Daily Market Update – March 9, 2015 (Close)
There was only a single day last week that the market made any sense.
That was on Thursday when shares were little moved on a day when there was very little news. The previous days also had no news, but markets moved strongly higher and lower and were volatile on an intra-day basis, as well.
Friday, of course, was a story unto itself, as I still have a hard time understanding why those who should have ice in their veins and who should have discounted future interest rate hikes, could have responded with the kind of sell off that we saw. That’s especially true when you consider that all that occurred was the release of some Employment data, that also has a habit of being adjusted in subsequent months.
Even more intriguing is that historically the period of the initiation of interest rate hikes tends to be associated with markets that continue to climb higher.
Given that the news received on Friday was a single point in time, represents a trend that we have all come to recognize as the prevailing direction of employment statistics and doesn’t appear to be accompanied by wage inflation, it really doesn’t make too much sense why the market fell nearly 300 points.
With the weekend intervening maybe there was an opportunity for cooler heads to prevail once the week’s pre-open futures started trading, as they are suggesting a very quiet open.
Of course, last week the pre-open futures meant absolutely nothing, other than on that single trading day.
Today they ended up not meaning too much, but the market still did the right thing.
It bounced back to erase more than half of Friday’s loss.
There was no news to justify that moive, it was just the right thing to do.
With last week being another in which the number of chickens produced was less than expected, my anticipated buying spree is likely to take another week off as it may be another good week to exercise some caution, as there’s absolutely no indication of market sentiment or direction to begin the week.
WIth a number of positions set to expire this week and double that number the following week when the monthly option cycle comes to its end, the likelihood is that any new positions will probably look at expirations this Friday, while rollovers may look to any premium opportunities that may be found in the first week of the April 2015 option cycle, although low volatility continues to keep forward week premiums lower than I would like to tie myself down in exchange.
That was certainly the mindset behind the day’s 2 new purchases, although it’s hard to refer to UAL as a new purchase, when it was the third time in less than a month doing so.
With a quiet news week ahead, there isn’t too much scheduled to upset things, but the past few weeks have been very quiet on international fronts. Even when there has been some news, our own markets haven’t really cared.
What may get increasing attention is the US Dollar slowly, maybe not so slowly, approaching parity with the Euro and resulting in more and more companies beginning to experience lower earnings due to foreign exchange issues and starting the process of issuing earnings warnings before the next earnings season starts in just 4 weeks.
But there, too, you have to wonder why those who manage large portfolios and funds and are principally the ones who create or destroy demand for stocks, wouldn’t have already factored such events into their expectations. It’s not as if this would be the first time in history that the US Dollar has strengthened, thereby resulting in weakened earnings and more competition from foreign consumer goods.
I know that I slept my way through most of my high school history classes, but for those who love to look at stock charts, looking at historical performance is a must. Too bad it isn’t necessarily coupled with trying to gain an understanding of the past in an effort to avoid the mistakes of the past.