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Daily Market Update – October 5, 2015 (8:30 AM)
The last few weeks have been weeks of polar extremes. Not necessarily from one week to the next, but rather during the course of each individual week. We’ve had the recent experience of opening weeks up very weakly or very strongly and then ending the week in just the opposite fashion. Last week’s very impressive turnaround on Friday helped to end a consecutive streak of losing weeks and lifted the S&P 500 from being below that 10% correction line that we’ve been tethere4d to for the past 6 weeks. This morning begins a week that really doesn’t have very much in the way of news. While FOMC Meeting Minutes are being released near the end of the week and another earnings season also begins near the end of the week, there’s little before that to get much attention. Last week certainly had its ups and downs culminating with a very disappointing Employment Situation Report that really sent stocks in a freefall as they started Friday’s trading. That disappointment was related to the newfound belief that a rise in interest rates wouldn’t strangle the economy and was, instead, reflective of an improving economy. So not getting that increase sent a message that all wasn’t well, but that message didn’t last very long. Fortunately, that turnaround on Friday helped to see to it that a number of positions got assigned and was a nice thing to happen for anyone looking to increase their cash position. Now, with more cash in hand, I’m still willing to part with some, particularly as premiums are relatively elevated and share prices have the appearance of being bargain priced. That appearance can always be deceiving, of course, as they could and do frequently get even cheaper if they’re not attractive enough to draw in buyers. Lately I’ve been buying more than has been the case for nearly the past 6 months, but there is still some uncertainty about what comes next for our own market. As the 10 Year Treasury fell below 2% on Friday, once again stocks become more attractive. As China, Japan and Europe have their own hurdles that just adds to the appeal that US equity markets hold. While the FOMC may not have gotten any real reason to justify a rise in interest rates after this past week’s Employment SItuation Report, the beginning of another earnings season may start to supply some proof that the consumer is returning and becoming more optimistic and confident. An increase in both revenues and earnings could be the sign that we all are looking for that the economy is on an expansion path and could finally be what the FOMC needs to justify the action that they’ve been telegraphing for so long. This week I will be open to parting with cash, particularly since there are only a small number of expiring positions for the week and only a single ex-dividend position to create the cash stream that I’ve become addicted to. As with previous weeks I will be likely drawn more to short term contracts and would love to add a dividend or two to the mix, but you never know where the opportunity will be, as the script is frequently poorly suited for unfolding events. |
