Daily Market Update – May 18, 2016 (7:30 AM)
Despite what you may have heard about the Additive Law of Addition, it really does matter in which order you invest your money.
Do you remember the nearly 200 point gains of last Monday?
How about the 200 point gains of the previous week?
Well, you might then recall that on both occasions those gains were wiped out the very next day.
If you invested on either of the up days, there’s a good chance that you weren’t very happy the day after.
But reverse things, if the market heads sharply lower and you take the opportunity to dig into your cash reserves, you might be much happier the following day.
For the most part, the latter, that is investing at the lows of the day only to see a big reversal the next have been mostly fairy tales.
They just haven’t become reality and so often, what may have looked like a bargain following a large drop, whether in an individual stock or in the broader market, hasn’t been a bargain at all.
That now brings us to mid-week and futures are again flat.
That was the case for the preceding days of the week, as well. There had been no clue of what was brewing in the markets.
Actually, even as those big moves were happening, it’s not too likely that anyone had a clue as to why they were happening.
This morning, as for the next 2, there is still some earnings news.
While we await those reports for a handful of remaining important companies, there’s still the issue of oil and whether the market will continue to mostly follow along.
Now you can also add to it the newly re-discovered belief that the FOMC may have found a reason to increase rates sooner rather than later and maybe more than once between now and the end of the year.
A few weeks ago I couldn’t wait for earnings season to begin, but more importantly I couldn’t wait for the May 2016 option cycle to end.
With more expiring positions on this Friday than has been the case for all of 2016, I’m hoping to get some trades done and maybe even see an assignment or two.
The way things have been going back and forth lately, however, I have my fingers crossed more than is my customary amount.