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Daily Market Update – October 27, 2015 (7:30 AM)
Yesterday wasn’t very exciting and this morning looks as if it may be no different. What is different is that in the past few months the days preceding the FOMC meeting had been really strong market days. That’s in contrast to the situation during the final 1-2 years of the Bernanke tenure as Chairman of the Federal Reserve, when there was lots of uncertainty in advance of the FOMC Statement release and very little stomach for committing to buying stocks. Back then, the real reactions took place after the 2 PM release, although weakness going into the release was more likely to be seen. That changed when traders began to realize that the economy’s bad news would continue to be good news for them. Now, they seem to flip flop on the meaning of anything. At the moment, the feeling is that no news is good news. But this week it seems that all of the party euphoria feeling and willingness to spend money all happened last Thursday and Friday when a slew of good news all hit. Of the good news, 2 of those 3 items spoke to continuing easy money in the EU and China. While it’s not likely that the FOMC will announce an interest rate increase today, they could really throw some ice water on last week’s rally, and perhaps the entirety of the recovery seen in October, by simply suggesting that conditions in the economy are bringing us significantly closer to the day of reckoning. On Thursday the GDP is released and national retailers begin their turn for reporting earnings soon. The last GDP was stronger than expected and another month’s worth of that kind of data, especially if there are also upward revisions, could upset traders, who really have no reason to be upset. While I did spend a little bit of money yesterday, I do have willingness to spend more, but would really still like to see some additional weakness heading into tomorrow’s FOMC Statement release. This week will continue to be one heavy with earnings and this morning those earnings are continuing to be mixed. The really big news on earnings will come after the close of trading today when Apple reports and it’s really anyone’s guess how they will report, as it is anyone’s guess how the market will react. What is clear is that Apple has stopped being a market leader or market barometer and this week it’s option premiums were actually not very enticing, given what seems to be more uncertainty than in the recent past. For today, I envision another fairly quiet trading day, although there may be some interest in capturing Ford’s dividend, as it reported earnings this morning and is ex-dividend tomorrow. Otherwise, it may just be a case of sitting back and joining traders and not do any trading while we all wait for tomorrow. |
