Daily Market Update – February 9, 2016




Daily Market Update – February 9, 2016 (7:30 AM)

Among the recurring themes in  2016, in addition to the ones that have already been beaten to death, is the refrain that the loss wasn’t as big as it could have been.

I’ve said that many times already in 2016 and have looked at those mid-day or late day recoveries as being harbingers of some stability or even some advances to come.

Yesterday was one of those days as the DJIA was down nearly 400 points, but ended the day down only 177.


Without exception, those false recoveries have been just that.

They certainly haven’t been a harbinger of anything good to come and they have, instead served to falsify give a sense of something good ahead.

I generally like to purchase stocks when the market is in a downswing.

For most of the past 7 years those downswings have been very brief.

The typical scenario was a lower open to start the week and then a flourish to end the week nicely higher.

That went on and on for a long time.

These latest large drops haven’t seen the recovery flourishes and I haven’t had much reason to have the slightest bit of confidence about buying “on the dip,” because these haven’t been your typical dips.

A dip usually means a quick recovery ensues, but that hasn’t been the case and as a result, it hasn’t been a good idea to get sucked in by what appear to be good prices, as those prices have only gone lower and lower.

For a while much of the weakness was being obscured by the strong performance of a handful of stocks, but now, those too are beginning to give back a significant portion of their recent gains.

Yesterday I was very happy to have been able to sell some calls on some uncovered positions, as had also been the case last week.

With no rollover opportunities in either of these weeks, the sales on uncovered positions helps, as do the ex-dividend positions, especially with this week having 4 such positions.

Still, as yesterday’s late day recovery doesn’t offer much in the way of  confidence, the morning starts with some conflicting data.

The oil theme isn’t appearing to go according to script, as oil futures are up sharply and the stock futures are flat in early trading.

Additionally, the Nikkei lost 5.4% overnight and its bonds traded below 0% for the first time ever.

I still can’t get my head around 0% interest rates.

So fart, our own markets aren’t taking any direction from either of those inputs.

Tomorrow’s Congressional appearance byJjanet Yellen may be more of the catalyst for something, but it’s hard to know the tone or tenor she’ll take and it’s also hard to know whether investors will respond at face value or invert the words to create a paradoxical response.

Again, I don’t expect to be doing much today or probably not for the rest of the week, as we get ready for next week, which marks the expiration of the February 2016 contracts.

Still, I’d jump at any opportunity to repeat yesterday or the call sales of the previous week.