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MONDAY:   With earnings over, it's time for events to take over, but markets never like unexpected events. Markets pointing toward staying with caution this morning.

TUESDAY:     Amazingly market shows pre-open complete rebound on words alone, not waiting for any confirmation on the baisis of actions. That's a formula for disappointment with anything less than the most reliable of parties.

WEDNESDAY:  All's quiet on Eastern front as Crimea retreats as story and ADP jobs takes center stage to no fanfare while awaiting the real thing on Friday

THURSDAY:    Three Federal Reserve Governors speak today, one day ahead of Employment Situation Report. Otherwise all is quiet here and around the world. Likely another quiet day.

FRIDAY:  This time around the Employment numbers are good and so is the initial reaction. Pattern seems to be on path to continue in upward direction, regardless of the number






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Daily Market Update Template




Daily Market Update - May 27, 2014 (9:00 AM)

While I don't like the smaller premiums that are generated on these 4 day trading weeks, I no longer dislike Monday holidays.

There was a time that I harbored some resentment for the market being closed on those Mondays. That was back in the days when such a holiday coincided wiith a day off for me and could have been used to hone some skills back when I couldn't spend as much time as I wanted glued to the screen and ticker.

These days I can and suddenly, maybe not so surprisingly I like those shortened weeks and actually, on a day like Memorial Day, get a chance to understand and appreciate the reason for the holiday.

So now it's Tuesday and inexplicably the market starts at another new high. What seems so unusual is that you really don't see or hear a chorus of people gloating about their returns. The other day it was mentioned that some 70-80% of hedge funds were trailing the S&P 500. While that's easy to understand if the market is going straight higher, it's not easy to understand when the market is going lower or bouncing around.

My guess is that lots of hedge funds, after trailing the market in 2013 stopped hedging in anticipation of the need for protection and instead doubled up on the bullish end of things.

Bad timing if that's the case and it is likely accuate to some degree. It's not much different fromt the individual investor who waits until the start of the new year to get into last year's hottest mutual fund.

While normally there would be some degree of euphoria here's something that should be cause for concern:

That is that while the S&P 500 is going higher the number of new highs is going lower.

That's just not the way things are supposed to work.

What that indicates is that the advance is really pretty narrow and there just isn't a lot of participation.

Normally in a market making new highs over and over again everyone is happy because just about everything is moving higher getting swept by a rising tide.

Now, there's a tide but it's not doing too much sweeping and only taking a lucky few along for the ride.

I start this week with replenished cash from a decent number of assignments and having sold more new cover last week than in recent memory. On a personal note that leaves me happy, but I'm not overly anxious to plow even the full amount of the regenerated cash back into the market this week.

Oart of that reqason is that the reward is reduced as there are only 4 days worth of premiums this week. However, beyond that is that after 2 previous weeks of not seeing much in the way of assignments and some decidely negative trading, I'm not entirely convinced that least week's positive trading patterns are here to stay.

My initial sense is that the optimism that may be borne of last week's trading may be for fools.

Of course, like most everything, I'm not fully willing to base everything on that belief that may end up being wrong. So I anticipate making some trades this week in an effort to open some new positions, but I would still prefer to see uncovered positions find coverage and make my weekly income in that manner rather than having to spend very much to generate that income.

As always, we'll see.

We'll see if the pre-open futures have any predictive capability for the rest of the day and whether any barains may pop up to cause me to rethink the thriftiness I have planned for the week.


When to Take Tax Losses

(A version of this article appeared in

Each year the ritual begins just days before New Years. Even in the best of years there are bound to be some losers. Fortunately, whatever faults there may be in the tax code, the ability to attenuate investment mistakes isn't one of them.

Fastenal is Fascinating

(A version of this article appeared in TheStreet)

Actually, that may be a little bit of an over-statement. Fastenal (FAST) is fairly staid, at least on a conceptual level.

In a previous life, one that included legitimate employment, I flew into a New England city on a weekly basis and would pass a Fastenal store on a lonely back road with equal frequency. On the occasional daytime landings I noticed that the parking lot and sidewalks would sometimes be packed, sometimes empty and never thought twice about it, otherwise.

During an economic period when businesses opened with great expectations and closed with great disappointment, that solitary Fastenal store was there for at least the 7 years that I drove past it. Nothing terribly fancy nor ostentatious about its appearance, just a utilitarian building, presumably delivering the literal and figurative goods.

A Bullish Case Going Forward


(A version of this article appeared on

The bullish case? I can't possibly make one, having been expecting a market correction similar to that seen in April 2012 since April of this year. Besides. I'm an inveterate covered option writer and by nature see the pitfalls of every single trade that I make or suggest.

After all, why would you need protection in the form of options if your stock thesis was sound?

After nearly 30 years of marriage my wife recently told me that only about 40% of what I say turns out to actually be correct. If it was only that good when it came to selecting stocks and getting the timing just right. I'd be in the pantheon of the world's greatest investors instead of world's greatest husbands.

Conveniently ignoring my track record of premature pessimism, the coming week holds lots of risk for portfolios.

Stocks Need Leadership

It's hard to be critical of a stock market that seems to hit new highs on a daily basis and that resists all logical reasons to do otherwise.

That's especially true if you've been convinced for the past 3 months that a correction was coming. If anything, the criticism should be directed a bit more internally.

What's really difficult is deciding which is less rational. Sticking to failed beliefs despite the facts or the facts themselves.

In hindsight, those who have called for a correction have instead stated that the market has been in a constant state of rotation so that correction has indeed come, but sector by sector, rather than in the market as a while.

Whatever. By which I don't mean in an adolescent "whatever" sense, but rather "whatever it takes to convince others that you haven't been wrong."

Sometimes you're just wrong or terribly out of synchrony with events. Even me.

Finish reading this article on Seeking Alpha

Love Fest and Victory Tour

This week may have marked the last time Ben Bernanke sits in front of far less accomplished inquisitors in fulfilling his part of the obligation to provide congressional testimony in accordance with law.

The Senate, which in general is a far more genteel and learned place, was absolutely fawning over the Federal Reserve Chairman who is as good at playing close to the vest as anyone, whether it's regarding divulging a time table for the feared "tapering" or an indication of whether he will be leaving his position.

If anything should convince Bernanke to sign up for another round, it would be to see how long the two-faced goodwill lasts and perhaps give himself the opportunity to remind his detractors just how laudatory they had been. But I can easily understand his taking leave and enjoying the ticker tape, or perhaps the "taper tick" parade that is due him.

But in a week when Treasury Secretary Jack Lew and Bernanke had opportunities to move the markets with their appearances, neither said anything of interest, nor anything that could be misinterpreted.

Instead, at the annual CNBC sponsored "Delivering Alpha Conference," the ability of individuals such as Jim Chanos and Nelson Peltz to move individual shares was evident. What is also evident is that based upon comparative performance thus far in 2013, there aren't likely to be many ticker tape parades honoring hedge fund managers and certainly no one is going to honor an index.

Finish reading this article on Seeking Alpha

Blame The Big Man

For some, "The Big Man" may refer to a personal deity. For others, the late saxophonist for The E Street Band.

While I have abiding faith in each of those, there's no doubt in my mind that Ben Bernanke is "The Big Man."

While the stock market soared to a new high just two months after its most recent high, it shouldn't be lost on too many people that the Chairman of the Federal Reserve was at the center of the move down from the highs as well as the move beyond the high.

Just take a quick look at the journey of the S&P 500 from its high on May 21, 2013, to its new high on July 11, 2013.

Finish reading this article on Seeking Alpha



Just How Smart is the "Smart Money?"

Much has been made of the recent increase in volatility.

As someone who sells options, I like volatility because it typically results in higher option premiums. Since selling an option provides a time defined period I don't get particularly excited when seeing large movements in a share's price. With volatility comes greater probability that "this too shall pass" and selling that option allows you to sit back a bit and watch to see the story unwind.

It also gives you an opportunity to watch "the smart money" at play.

But being a observer doesn't stop me from wondering sometimes what is behind a sudden and large movement in a stock's price, particularly since so often they seem to occur in the absence of news. They can't all be "fat finger" related. I also sit and marvel about entire market reversals and wildly alternating interpretations of data.

I'm certain that for a subset, there is some sort of technical barrier that's been breached and the computer algorithms go into high gear. But for others the cause may be less clear, but no doubt, it is "The Smart Money" that's behind the gyrations so often seen.

Finish reading this article on Seeking Alpha


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