Daily Market Update – October 26, 2015 (7:00 AM)
The final 2 days of last week put a real nail in Volatility’s coffin for now, as it got to see daylight for only a very short time.
I had enjoyed its brief return and wouldn’t mind seeing an encore, especially after having had some assignments last week and cash in hand for re-investment, if the prices are right.
With still lots more earnings reports to come, it’s hard to imagine that this week will provide the same kind of fertile ground for the market as was the case last week.
Last week we had gifts from the ECB and the People’s Bank of China, in addition to really great earnings from a trio of companies that could conceivably reflect what’s going on in a big portion of the economy.
But other than those three, albeit very important companies, there hasn’t been too much to get excited about.
If you’re the kind that looks at bad earnings news as being the sort of thing that delays an interest rate hike you would be happy, so the news from that trio may put a damper on things a thought now turns to what the FOMC will do this week as it meets and releases its Statement on Wednesday.
More likely than the FOMC actually doing anything, though, is it saying something. It may take note of improving conditions in China and more likely, signs of a recovering consumer led economy in the United States.
Until then, though, we still have half of the trading week to figure out where things were going.
The rally of last week on Thursday and Friday have altered my position that we would see a rally heading into the FOMC Statement release, in anticipation of no real policy change coming from the FOMC.
This morning’s futures point to a much more tentative investing environment.
With a nice amount of cash raised from last week’s assignments, I wouldn’t mind opening some new positions, especially since there are none expiring this week and only 2 ex-dividend positions to generate income flow.
As in past weeks I’m mostly inclined to do so in the face of some declining prices. Lately the market has been good about doing that as the week has opened.
In the past few weeks even a flat opening may have seemed a little bit of an invitation, but following the rapid surges of last week, I think I want to see some more being given back before committing much in the way of new funds.
The S&P 500 is now barely 3% lower from its all time highs after having dropped almost 12 %.
That’s a pretty sizeable gain in less than a single month, so I may want to sit on cash a little bit more than has been the case the past few weeks.
With the market pointing toward a flat open to begin the week I’ll probably be more tentative than I usually like being, but I do like having some more cash in hand than has been the case for quite a while and don’t want to get deep in the hole again so quickly, particularly as a single word change in an otherwise dry tome put out by the FOMC can dash the entire party very quickly.