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Daily Market Update – March 31, 2015 (8:00 AM) Yesterday was a nice day. It had been more than a month since the market was able to put two advancing days together and the 263 point advance in the DJIA pretty much assured that the quarter, which ends today, wouldn’t end up being the first losing quarter in quite a while. This morning, however, the early indication was that the market has changed its mind and wanted to take back a significant portion of what was gained yesterday. It would take a lot, though, to move the quarter into negative territory, although another day like last Wednesday could do it easily enough. As today was winding down in its final hour of trading that additional selling push came in turning a moderately negative day into a strongly negative day as the drop doubled in size in the final hour. By the time it was all done the DJIA ended up with a quarterly loss. As with yesterday’s gain, it’s not that easy to pinpoint a reason for the triple digit move in the pre-opening futures, nor was there really an obvious reason for the slide later in the session.. Lately reasons haven’t been necessary and have been few and far between. How else could you have the kind of regular alternating up and down pattern that we’ve been seeing? Yesterday’s gain was just another in a string of very large gains that we’ve seen in 2015 and that get me nervous. We’ve had about 15 gains in the 150 and higher point range and yet the DJIA is up only 153 points for the year. Actually, that may be good, because historically, when you see really large gains they tend to be associated with bear markets. If that’s the case this time around, at least the bear market hasn’t hit yet and is only sending an early warning signal. The challenge is what to do about what may be an early warning signal. Human nature makes it so that when we see a large gain we think that it’s going to be the first of many to come. That’s because sometimes they are. but so often they’re just there to suck people in. The lesson, though, may simply be that 150 points just isn’t that large of a move anymore, at least in relative terms. It may be that what we really need to see to justify being nervous are more and more of the 250+ kind of higher moves. In that case, I’m still nervous, because those have definitely been spotted over the past few months, as well. Ever since reaching its then peak in early December 2014 the market has seen lots of these triple digit moves, with most just working to offset one another. In the nearly 4 months that have passed since that time the DJIA has gone about 76 points higher and I’ve decided not to even try and count the number of triple digit moves, but if you’ve been watching you know that they’ve become fairly commonplace since then. With a couple of trades yesterday I would have loved to have seen a continuation of yesterday’s gains to be able to sell some more calls on uncovered positions or at least to be in better shape to have some chance for rollovers on Thursday or even, dare I say it, some assignments. Today made all of those more challenging although as with last week’s early morning futures sell off that eventually reversed itself as the market opened, this morning’s sell-off was getting a little less pronounced, so for what it’s worth, my fingers were crossed. But obviously it wasn’t worth much. Last week’s turn-around on that morning was surprising, as it was welcome. I don’t expect the same to happen again this morning, but it would have been even more welcome this week, as there are fewer days to recover from any large decline, as markets are closed on Friday. Today’s trading helped nothing. At the very least we can be certain that March is coming to its close today and it will be as good to see it go as it was to see January go. What we don’t know is whether April will be as welcome a breath of fresh air as was February. Unfortunately, April will have the added challenge of currency challenged earnings that will start in about a week. While you would think that we’re all prepared to deal with the adjustments that may need to be made in earnings expectations and that perhaps lower prices already reflect that reality, there’s bound to be shock and dismay coming. |
