Daily Market Update – April 26, 2016 (7:30 AM)
The market recovered nicely from a big loss yesterday as oil and commodities gave back some of the big gains they’ve made over the past two weeks.
Heading into Wednesday’s FOMC Statement release, you might have had reason to suspect that trading would be pretty quiet, but there’s still the matter of oil and lots of important earnings announcements this week.
This morning, the market again looks as if it will open flat, just as it looked yesterday, but some earnings are coming in that aren’t terrible.
That’s the way the bar is set right now.
The expectation is for terrible and if it’s anything better, well then there’s reason for exaltation.
This morning, not all of those numbers have looked better than the expectations, but more importantly, some companies are giving better guidance.
When oil companies start to give better guidance, such as BP did this morning, there’s reason for some excitement, even if their guidance is heavily dependent on workforce reductions.
History has shown that the market rewards those kind of things, even as they are bad for the overall economy.
Microeconomics versus macroeconomics.
It’s a story as old as Cain and Abel.
This morning’s flat market comes the day before the FOMC Statement release, which for the past couple of years has been a day for markets to move strongly higher.
That wasn’t the case last month and may no longer be the case, as the countdown for an interest rate increase is really on full alert.
I have some money to spend this week and am still considering doing so, but am torn between the risk of earnings and the lure of dividends.
That’s a story as old as Cain and Abel, too.
This morning’s futures do have oil weaker, but the market isn’t following very closely. It now seems to be more reactive to larger kind of moves in oil.
Oil now appears to be getting comfortable above $40 and the next level that has to be broken is $45.
At some point, someone is going to look at increase gasoline prices, up about $0.08 last week and make note of how that’s going to hurt the summer travel season.
True, but logic hasn’t worked any of the way down in the price, so we’ll see what role logic may play if the optimistic outlook for the price of oil is correct.
I, for one, who suffered on the way down, would like to see the association continue, even if it is illogical.
With a few ex-dividend positions this week, one potential rollover and the sale of calls on an uncovered position, I’d still like to see some more activity this week.
The idea of a surprise from the FOMC doesn’t seem too likely, but I assume that they use very different criteria than the rest of us when interpreting data, especially the data that we don’t have access to, yet.
Such as Thursday’s GDP.