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Daily Market Update – August 19, 2014 (9:15 AM) Well, yesterday was a surprise, but it does seem to go along with the recent pattern that the market basically hates getting news and loves existing in either ignorance or denial. The reaction last Friday to news or at least what was passed off as news contrasted sharply to the reaction yesterday to nothing. It’s hard to understand how the market could be so fragile as to flee on any bad geo-political news, but then to flock back when there is no news. It doesn’t even take good news, it just takes no news. That’s especially confusing when you realize that the story is far from being done and any day, especially any Friday the way the pattern seems to be going, can bring a new series of investor rattling bits of news. While every one still believes that the market looks out into the future by a 6 month period, that’s increasingly hard to accept, given the way daily events or non-events rock the markets and can change the entire tone in an instant. After seeing yesterday’s gain it’s hard to not want to be part of the revelry and today looks like it may add to those gains. The one bit of good news coming from the market before the opening was Home Depot. It reported earnings the way any company would like to see itself report. It beat on every single metric and it guided even stronger for the next quarter. If looking for good economic news, or at least any news that doesn’t have the word “geo-political” attached to it, the news from Home Depot seems to be just the right kind. Of course, it will be put into better context tomorrow when Lowes reports. Then, at least will know whether Home Depot’s good fortunes have come at the expense of its competition or whether the pie just got larger. Ultimately, good news from both of those companies has to be good news for the economy as a whole. While there may be various theories about what strength at Home Depot and Lowes means for the home builders, which are often thought of as the real measures of the economy,those theories are just that and not necessarily having much in the way of validity. Too often mutual exclusivity is believed to be a rule in so many aspects in life. Home Depot can thrive even as home builders do, as well. SO I think that if the pie is expanding that is more likely to be good news for all. While the market’s early morning gain may extend yesterday’s rally I plan to still practice the “prove it to me” approach and may again be content with little new purchase activity, but not very content if unable to find opportunity to sell new calls on existing positions. On a very positive note, after last week’s inability to keep up with the market, even with yesterday 1% gain existing positions kept pace. Sometimes the tide is good, but I’d much rather swim free and see the market tread water for a bit.
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