Daily Market Update – January 19, 2016




Daily Market Update -January 19, 2016 (7:30 AM)

A holiday shortened trading week was incredibly welcome this week after how the first two weeks of 2016 treated most everybody very shabbily..

As the third week gets set to begin trading we were greeted with another Chinese economic report that was met with lots of skepticism, as despite the obvious growth having had taken place in China, there may be figurative smoke to go along with all of the real smoke choking off the major cities.

But the real story was the sharply higher price of crude oil this morning.

Along with it are going stocks in the early futures trading as they continue the strange alliance with oil.

Oil goes down and stocks go down. Oil goes higher and stocks go higher as people are left scratching their heads wondering why no one pays homage to the historical relationship.

S&P 500 futures were up very sharply this morning, but taken in context, the 250 or so point gain being seen in the DJIA is just about enough, if coupled with one of last week’s 250 point gains, to offset only one of the losses seen last week.

With the S&P 500 down about 8% in 10 trading days to start the week, it’s going to take quite a bit to begin to offset those losses.

With so many expirations last week that couldn’t get rolled over, I’m not terribly interested in looking for more places to park what little is sitting in the cash reserve. I would much rather look for any opportunity to find a call sale that could be made to generate the income that I want and need for the week..

In looking for those opportunities I would look to try and take advantage of any bump in volatility that we’ve had over the past 2 weeks and maybe even look at some longer term expirations.

The other factor that may get woven into the decision process is just where earnings are going to be reported. The earnings will also give a bump to premiums.

There isn’t too much in the way of economic reports this week nor in Federal Reserve Governors speaking, so it may again be a week dictated by oil and the occasional international surprise, such as has been the case for 2016, to date.

While some prices looked very appealing when the market closed on Friday, this morning’s attempt at a strong gain takes away some of that appeal, but staying power hasn’t necessarily been a characteristic of the market over the past 2 months whenever it has put together a nice day, so it’s very unlikely that I would find myself biting at anything today.

I otherwise expect this to be another quiet week of trading, but I’d be happy to see some of the reversal of fortunes, even at the expense of giving up on some of the volatility induced premiums.

Those premiums aren’t very helpful if the trades can’t be made.