Daily Market Update – November 24, 2014 (Close)
There’s not a single Federal Reserve Governor scheduled to speak this week as it will be a very quiet and short trading week.
While there will be a GDP release and some Jobless number statistics, unless there is another big revision to GDP, as we have already had twice this year, I don’t expect too much impact from the abbreviated schedule of economic announcements for the week, particularly as reports will be crammed into a shorter reporting period and may simply cancel one another out if offering conflicting views or interpretations over what is going on.
While many will begin the Thanksgiving holiday early and trading will be very light, the Thanksgiving Week sometimes starts off the final 5 weeks of a traditional rally for the year, as the November – December period usually out-performs the rest of the year.
Most of the focus shifts to retail and the script is usually the same. After the first couple of days of mega-sales, which are now being disclosed as perhaps not the great shopping bargains that everyone has been led to believe, the initial reports are usually of disappointing early sales.
The concerns about slow sales generally continues as people are led to believe that desperate retailers will lower prices even more.
Then, when it’s all said and done it’s revealed that sales for the holiday season were better than expected.
For the next five weeks prepare for an onslaught of these retail centric stories and constant talk about sales levels.
With consumer optimism rising and the holidays finally here, anything less than a really robust holiday sales season would have to be very disappointing, but we may have to prepare ourselves for the same weather related calamities lots of retailers faced last year, if the early indications are any predictor of what’s to follow.
This week with more cash in hand than has been the case for a while and with already some reasonable distribution of expirations for the December 2014 option cycle, I’m approaching this week with a very open mind.
While I’m not too likely to go wild with all of that cash, I’m not at all adverse to adding new positions. However, after 5 consecutive weeks of gains a low volume trading week can result in any kind of exaggerated movement. Also, plowing too much back in as the market is again at new highs should probably be questioned.
This week already has a number of ex-dividend positions so some income is already there for the week. Given that premiums will not only be light due to the extremely low volatility but also due to only having 3 1/2 days of time value, there may be some reason to look beyond this week’s expiration and perhaps to the December 12, 2014 expiration, which currently has no positions set to expire on that date.
However, as it worked out, two of the three new positions opened today will be expiring next week and the third will expire at the end of the month.
Another good thought and strategy gone to waste, as nearly every day stands on its own and doesn‘t easily lend itself to prediction or following a carefully planned script.
I would like to add to both the health and technology sectors and had been considering Microsoft this week, following its downgrade on Friday, but didn’t include that in this week’s Weekend Update, but would be happy to add that on any weakness. Instead, the weakness in Microsoft wasn’t really enough to justify doing anything today,but at least Lexmark is still nominally a technology company and it was going ex-dividend tomorrow.
That was good enough.
Otherwise, it’s was just another Monday to sit and see where sentiment would take us to begin the week. The difference was that there wasn’t too much time to make decisions and still get any kind of reasonable premiums as time will be running out very quickly this week.
That resulted in making some opening weekly trades quicker than I’ve done for the past few months, as I do like trading oin the first 30-60 minutes, but for the longest time that first hour has been good for nothing much more than head fakes.
Today that wasn’t the case as the market just traded in a narrow range all day offering little of interest after those first couple of trades.
I hope the rest of the week brings some considerable strength and the opportunity to have another week like last week and see a nice combination of assignments, new covered positions and rollovers.
I could certainly give thanks for that.