in discretionary spending if the economy is improving.

But at least this morning there’s some good news, just as in the past few quarters. That news is that JP Morgan and Wells Fargo are making money and are likely to make even more as interest rates creep higher. Although there were some signs of slowdown, such as decreased mortgage applications, the overall tone was positive and the numbers were higher.

Unfortunately, that news doesn’t necessarily mean anything for the other 498 members of the S&P 500.

I didn’t really have to scour my records to know that yesterday was the slowest trading Monday in a long time. It’s one thing to not make many new purchases when you don’t have too much cash, but it’s entirely different matter when the cash is there and prices are dropping.

That perfectly describes yesterday.

All revved up with no place to go is a frustrating way to spend the day.

Today’s rally, on the other hand, was possibly fueled by the words of a hawkish FOMC member, Richard Fischer, who spoke in terms that could only be described as being dovish.

All of this just goes to show that it’s a completely wasted effort trying to understand anything.

You could, for example, have spent all day trying to understand the on the dime turns in  intra-day prices of such stocks as Starbucks, Sears Holdings, YUM Brands and others. Sometimes it’s fascinating looking at the minute by minute charts and seeing the graphic representation of those changes, but you’re still left wondering what happened.

In the past year having cash and falling prices has been a perfect formula to pick up some bargains. However, it just didn’t feel that way to me yesterday. Some of the falls in stocks were just too large and represented what appeared to be over-reactions.

Over-reactions are common, especially on momentum stocks. I suppose you can also make a case that so many stocks have risen so much that they are also due for some kind of give back, but yesterday was definitely a case of taking action  first and then asking questions later.

Those kind of reactions aren’t very healthy, but more importantly they do give you a glimpse of how your fellow investors might react in the face of truly bad news.

That alone is a good reason to be defensive. Very few market declines are insidious. They tend to be precipitous, but history also shows that sitting on the sidelines in fear of those kinds of drops only means missed opportunities.

The compromise is to not be fully invested when you have doubts, even though that may mean missing some of the party. The upside is that if you are correct and the market does move downward in a decisive fashion, not only do you suffer less, but you’re likely to overcome what you missed by  finally deploying sideline cash at bargain levels.

I’ve been in that mindset now for a long time, much longer than I ever believed I could have emotionally sustained, but I don’t feel as if I’ve missed very much.

I am beginning to believe that we’re at a transition phase right now, with more and more emphasis about to be paid to company fundamentals rather than to the Federal Reserve’s intentions.

During the latter, with most everything going higher it was only natural for investors to dump anything that disappointed, perhaps accounting for some very pronounced moves, unlike what had been seen in the past. After all, why hold onto something that’s falling when absolutely everything else is going higher, buoyed by a Federal Reserve stimulated market?

However, with an emphasis on fundamentals and the belief that stocks can go up or down and not just higher, even in a falling market individual stock drops may be less frightening and less severe.

I think that this earnings season may see a moderation to the market and that would be a great environment in which to spend that money  that’s now on the sidelines.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 14, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 14, 2014 (9:30 AM)

It’s hard to believe that a dovish, non-voting member of the FOMC could have said anything that would have sent the market down nearly 200 points. That was the widely blamed reason for yesterday’s market in which there really was no substantive news.

Maybe it was the carryover from the really disappointing Employment Situation numbers.

Maybe it is the really horrible retail sales statistics that makes people wonder why no one is involved in discretionary spending if the economy is improving.

But at least this morning there’s some good news, just as in the past few quarters. That news is that JP Morgan and Wells Fargo are making money and are likely to make even more as interest rates creep higher. Although there were some signs of slowdown, such as decreased mortgage applications, the overall tone was positive and the numbers were higher.

Unfortunately, that news doesn’t necessarily mean anything for the other 498 members of the S&P 500.

I didn’t really have to scour my records to know that yesterday was the slowest trading Monday in a long time. It’s one thing to not make many new purchases when you don’t have too much cash, but it’s entirely different matter when the cash is there and prices are dropping.

That perfectly describes yesterday.

All revved up with no place to go is a frustrating way to spend the day.

In the past year having cash and falling prices has been a perfect formula to pick up some bargains. However, it just didn’t feel that way to me yesterday. Some of the falls in stocks were just too large and represented what appeared to be over-reactions.

Over-reactions are common, especially on momentum stocks. I suppose you can also make a case that so many stocks have risen so much that they are also due for some kind of give back, but yesterday was definitely a case of taking action  first and then asking questions later.

Those kind of reactions aren’t very healthy, but more importantly they do give you a glimpse of how your fellow investors might react in the face of truly bad news.

That alone is a good reason to be defensive. Very few market declines are insidious. They tend to be precipitous, but history also shows that sitting on the sidelines in fear of those kinds of drops only means missed opportunities.

The compromise is to not be fully invested when you have doubts, even though that may mean missing some of the party. The upside is that if you are correct and the market does move downward in a decisive fashion, not only do you suffer less, but you’re likely to overcome what you missed by  finally deploying sideline cash at bargain levels.

I’ve been in that mindset now for a long time, much longer than I ever believed I could have emotionally sustained, but I don’t feel as if I’ve missed very much.

I am beginning to believe that we’re at a transition phase right now, with more and more emphasis about to be paid to company fundamentals rather than to the Federal Reserve’s intentions.

During the latter, with most everything going higher it was only natural for investors to dump anything that disappointed, perhaps accounting for some very pronounced moves, unlike what had been seen in the past. After all, why hold onto something that’s falling when absolutely everything else is going higher, buoyed by a Federal Reserve stimulated market?

However, with an emphasis on fundamentals and the belief that stocks can go up or down and not just higher, even in a falling market individual stock drops may be less frightening and less severe.

I think that this earnings season may see a moderation to the market and that would be a great environment in which to spend that money on the sidelines.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 13, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 13, 2014 (Close)

With one third of January now part of history, history is at risk of not repeating itself this year unless the market does something with the next two weeks. The pre-market didn’t offer any suggestion that anything would begin today in that regard.

By the time it was all over it would turn out to be one of the worst days in quite a while, as Goldman Sachs raised concerns that stocks were getting to be over-valued.

With earnings season really getting into full swing this week comes word that a 6% increase in comparable period earnings are expected. That alone should help increase the broad market, unless of course there’s an inexplicable shrinking of the market multiple.

But that 6% seems high, unless that’s the result of some optics secondary to share buy backs. Fewer shares can result in increased earnings per share even if net earnings decrease.The only problems is that optics can only take you so far. At some point no one is fooled.

The continuing difficulty exhibited by retail makes it hard to see where improved earnings are coming from unless they are really the result of optics.The last couple of quarters the major money center banks reported nice earnings, but they really didn’t set the tone. Rather, they set investors up for disappointment.

But last year that didn’t really matter. No matter what was going on the market just kept going higher.

While it’s obviously too early to make any conclusions or projections, at least it’s clear that this January isn’t looking at all like the past two years. Looking at some of the really significant price drops among those that disappoint the market with either earnings or guidance the lack broad market strength, thus far, makes you wonder when the other shoe is about to hit.

I suppose first they actually have to be able to sell the shoes, so maybe we’re then safe. Even Family Dollar is struggling.

After a week of a lot of assignments and an end of the monthly cycle this week, I’m hoping for a repeat. Some good earnings reports from the banks this week would at least add some support to the market in a week that isn’t scheduled to have much in the way of market moving news, otherwise.

While the money is available this week, I’m still a little cautious and am not likely to bring cash reserves down as low as they went last week. This week I stand at 40% and am willing to get down to about 25%, which would be 5 to 7 new positions.

But as the market approached a loss of 200 points going into the final hour and the drops were across the board, I didn’t sense any bargains or anything that I was salivating to own. That was despite large drops in Starbucks, Conoco Phillips, Coach, Verizon, Lowes, YUM Brands and many, many others.

Given that even after today’s 1% fall we are only about 1.5% off the recent market top, I’m not in a real rush to go out and buy anything until the clarity appears. That could be further weakness or it could be price stability, but prices are not down enough to offer a reward that makes it worth trying to be ahead of the curve.

However, as nearing mid-week or Thursday, if it appears as if there may be a considerable number of assignments on Friday, and that became less likely as today’s trading proceeded, that may send a signal for a surge of buying. If the cash is likely to be there, I would rather get premiums reflecting 6 days of time by jumping the gun on the week, rather than waiting for next week’s holiday shortened trading to begin on Tuesday.

Lately, it seems that every day has a challenge.

Today in the pre-open it was LuLuLemon, although for the rest of the day, perversely enough, LuLuLemon out-performed the market.

LuLuLemon set the stage for disappointing earnings by reporting that store traffic was low in December. With options expiring next Friday that allows some time for price recovery, which I think will be forthcoming. With a new CEO it’s not unusual to load up on bad news so that their first “clean” quarterly earnings report will have had as much bad news eliminated. The strategy is to always accelerate the negatives and have them reflect on past leadership.

Clearly someone bet wrong on shares on Friday when it went nearly 4% higher on no news on an otherwise flat day in the market.

However, as retailers are getting the bad news out and taking their hits they are becoming more and more attractive, although if any are potential buys this week, as Bed Bath and Beyond, L Brands, Target, Lowes and even Sears are all possible purchases this week, individuals should make certain that retail isn’t too large of a sector in their portfolios.

Ultimately, I don’t understand how the market can not see the retail situation as reflecting an economy that isn’t as robust as it should be. Hopefully the last Employment Situation Report was an anomaly and not a foreteller of people’s inability to make discretionary purchases.

So it’s another weak of selective caution, but maybe more caution than selection

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 13, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

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

With one third of January now part of history, history is at risk of not repeating itself this year unless the market does something with the next two weeks.

With earnings season really getting into full swing this week comes word that a 6% increase in comparable period earnings are expected. That alone should help increase the broad market, unless of course there’s an inexplicable shrinking of the market multiple.

But that 6% seems high, unless that’s the result of some optics secondary to share buy backs. Fewer shares can result in increased earnings per share even if net earnings decrease.The only problems is that optics can only take you so far. At some point no one is fooled.

The continuing difficulty exhibited by retail makes it hard to see where improved earnings are coming from unless they are really the result of optics.The last couple of quarters the major money center banks reported nice earnings, but they really didn’t set the tone. Rather, they set investors up for disappointment.

But last year that didn’t really matter. No matter what was going on the market just kept going higher.

While it’s obviously too early to make any conclusions or projections, at least it’s clear that this January isn’t looking at all like the past two years. Looking at some of the really significant price drops among those that disappoint the market with either earnings or guidance the lack broad market strength, thus far, makes you wonder when the other shoe is about to hit.

I suppose first they actually have to be able to sell the shoes, so maybe we’re then safe. Even Family Dollar is struggling.

After a week of a lot of assignments and an end of the monthly cycle this week, I’m hoping for a repeat. Some good earnings reports from the banks this week would at least add some support to the market in a week that isn’t scheduled to have much in the way of market moving news, otherwise.

While the money is available this week, I’m still a little cautious and am not likely to bring cash reserves down as low as they went last week. This week I stand at 40% and am willing to get down to about 25%, which would be 5 to 7 new positions.

However, as nearing mid-week or Thursday, if it appears as if there may be a considerable number of assignments on Friday that may send a signal for a second surge of buying. If the cash is likely to be there, I would rather get premiums reflecting 6 days of time by jumping the gun on the week, rather than waiting for next week’s holiday shortened trading to begin on Tuesday.

Lately, it seems that every day has a challenge.

Today in the pre-open it’s LuLuLemon.

They set the stage for disappointing earnings by reporting that store traffic was low in December. With options expiring next Friday that allows some time for price recovery, which I think will be forthcoming. With a new CEO it’s not unusual to load up on bad news so that their first “clean” quarterly earnings report will have had as much bad news eliminated. The strategy is to always accelerate the negatives and have them reflect on past leadership.

Clearly someone bet wrong on shares on Friday when it went nearly 4% higher on no news on an otherwise flat day in the market.

However, as retailers are getting the bad news out and taking their hits they are becoming more and more attractive, although if any are potential buys this week, as Bed Bath and Beyond, L Brands, Target, Lowes and even Sears are all possible purchases this week, individuals should make certain that retail isn‘t too large of a sector in their portfolios.

Ultimately, I don’t understand how the market can not see the retail situation as reflecting an economy that isn’t as robust as it should be. Hopefully the last Employment SItuation Report was an anomaly and not a foreteller of people’s inability to make discretionary pirchases.

So it’s another weak of selective caution.

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 10, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle

(see all trades this option cycle)

Daily Market Update – January 10, 2014 (9:00 AM)

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

Today’s possible outcomes include:

Assignment:  ANF, BMY, EMC, HFC, JPM, NLY, SBUX, WAG

Rollover: MRO, MSFT, WLT

Expiration:  CLF, CSCO

Trades, if any, will be attempted to be made prior to 3:30 PM (EST)

 Access prior Daily Market Updates by clicking here

 OTP Sector Distribution* as of January 8, 2014

 * Assumes equal number of shares in positions

Posting of trades is not a recommendation to execute trades

Monday through Thursday? See “Daily Market Update” with first edition published by 12 Noon and Closing Update published by 4:30 PM

Friday? See Week in Review for summary statistics and performance

Sunday? See Weekend Update for potential stock choices for coming week

Any day? See Performance for open and closed positions

Subscribers may see  ROI statistics  on all new, existing and closed positions on a daily updated basis

See all Trade Alerts for this monthly option cycle