Daily Market Update – November 6, 2014 (8:30 AM)
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 awaits 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 comes today, and there is no expectation of it, our markets would likely go significantly higher. There’s no expectation of it, however, because they had previously existed and went unanswered on a couple of occasions.
But the market is in a holding mode until some word comes from across the ocean and then, if there is nothing new, won’t likely react negatively, instead will probably prepare itself 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 potentially big tests ahead.
I’m not expecting much of anything to occur between now and the week’s end.
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. On the other hand, large jumps higher, in quantum leaps, aren’t as frequent as are the quantum leap plunges.
The new highs have come methodically, while the lows have come suddenly.
As has been the case for a while, I hope today offers some opportunity to sell something, but the indication isn’t appearing in the morning’s futures trading.
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.