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Daily Market Update – March 8, 2016 (Close) It’s was just another morning and oil was lower while stocks simply followed along. Yesterday was more of the same, except that oil was higher and so were stocks. In yesterday’s case oil was actually seriously higher, but stocks were sort of indifferent, with the DJIA showing the impact much more than the broader S&P 500. This morning stocks were appearing to head lower than might be warranted by the move in oil. But who knew what that would mean? When oil ended the day falling by 4% the DJIA didn’t look too bad, but the S&P 500 which also had a broader representation of energy and commodity related stocks really showed weakness, just as it had showed relative strength over the past few days. What goes up fast goes down the same way. Most still have to be looking for any signs of a break in the association between stocks and oil, but the few times that it looked as if they may be getting ready to go their own way, the association quickly returned. For now it’s still hard to see where any real economic growth would justify strength in oil. Normally a rise in oil prices would be net negative for stocks, unless there was significant economic growth behind an increase in demand for oil. Now, it’s hard to even get anyone to agree why the price of oil had gone so low to begin with. Sure, it was over-supply, but what was the reason for that over-supply. Now, most agree that it was more a case of over-production than under-demand, but as the price of oil has been moving higher, there’s no real indication that either supply is decreasing or demand is increasing. It could simply be speculation at play, which could also explain some of the large moves and the frequent back and forth, although the net has been to the upside lately for both oil and stocks. This morning both are lower and it just stayed that way all through the day as the market closed at its lows. With a single new position opened yesterday, specifically identified for the dividend, I would have like to be able to capture that dividend, but I would have preferred if I had to rollover the position in order to keep the dividend, instead of watching it take a hit along with everything else today. While I didn’t expect to be doing much more dipping into cash this day, if faced with losing shares to early assignment, I would have really liked to try and roll those short calls over an additional week to at least be able to get some extra premium if those shares are still going to end up being exercised early. But not today. At least tomorrow I’ll have the dividend. Now if only the position can be rolled or assigned, all will be good until next week. . . |
