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Daily Market Update – March 2, 2015 (Close)
After a fairly quiet week last week that had movement higher when it was suggested that interest rate increases might be delayed and then a move lower when it was suggested that interest rate increases may be sooner, there’s not too much to change the dynamic this week. If that’s the case, it may be the kind of quiet week as much of last week turned out to be until those interest rate projections caught everyone’s attention. The key thought here is that “it may be.” As it turned out this week started off with a bang, as interest rates climbed 4% and the NASDAQ 100 closed above 5000 for the first time in about 15 years. Good luck trying to figure out why, especially since the morning’s “Personal Income and Outlays” data showed another decrease in personal spending over the past month, making it two consecutive months that people have been spending less when we all expected them to be spending more. The surprise last week was that with all of the retailers who represented a large portion of the consumer market reporting earnings, no one really gave the kind of forward projection that you might have expected with a few months of falling energy prices as a backdrop. Yet despite expectations for good news, the market didn’t show its disappointment. Although the past few months have seen people question the validity of the Retail Sales reports the most recent earnings and projections, added to the downwardly revised GDP for the 4th quarter seems to validate the data showing that the consumer isn’t going out and spending those energy savings. The Personal Income and Outlays data added to the picture. On the one hand that could serve to delay interest rate increases, but on the other hand most everyone believes that some increases are needed and would be a good sign for an economy that is still very slow in its recovery and having a hard time demonstrating that it’s for real. Maybe it’s that kind of conflict that left the market in a sort of tug of war stalemate. Sometimes it’s hard to know what you really want. This week doesn’t have too much to move markets other than Friday’s Employment Situation Report and a number of Federal Reserve Governors looking for audiences. Included in that latter group is Richard Fisher, who is probably the loudest interest rate hawk, but he’s now a non-voting member and will be stepping down soon. So there’s reason to expect that this week could be quiet, although there still continues to be the issue of the fluctuation and uncertainty in oil prices and the re-emergence of nascent international political and economic issues. Despite today’s really nice gain, there’s still not much reason to think that there’s anything to spark a further climb, especially as that spark was missing today. With a little bit of cash injected into the reserve and a decent number of positions already set to expire this week, but none for next week, I’m probably not as motivated to add too many new positions and would likely consider using extended weekly options. The problem, though, is that those premiums are so low now that volatility has resettled itself following January’s ups and downs. With lots of ex-dividend positions again this week. even more so than the previous week, some of the need to generate income is diminished, but I don’t think I’m in a position to turn down any opportunities if they were to appear. This morning’s pre-open futures didn’t t look as if they were going to offer too many of those opportunities as the market was wavering around the flat line and oil ws ready to open the week considerably weaker, but still far above where it was just a few weeks ago. By the end of the day the market was anything but flat, but at least oil stayed true to form for the day. With little indication of where the market will be as the week progresses and with not as much to spend as I might like, it’s not too likely that I’ll be jumping in very much more, especially after already taking advantage of today’s drop in energy and climb in interest rates, but there’s still 4 more days to change my mind and attitude.
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