Daily Market Update – September 10, 2014 (Close)
After what seemed to be a fairly predictable Apple event yesterday nothing had gotten a boost of any sort.
Apple itself fluctuated between a gain and a loss and the market accelerated losses, making it the second consecutive day of losses, putting more distance between September and this past August.
With the event now over there’s really nothing left for the rest of the week of any great importance.
Today became reasonably important, however, as after two days of losses and a small spike in volatility, a third day of the same would start getting everyone to begin their whispers about a correction.
Over the past two years there has been some sort of a mini-correction and spike in volatility every two months or so, the last of which was in July and ended in early August. During that time most everyone was pointing toward the 30% spike in volatility, having taken notice of the volatility late in the process of that most recent mini-correction. By the time volatility became noticed and became a topic it was already time for the correction to end, and it did in a very sudden manner.
This morning was giving indications of a higher open, but a very reluctant one, as futures are actually pointing lower, but are still above the fair value.
That means no one was terribly enthused as trading was getting ready to begin.
That described yesterday, as well. Despite some falling prices there really wasn’t anything that gave the message that some bargains were in the process of being created. It was difficult to get enthused about the price activity yesterday which deteriorated as the afternoon wore on, especially in the final two hours of trading.
That kind of deterioration going into the close is rarely a reason to get excited by the next morning’s opening and that’s precisely where I began the day.
It was also a Wednesday, which tends to be a slow day anyway, as the new weekly options for those without expanded weekly options aren’t yet available. That generally immediately cuts the available new position opportunities especially in a low volatility and low premium environment.
However, since next week is the end of the monthly cycle that also means that any position can be rolled over to next week even today.
So while I didn’t expect much action or trading today, any kind of strength that may develop throughout the rest of the week may be an opportunity to secure positions for rollover, if assignment doesn’t seem as likely. Given the weakness thus far this week, until the Apple inspired turnaround in the afternoon, the hope of finding new call sale opportunities had been waning, so attention has to focus on the ability to create income through rollovers and hopefully replenish cash through some assignments.
Either of those goals would be compromised by further market weakness over the next 2 days, but I’m hopeful for some kind of stability. Whereas the weakness going into yesterday’s close wasn’t encouraging, the strength heading into today’s final two hours was encouraging, by contrast. In that event I would rather commit to an early rollover, even if those shares move higher by the end of the week and could have been assigned, instead.
It’s generally better to have the cash in hand than to devote too much energy to hoping that favorable events will happen.
But I still hope they will.