Daily Market Update – January 28, 2015 (Close)
Yesterday wasn’t very good and it all seemed to start with some disappointing earnings numbers that showed the negative side of lower oil prices and a stronger dollar.
Then came data that not only showed less durable goods purchases than would have been expected with the economy growing and with energy price declines fueling new spending, but also revised past months downward.
This morning we started after getting some good news from Apple and Boeing. Along with their sales, revenues and profit news came no real currency news to detract from the feeling that things are looking up on the consumer end of things and with global sales of airplanes.
So this morning, while not really showing much of a bounce from yesterday’s terrible trading, is was at least pointing higher in advance of today’s FOMC Statement release.
Too bad you can’t just turn it off when it suits your needs.
With Morgan Stanley now believing that any interest rate hike from the FOMC won’t come until sometime in 2016 and with the bond market confirming that belief lately, there would be lots of angst if the FOMC were to do otherwise. However, with the latest statistics, including Retail Sales and now Durable Goods, the real surprise is that there doesn’t seem to be the upward pressure on prices that we’ve all thought was coming.
That has to raise the question of where that upward pressure is hiding and why we aren’t seeing any.
While today’s FOMC Statement probably wasn’t likely to provide too much additional information, it wasn’t very wel received after about an hour of mulling it over first.
With no help from the FOMC, Friday’s GDP data might begin to give us some idea of whether these decreasing oil prices are somehow finding their way into the economy. At the very least there’s no currency consideration to offset things. Either people have more money to spend and are spending it, they have more money and aren’t spending it or they really don’t have much more money after spending it on their cellphone, streaming and cable plans.
With the market pointing tentatively higher in the morning it would have been nice to see some opportunity to sell some calls or roll over something other than the Gold Miners ETF, which has been a regular trade lately, as precious metals have taken on some life, as they go about a step and a half forward for every step backward, but that’s a very profitable path to take.
But that wasn’t meant to be, although I did think about doing some more trades in that very same Gold Miners ETF.
At least there was a chance to raise some cash and close the Blackstone position as it reports earnings tomorrow morning. The pure impetus for doing so was the fact that while it was currently $3 in the money and with a bit more than 3 weeks until option expiration, there was really no benefit to keep holding it going into earnings. There was certainly no upside if shares went higher and only potentially a downside.
What helped was that the options market was willing to close the trade at only a few cents cost below the strike. In essence, the time value was only $0.04 for 3 weeks. Think of what you could otherwise do with the money freed up from closing the position and putting it to use over the next 3 weeks.
Too bad there was nothing else to do today.
With a few positions set to expire this week I wouldn’t have minded if the market made some recovery from yesterday’s loss and would have actually liked to see all 4 remaining positions get assigned this week so that some more cash can be piled up, as there isn’t too much doubt that the market is taking on a very different tone and has become directionless.
That seems a lot less likely after the late day’s sell-off, yet another in a string of outside the ordinary kind of trading days in 2015.
Next to having more positions covered, during that kind of directionless and unpredictable trading and sentiment, my favorite position is to have cash to spend, or at least have the option of spending it, as may look warranted.
Today was likely to be a probably be a day of watching, so at least in that regard I wasn’t too disappointed. While I was still open to making a new position purchase it’s probably not too likely for the rest of the week as there are still too many unknowns in even the last 2 days left of trading that could take stocks in either direction and in a big way.
Just loike today, when there really wasn’t anything well out of the ordinary and yet you see what can happen to stocks and bonds.
Although I wasn’t really expecting too much movement to come from the FOMC news today, the GDP may yet be the wild card. Sooner or later the thesis that had everyone optimistic about plunging oil prices has to either be validated or repudiated.
I’m still hoping to see it validated and the market embracing it as good news.
We could use some