Daily Market Update – November 2, 2015 (7:30 AM)
While it’s still a busy week for earnings ahead, the real action starts at the end of the week and then next week.
At the end of this week is yet another Employment Situation Report and next week begins a slew of earnings from big box retailers.
It was just a month ago that following an initial negative reaction to a worse than expected Employment Situation Report that the market turned things around and has, in the course of those 4 weeks, almost entirely erased a 12% decline.
That turned out to help make October a really great market month, as long as you started your investing career in the market after 10 AM on that Friday morning.
Undoubtedly, in a few years there will be someone on some financial news network show whose returns will be based on having started tracking perfromance from that mid-morning.
What makes those two events so important is that good numbers from both could easily give the FOMC the push that it wants from the data.
Particularly since the FOMC has seemed to suggest that 150,000 new jobs would be sufficient to give them reason to do what now seems very clear that they are aching to get done.
While the FOMC has repeatedly said that they will be data driven, they have never said what thresholds they would use in making their decisions, so the suggestion that 150,000 may be enough, particularly as the last report, which was a rare one coming in at below 200,000, would no longer be considered “disappointing.”
Beyond that, next week’s retail reports will probably give an earlier indication of what the consumer is doing, as opposed to the official GDP reports.
While the earnings are backward looking, if retailers start painting some optimistic pictures with regard to forward guidance, you can feel pretty assured, that barring some unforeseen calamity, things are going to get better and better.
That would really be what the FOMC would be looking for as a signal to finally raise interest rates.
While we are all expecting that such a decision won’t come before the December meeting and many believe that it won’t come until 2016, back in October when the word didn’t come, it was made clear that the FOMC didn’t have to wait until its next meeting to make and announce a decision.
So everyone should still be on their toes between now and Thanksgiving.
The market is set to start the week off with a mild gain, but like last week, there’s not too much reason to expect any big moves.
Of course, last week didn’t need an excuse to start running higher in advance of the FOMC STatement release and then had sufficient reason to make big moves afterward.
That was mid-week. This time around we may have to wait until the end of the week to get a fire lit, but you never do know.
With some assignments and cash to spend, I’m willing to do so, especially if there’s a dividend to be captured. With a few positions already set to expire this week and some ex-dividend positions already in the mix, while willing to spend, I may be waiting for some relative weakness and would likely think about weekly contracts, if parting with some money.
For now, I’ll probably let the early trades work themselves out and see what kind of tone develops by mid-morning before making any decisions on new positions.