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Daily Market Update – August 3, 2015 (Close)
With last week being another in a direction higher, the market has continued its back and forth character for a while, with occasional minimally sustained moves lower or higher. Lately, we haven’t even been able to get a real mini-correction going, although we came close on an intra-day basis. Otherwise, it’s been 5 months since there has been a 5% drop on a closing basis. We used to talk in terms of a 10% drop, but for that you really have to go back in time. What has been missing for a while has been any kind of sustained move and as we sit getting ready to begin the eighth month of the year, the market is essentially unchanged, owing most of whatever gains it has for the year on the past week. This late in the year it’s somewhat unusual to keep hearing the phrase “and with today’s loss, the market has given up all of its gains for the year.” That’s been very commonly uttered the past few months, yet somehow the market has resisted staying down or getting up. Looking at this morning’s futures, it seemed to be a perfect reflection of that kind of indecision, as the futures were perfectly flat for the morning. It would turn out to be anything but a flat kind of trading day, as the market was decidedly lower, but without any obvious reason for taking the sharp downturn. If China stays calm for the week, there’s very little international news that should have an impact on markets this week, but today was an example of how news isn’t necessary. For the rest of the week there are still earnings to come, but the next important wave of earnings begins sometime next week as Retail begins to report and will continue in the week following. There is an Employment Situation Report this week, but with no Federal Reserve meeting for nearly 2 months, any incoming data today can be old and stale by the time the FOMC gets together to make an interest rate decision, which is increasingly not looking as if it will result in a September rate increase. So it’s not too likely that Friday’s report would have any impact, but the guess is that if it is outside of the expected range, a bad number would move markets down, while a really good number might send the market higher. That’s the way economic news is supposed to work when people aren’t trying to over-analyze everything. The one thing that should be noted by now is that for the past year, markets, pundits and analysts have all been wrong about when that first rate increase would come and fears of that increase have perennially depressed the market, as the fears simply got stretched out over time. This may still end up being a quiet week for the market, despite today’s dour trading. While I was expecting it to be a very quiet week for me, I surprised myself with 2 new positions and have exhausted cash. With limited cash and no positions set to expire this week, the best bet for activity would now be if the market could somehow find a way to add some real gains and perhaps create an opportunity to sell some calls on uncovered positions. WIth having spent the day digging a hole, it’s going to take more to climb out. I won’t hold my breath for that, but as we’ve been seeing over and over again, the morning’s futures trading doesn’t necessarily mean anything for the trading day to come. I had hoped that would have been the case this morning. We’ll see what tomorrow will bring.
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