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Daily Market Update – May 7 , 2015 (Close)
The one lesson that can be learned from Alan Greenspan and Janet Yellen is that the market doesn’t like it when they vocalize an opinion that essentially says that they believe stocks are too expensive. Whether it’s Greenspan’s “frothy exuberance” or Yellen’s questioning of bio-technology stock prices, yesterday’s comment that equities were “priced quite high,” seemed to get an immediate response. While the knee-jerk reaction is hard to argue, the longer term consequence is less clear cut, as such statements have tended to lead toward the market or the sector to move higher. Despite a late minute reduction in the decline, taking it out of triple digit territory, yesterday was a very negative trading session, adding onto the decline from the day before. Lately, when faced with a decline of some note there has been a reflexive bounce back the following day, so yesterday did stand out a little for not following that pattern. In a week that has basically no scheduled news sometimes it doesn’t take too much to make things happen and yesterday was a good example of that. Tomorrow, however, as the Employment Situation Report is released and most expect a bounce much higher from last month’s disappointing report, anything can happen. Both “too good” and “bad” are likely to lead in the same downward direction and even “as expected” may be seen as a disappointment. This morning’s futures, just prior to the Jobless Claims Report had already shown quite a bit of improvement and was only very slightly lower, hopefully putting the brakes on the past couple of days and giving those positions expiring this week a chance to either be assigned or get rolled over. The past few days put either of those goals a little further off the horizon. With the Jobless Claims Report released and essentially showing no change, the market also showed essentially no change from its improved position and looked at least be ready to start the day without the extreme prejudice that was hanging over it yesterday. Instead, it actually provided a nice surprise, as the market actually spent quite a bit of the day in triple digit gain territory and at least was there long enough to allow a couple of rollovers. Of course, that doesn’t leave too much for tomorrow, although there may at least be one rollover or assignment still in contention. Hopefully there will be some more rally tomorrow, even a relief rally would be fine right now, as long as giving some chance to generate some more income from holdings. As we close in on next week’s month ending expirations and with enough expiring positions to get my attention, we will hopefully not be taken further away from the goal line heading into the expiration date. After that anything is fair game
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