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Daily Market Update – February 18, 2016 (Close) After yesterday’s gain, which came on top of Friday’s 300+ points and Tuesday’s 200+ points, February 2016 has gone from having started last week as even worse than January 2016 to actually being in the black. That’s quite an achievement. The real test is how the market handles such gaps higher. 798 points on the DJIA in just 3 trading sessions is pretty good by all measures. What it has done is to bring the DJIA to some near term resistance. While the S&P 500 is also at a near term resistance level, it does have another minor resistance level about 12 points higher. After that, if you believe in charts, it’s do or die, as the next resistance level for both indexes is much higher. On the DJIA it’s about 1200 points higher and for the S&P 500 it’s about 150 points higher. What would be good would be to see the gains coming in smaller sizes and taking a day off every now and then to digest those gains. But that would be the rational thing to do. And today the market did the rational thing. Although I had hoped that the gains would keep going for at least the final 2 days of the week. Although it does look like there will finally be an assignment, the first in 2016, I’d love the idea of actually also being able to roll anything within the small number of expiring positions. Even going out a few months would be nice and also a nice change of pace. Unfortunately,with the market taking the day off today, it wasn’t the time to find those opportunities popping up. The futures were mildly higher this morning, with again, no real news to account for anything, although Asian markets were again nicely higher. As the day progressed the market gave up its gains as oil led the way also giving up its gains. The story seems to still be one of oil, but more and more the lessened possibility of increasing interest rates seems to be having a calming effect on traders. At some point and I thought that point would have been here at least a quarter ago, there has to be some evidence that earnings are getting better in organic terms. At some point there has to be a real reason for the market to go higher and not just on paradoxical reactions to bad news or from stock buybacks. That would be nice, but I’ve waited a long time for the past to return. In the stock market it usually does, but usually much more quickly than this macro-cycle has been doing. For now, I’m still patient. Who knows, even oil may make some kind of a meaningful comeback. Stranger things have happened. . . |
