Daily Market Update – March 18, 2016 (Close)
There’s not too much going on this week on the economic news front except for the release of the GDP on Friday.
Coincidentally, markets will be closed on Friday so any kind of reaction may be a little bit delayed, if at all.
After the FOMC Statement release this past week, the expectations for a robust GDP may be lessened.
In that case, a weaker GDP or at least one in line with lessened expectations may result in some market enthusiasm the following week, if anyone can still remember.
However, a better than expected GDP may lead some to believe that the next interest rate hike may come sooner than they interpreted the FOMC’s comment to suggest.
What the FOMC didn’t do was to say that there would be a delay in getting the next rate hike. What they did say, or at least what Janet Yellen said, was that there would likely not be as many rate hikes in 2016 as had been originally thought.
People hear what they want to hear and what they heard was that the next rate hike would be delayed.
This morning the market was understandably flat and it’s likely that the association with the price of oil will continue until that point that someone realizes that there’s little rationale for doing so.
Unfortunately, that may mean that markets won’t recover all that was lost as they followed oil lower, but as it stands, the market is at least at a break-even for 2016 as we get ready to bring a close to March.
Today wasn’t going to be that day, though, as there was no theme and almost no range of trading.
With an assignment last week, but no ex-dividend positions this week and no positions set for expiration, I would still like to make some trades to have some chance of generating income this week and will be again considering the energy sector.
The one trade was more on the speculative side, but as long as that sector specific volatility remains high, even after the gains seen in the energy sector, there is some added cushion from the rich option premiums to offset a portion of the risk that is still there.
I don’t think that i would get overly aggressive or spend too much in that area, but it continues to look as if there is additional opportunity there and in related companies.
Otherwise, there’s not too much reason to expect much of anything as the world is generally quiet and preparing for spring break of some sort everywhere that counts.
With markets closed on Friday and with volatility falling, there may be some reason to consider the use of an extended weekly option to get some additional premium, particularly if a dividend may also be involved.
Otherwise, I expect little in the way of personal fireworks.