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Daily Market Update – August 20, 2015 (Close)
Yesterday was a rare kind of day. For one thing there was a very premature release of the FOMC minutes from the previous month. That doesn’t happen too often, but every time there’s an early release, whether it’s on embargoed items or company earnings, the fingers start pointing very quickly. The other thing that seems to characterize early releases is large moves and then reversals of those moves as traders try to out jockey one another and take whatever advantage they can of the unexpected. This time they all pointed to Bloomberg News and instead of it being a leak done in high frequency trading time terms, this one was about 20 minutes early. What there was no shortage of was surprise, nor was there any shortage of attempting to take advantage of the surprise and then either profiting from those quick actions or coming to regret those quick actions. That’s because the real story was that there was another strong reversal to a triple digit drop, which had to offer some encouragement, particularly in light of earlier in the week, when such a reversal couldn’t find some staying power. So ordinarily today would be a day of hope. That hope would be that the reversal could find some staying power, but unfortunately there was a reversal to that reversal. That was the really big news for the day as traders were really confused over how to interpret the FOMC minutes. Now only were they divided over whether the tone was hawkish or dovish, but whether their interpretation should then be acted up in paradoxical ways or accordingly. So this morning was destined to be one opening on continuing confusion, but added to it is some clarity. That clarity comes from China, which was continuing its steep decline from earlier in the week. I’ve lost track, but I think that this morning’s decline in China brings it to more than 10% on the week. This morning’s triple digit decline in the futures seems reasonable given yesterday’s real disappointing lack of follow through and the morning’s overseas news. I had thought about doing some early rollovers yesterday, but then felt briefly vindicated as the market recovered and gave some hope that there could still be some assignments. That hope didn’t deteriorate too much as the market then reversed its reversal, but this morning it was not looking terribly good. In a week, however, that has really been characterized by reversals, it wouldn’t be unusual to expect that at some points those bargain hunters are going to come in, but it may first take some kind of capitulation in the oil sector to really get things going. As it would turn out, if anything resembled panic or at least accelerated selling, it wasn’t really in oil. It was in everything else today. It’s tempting to want to call a bottom in oil, but the fervor in selling hasn’t really occurred. With the prospects of Iranian oil hitting the market and the intransigence of the Saudis, the prospects of oil climbing higher in the face of a Chinese economic slowdown doesn’t seem too likely. And so I thought that today may be a day of trying to wait things out and hoping for the opportunity to roll anything over. Surprisingly, some of those opportunities came, but in keeping with a theme of surprises, nothing surprised me more than digging into my other pocket and adding some shares of Bank of America, which along with everything else was hit very hard today. It could just as easily have been Blackstone or MetLife, but Bank of America is ex-dividend in a couple of weeks and I’m looking at bypassing next week for expirations to give the market some more time to get things out of its syst While I thought today might be a day of leisure, I was happy to see that it wasn’t and am hopeful that tomorrow may offer some opportunity for shares of Cisco, Cablevision and Intel. Meanwhile, I’m prepared to be in watching mode next week and would love to just sit back until this August comes to its end. |
