Daily Market Update – November 6, 2014 (Close)
Yesterday was one of those days that had some post-election spillover, but no real enthusiasm. Still the market hit more new highs.
Today the market awaited some word from the ECB as to whether, or when, it will take a walk down the same path as the Federal Reserve had taken the US.
If any suggestion of that would have come today, and there was no expectation of it, our markets would likely have gone significantly higher. There’s no expectation of it, however, because they had previously existed and went unanswered on a couple of occasions.
But it didn’t matter, because after some wavering it was another day of record highs.
The market had been in an early holding mode until some word would come from across the ocean. It was fairly widely expected that if there was nothing new, there wouldn’t likely be a negative reaction, with everyone instead probably preparing for tomorrow’s Employment Situation Report.
There shouldn’t be too much of a surprise in that either, but for well over a year the pattern has been that the market celebrates the entire week of the report and usually celebrates on the day of the report, as well.
So far, this week is living up to that pattern, but still has now just one potentially big tests ahead, having passed today’s test.
I wasn’t expecting much of anything to occur between this morning and the week’s end, but the momentum just kept carrying most everything along.
Earnings reports are now going to slow down, although retailers are still ahead and may give reasons to believe that the economy is moving forward on the basis of increased consumer spending. You would expect that at some point the fall in the unemployment rate would result in greater levels of discretionary spending and at some point that would have to translate to the bottom line.
The warning from Kohls a couple of weeks ago would seem to argue against the belief that the middle of the pack consumer is coming back, but there’s no accounting for what may make a single retailer lose or gain favor with consumers at any moment in time. It’s entirely possible that at the moment people may favor one retailer over another and could easily switch back.
As those numbers come in a final catalyst may exist to push markets even higher.
What is increasingly clear is that companies that don’t deliver on earnings or that give the slightest hesitancy in their guidance are being hit very, very hard and are not recovering in the same time frames as in past years. Most every day during earnings season there are so many large cap companies, that can’t be considered momentum kind of stock trades, that are feeling the wrath of disappointed investors. O
The new highs have come methodically, while the lows have come suddenly.
As has been the case for a while, I hoped today would offer some opportunity to sell something, but the indication wasn’t appearing in the morning’s futures trading, although some opportunities did present. What is still strikingly clear is that there are very few call option buyers around unless there is some anticipated news. The volume in everyday kind of trades is really drying up.
While the week may again see an assignment or two, any rollovers or call sales would be appreciated and I would look to add to the list of those expiring next week and at the end of the monthly option cycle.
For now, it’s just more of sitting back and seeing where things take us after tomorrow morning’s news.
Hopefully even higher.