Daily Market Update – December 3, 2014 (Close)
Yesterday was a surprise.
While triple digit moves aren’t as important as they used to be they still get your attention, especially when there’s really not too much to account for the move.
Yesterday was a very quiet day on the news front, but at least there wasn’t any really negative news and there was some acknowledgement by a Federal Reserve Governor that falling energy prices will likely add to the nation’s GDP, as about 70% of it is consumer driven.
That acknowledgement may have been the driving force behind the positive tone to the market.
Today, however, there were to be three more speeches by Federal Reserve Governors that could have their own impacts, including one by the always influential Richard Fisher, although he speaks well after the market’s close and in less than a month he will no longer be a voting member of the FOMC.
In the meantime the ADP Employment Report was released this morning and although it is sometimes a prelude to what is in the Employment Situation Report that follows on Friday, very often it has a lack of concordance. The ADP Report rarely moves markets and lately neither has the Employment Situation Report, so there isn’t very much expectation for known events having too much influence for the remainder of the week.
The remainder of the week looks like it will be one of just simply waiting for any opportunities to pop up, although I wouldn’t mind some passivity, as it comes to assignments. I would like to see some so as to add to cash reserves, but increasingly I want to see rollovers right now in lieu of having to add new positions.
Today’s narrow range trading did at least offer some of those opportunities for rollovers and new cover sales. Unfortunately, some other trades that I tried to make just didn’t execute, such as option sales on General Motors, as the volume is still light and the spreads are still too wide for my liking.
Looking at charts makes it harder and harder to justify purchases at current levels for so many stocks. However, there are still many stocks that are not at their 52 week highs, but it is also increasingly clear that the cycle for many of those stocks to recover their price drops is longer and longer, as the market is less and less forgiving.
Stringing along some positions, sometimes even keeping them via rollover when assignment is likely or possible may be better in some cases rather than taking the assignment, unless you specifically want to add to an unused cash cushion.
For now, I think I want the best of all worlds and still want to add to the cash cushion but may be willing to add less in order to perpetuate the premium stream from current holdings.
This morning appeared as if it would be a very flat open and that there may not be too much excitement nor opportunity to do very much. Again, all eyes were on energy and retail and the thought that lower energy prices should drive more retail purchasing as the holiday season progresses.
What’s still needed are the anecdotal stories to back up the theory behind those expectations, but for now the few reports that have been made haven’t corroborated the belief that consumers are better poised to be spending this holiday season.
If this December’s market performance is going to be up to par with Decembers past that kind of consumer fuel is really needed as fuel itself becomes less of a burden on household budgets.
The combination of more jobs, better paying jobs and more discretionary cash is a good one to start the new year, but this month would be an especially good time to really get it all started.