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Daily Market Update – September 16, 2015 (7:30 AM)
Yesterday was really a surprise. It was funny to hear so many people refer to the fact that the day before an FOMC Statement release the market has a tendency to move significantly higher. That was their explanation for a 228 point gain in the DJIA, with really not an instant in which that gain would come under attack throughoiut the day. That observation about the day before an FOMC Statement release, actually has been true for about the past 18 months, with an occasional outlier or two. Still, the odds have been very good that if you were investing during the Janet Yellen era the market went higher on the Tuesday ahead of the Wednesday release. What no one really seemed to make note of was that today was really like the Monday before a Wednesday release and there has been no identifiable Monday pattern. Today was the equivalent of a Monday because this week’s FOMC Statement release is on Thursday and not it’s usual Wednesday. So if you believe in patterns, and I do, there’s still no reason to believe that a pattern was involved in yesterday’s really strong showing that just got better and better as the day went along. AT least there were appearances of there being a reason to explain what was really not so rational. Our gains today came despite the fact that China was again abysmal and our pre-open futures were comatose. Since there was nothing to point a finger at as being responsible for the day’s gain, it can only be that investors are finally at peace with whatever the FOMC will decide to do this week, as long as what they decide to do is within the narrow range of anticipated actions. It’s like your parents being at peace with whatever you decided to do with your life, as long as it was becoming either a doctor or a lawyer. When Thursday afternoon does roll around It’s very unlikely that there will be anything of a surprise, but if there happened to be a surprise, such as a 0.5% or greater increase or any suggestions by Chairman Yellen during her press conference that economic data couldn’t support an increase in interest rates, I would be prepared for a major sell-off. I don’t expect that, but if the interest rate isn’t increased on Thursday, someone is bound to ask the obvious question during the press conference. No matter how Yellen might nuance that answer, the bottom line would be that things aren’t as good as had been hoped. Considering that there appears to be growing sentiment within the FOMC that a rate increase is due, if it doesn’t come through this week, all of those mindsets that had come around to not feeling threatened by the increase might instead feel threatened by the lack of an increase. Does that make sense? It shouldn’t, because up until yesterday, there probably hasn’t been a single day when invetsors seemed to understand that there was nothing in our past to suggest that the early stages of such rate increases is anything but a good thing. Anyway, now at mid-week and with very little trading activity, it becomes a question of just waiting for events and seeing whether any opportunities will be created as the monthly cycle will come to its end. I hope so, but very little has played according to script the past few months, so there’s not too much reason to suspect that things will become more predictable any time soon. |
