Daily Market Update – March 25, 2015 (8:30 AM)
Yesterday reverted back to recent form after having spent a couple of hours of the trading day looking as if it would simply be as flat as was the pre-open futures.
Instead it was another triple point move. This one was to the downside and was a continuation of the sell-off that happened on Monday afternoon that saw the DJIA give up its gains in the final 15 minutes of trading.
This morning looks like it will be another flat open as the futures are doing almost nothing despite some excitement from the impending Kraft Foods deal. The fact that interest rates are still so low would make you think that more deals might be on the horizon, although it may be hard to justify the stock prices at these levels. Even for those companies that are sinking below 200 day moving averages are still pretty expensive for those looking for bargains.
That goes even for someone just looking to pick up 100 shares.
Still, some increased activity would be welcome and they don’t all have to be blockbuster kind of deals, such as with Kraft Foods. Just look at yesterday’s announcement of a relatively tiny $1 Billion deal that Lexmark was undertaking in buying a company that I’d never heard of, but coincidentally also starts with the letter “K.”
Both of those companies appear to be getting pats on the back this morning, so there may be more, especially as Lexmark hasn’t exactly been the kind of company on the acquisitive prowl over the past few years, but opportunity is opportunity.
The real focus for the rest of the week will still be on Friday’s GDP release, although this morning’s Durable Goods could have potentially given the markets either a reason to celebrate or to fear that the news was a harbinger for impending interest rate hikes.
Instead of suggesting that the manufacturing portion of the economy was humming along those Durable Good numbers threw some cold water on the idea of any real economic expansion brewing.
At this point we don’t really know whether the market is going to view good news as good news or whether it’s going to take that paradoxical approach that it often does.
As the Durable Goods figures were released the futures did virtually nothing, befitting a market that may still find itself confused over what it wants to hear.
For the rest of the week I don’t see very much in activity. While I wouldn’t completely exclude the possibility of any other purchases of new positions for the week, it’s probably not too likely and there are only a handful of contracts that are possible rollover candidates this week that require much attention.
As the day gets ready to begin it doesn’t appear as if there will be too many chances to sell calls on uncovered positions, so it may be a very passive and watchful day today, just like it was yesterday.