Daily Market Update – July 1, 2014




Daily Market Update – Jul 1, 2014 (9:15 AM)

Yesterday was a little busier than I had expected, but it was certainly a quiet and uneventful day as the market stayed in a tight range all through the trading session.

This morning the pre-open futures are pointing toward a mildly positive opening.

I don’t think that’s going to result in much as far as opening new positions, but it would be especially nice to see that opening spill over into the regular session and take on some life. Maybe that would give some opportunity to wring some income out of existing positions, although lately you do have to wring harder to squeeze much premium out. To some degree that’s offset if dividends become part of the equation or become sought after, but there is a limit to those opportunities and they are far fewer than the universe of optionable stocks.

In the absence of any news or any obvious catalysts those kinds of large moves are possible when there’s not too much trading going on. If that’s the case, any moves are usually not very well sustained and return back to where they had started in fairly short order.

I suppose that with cash still in reserve and the willingness to spend some of that reserve down, I also wouldn’t necessarily mind a sharp, light volume kind of sell-off this week. That would give enhanced buying opportunity and also lead to some increased option premiums.

It’s always strange to suggest that you wouldn’t mind some sort of a sell-off, even if highly qualifying what type would be acceptable, but there are definitely advantages, especially if there’s cash in reserve.

Unfortunately, like so many things in life, what you wish for and what you get can be very different, so even while thinking that a sell-off might be nice, that’s only if rational heads prevail.

When it comes to money rational thinking is often in short supply, whether its greed or fear that’s at fault.

This week the only known challenge will be Thursday’s Employment Situation Report. With three and a half days of markets being closed after the report any unforeseen news, such as might corroborate the revised GDP statistics, could lead to weakness, especially if other events, such as in Iraq, pile on to the nervousness.

We’ll get a little bit of a hint tomorrow as the ADP statistics are released and any deterioration in those numbers could serve as a precursor for Thursday.

It has been a while since the Employment Situation report really mattered, but t
his could be one of those times that it does, perhaps exacerbated by the nervousness of staying long through an exceptionally long week-end.

Recent history, meaning for the past two years, however, indicates that traders haven’t really cared too much about weekend exposure, even when there were clear threats, so  the likelihood still has to remain that the event will be another non-event.

I’m still content to watch and wait as the rest of the week unwinds. In the event of any weakness I would likely not be of the belief that there would be anything sustained, so would probably be in the market to add new positions.