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Daily Market Update – June 22, 2015 (9:00 AM)
With a little more cash in hand to start the week, I’m still not overly anxious to do much spending. I’m not particularly excited either about having a third consecutive week without any new purchases, but the cash accumulation phase seems important to me right now. As long as that’s the case, and with an eye toward increasing the amount sitting in cash reserves, I like seeing a week get off to the kind of start that the pre-opening futures are pointing towards. When I have lots of cash and am anxious to spend it, it’s nice seeing the market get off to a decidedly negative start, especially if there’s not as large of an adverse impact on the positions set to expire that week. But when I don’t have much money to spend and the expiring positions could use a boost in their prices to put them into contention for either assignment or rollover, there’s a real delight in seeing the market begin the week on a much higher note. For the moment, credit is being given for the higher futures trading to begin the week to the prospects for some sort of short term agreement on Greece’s banking crisis, but the morning also has a couple of very big merger/acquisition stories that could be driving sentiment. Whatever the reason, I’m happy to see it and the prospects of the entire market being moved higher. With a few positions already set to expire this week as the July 2015 cycle gets ready to begin, I would welcome anything that brings any of those positions closer to either a rollover, or better yet, an assignment. With another GDP Report and reports on both existing and new home sales, there are potential market movers among the scheduled news events, but it’s not really clear how the market would react to overly good news. With the prevailing belief that interest rate hikes won’t occur until September, any particularly strong showing in the economy that may come prior to the FOMC’s next meeting late in July could offer fears for a rate hike coming as early as that next meeting. That would likely be neagtive for the market, at leat until those fears are realized in more than a month or they are dismissed. But in either case that would mean a period of about 5 weeks of worrying about what bad things the good news might bring, while totally forgetting that it is good news. We do that on a regular basis and squander opportunities to revel when there is perfect justification for doing so. Just as with some Employment Situation Reports in the past few months, the best data would be those that were just in line with expectations. Neither too good, nor too bad. Staying the middling course has its advantages and in this case mild strength in the economy would be the best way to see the market advance. The morning’s optimism looks strong enough to have some legs as the regular trading session gets ready to begin. That optimism is seen in every component of the DJIA, so it is spread more broadly than simply the health and energy sectors which are in focus with the buyout proposals on the table.
The Grrek story has about a week more to play out and may continue playing a day to day role, as it did last week and caused market gyrations. Hopefully there will be some rational thought and action coming from the Greek government that neither incite their citizens nor markets to do the wrong things. As the market does get ready for trading I’ll be more than happy if the futures turn out to predict a higher open and especially if it’s one that can be sustained until the closing bell. With little desire to spend money in order to generate income, I’d really like to see that income get generated from what is already in the portfolio. I’d especially like to try to atone for some of last week’s positions that expired and are now sitting uncovered.
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