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Daily Market Update – November 19, 2015 (7:30 PM)
Yesterday was a big surprise. There were 2 things that happened that made it an impressive day. The first was the manner in which the market reacted to the release of last month’s FOMC minutes, which indicated a much more hawkish tone and one that made it pretty clear that the intent was to raise interest rates soon. That the market didn’t run away in terror was a good sign. There was already some word that would be the news in the minutes and that may have been the reason that the market had opened with some strength heading into the official release at 2 PM. It was, however, at 2:04 PM that the market really took off and moved higher and higher. While it may have been the official release of the minutes that was the proximal cause of the further rally, perhaps coincidentally, it occurred just as the DJIA had fallen to and successfully tested the 17600 level, which proved to be a resistance point on Tuesday. Yesterday, after testing that point for just a moment, and again, perhaps coincidentally, the market turned a decent gain into a really nice one. With some decent earnings for the week and a more mature look at what interest rate increases might mean at such an early stage, there’s some hope that the market will be able to maintain this forward momentum as the monthly option cycle is getting ready to come to its end. There are some more earnings reports for this week and for this current cycle, but we are now near the end of the ones that really matter for the broader market and so we may begin to fall into that more quiet time of the year when most talk starts centering on retailers and their holiday sales. Using the past as a guide, that typically means considering adding retailers in advance of the official start of the season and holding on through the end of that season, as the script is usually fairly consistent. Expectations are usually low and results are usually better than expected. That tends to be a good formula for buying and selling. But that might be easier to do if the market maintains its strength this week and allows for some assignments of some existing positions and creating some freed up cash to recycle into that sector, where appropriate. For now, it may just be a case of sitting back for these last two days of the cycle and see where the opportunities arise. |
