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Daily Market Update – December 24, 2014 (9:00 AM) This morning, the day before Christmas, is looking as if the market will be trying to add another day higher to the current string. While most holidays see the day before trade to lower levels, that’s not the case for Christmas, as 67% of the time time, that shortened day ends up moving higher. Add that to the Santa Claus Rally that’s still owed to us and 2014 may go out on a high note, despite how energy continues to drag the broader market lower. Still, yesterday saw the 18000 level broken for the very first time and the S&P 500 also made a new high. In that regard 2014 is very much like 2007 in that seemingly new highs were being made on about a weekly basis, on average. In 2014 there have now been over 50 new highs. Today may be a day that just gets lost in that shuffle, as in 2007 those new highs stopped being news, much as they’re not very much news these days, either, unless they encompass some round number in them, such as 18000. For now, I really don’t care whether the moves higher are newsworthy or not. I don’t mind seeing prices edging higher, but would still be every happy to see energy sector stocks make up some of what they’ve lost over the past month or more. I’m not expecting to do very much today, certainly not expecting to add to the week’s new positions. The likelihood, at this point of selling any new call contracts expiring this week is now very small, as the premiums are going to be tiny reflecting only 1 1/2 days of time and seeing volatility moving lower, as they are now down nearly 40% from their levels of just a week ago. For that reason sights are now set for next week’s expirations, the first week of 2015. During that rise in volatility is was easier to diversify expiration dates, but as they are returning to their low levels seen at the time of the previous run higher beginning in mid-October came to its peak, it’s more difficult to accept the low marginal premium increases that are seen when adding more time into the equation. With what is likely to be a slow day anyway and then a short one, at that, it’s probably just a good time to wish everyone a Merry Christmas and a hope that all is in place to get 2015 off to a great start.
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