Daily Market Update – August 31, 2015




Daily Market Update – August 31,  2015  (8:15 AM)


While it’s not too likely that this week, or any week, can really be anything like the one that we just concluded, with lots of global economic turmoil being fomented from within China continuing, you just never know.

This morning the week begins with news that CHina has announced that it will no longer be buying stocks in its open markets, helping to support those prices amidst a plunge that had taken t6he SHanghai market down by more than 30%.

As it is, even with a wide range of interventions all within a confined period of time, that market is still down 20% and it really is anyone’s guess as to what unbridled market forces can now accomplish, if intervention is ending.

This morning, our own futures are pointing to another triple digit decline, after last week’s very tumultuous week ended on a very sedate note.

For our part, the only real potential catalyst that we may have to move markets will come on Friday, as the Employment SItuation Report is released.

The timing of that release may be a little unfortunate as markets are closed on the following Monday.

Although the past few years haven’t seen the exercise of the old adage of to not stay long over a weekend of uncertainty, especially if it’s going to be a long holiday extended weekend, this time it could be different.

With lots of uncertainty over what the FOMC has in mind and whether it interprets data differently from the rest of us, any indication of a strong jobs market could again stoke those completely unnecessary fears of an interest rate hike.

I still can’t understand why that has been feared so much and for so long, especially since so many people are well versed in the market’s trading patterns. Such early rate hikes turn out to come at times when markets still have lots of energy to move higher.

Anyway, as was noted in this week’s Weekend Update, whatever may await us is open to lots of interpretation.

10% corrections mean nothing as far as predicting where the market will go next. They certainly don’t portend an upcoming bear market. Yet, on the other hand, the kind of really large moves higher that we’ve seen do portend a continuing weak market.

With a few positions set to expire this week, an unusually large number of ex-dividend positions and still relying on the equivalent of margin funds to make new purchases, I am not likely to be anxious to open any new positions.

Of course, I’ve said that before.

As has been the case for quite a while, I would be most happy with the chance to sell call options on uncovered positions,  and would love to see some assignments this week to repay myself the margin extended to me.

That, however, seems unlikely as the week begins, so instead, I’d be really happy just to see those expiring positions get rolled over.

Hopefully this week will see some liquidity increase in the options market, as it would be great to take advantage of growing premiums. But as last week showed, there was so much uncertainty that buyers and sellers of options just couldn’t commit themselves to the trades, as the bid – ask spreads were unusually large. For the most part, it was the absence of buyers for both calls and puts that was at fault last week.

Continued market volatility, though, would likely start bringing in more motivated buyers and that would be great, because I am definitely a motivated seller.

Hopefully, this week will also continue the recent trend of out-performing the market, but also do so in more than relative terms and also add to portfolio value.

That’s more meaningful than just being able to say “I won,”when you still ended up losing.