Daily Market Update – August 4, 2016 (7:30 AM)
Yesterday broke the streak of 7 straight days of losses, but it wasn’t a very powerful statement of buying strength.
Whatever there was yesterday was all on the heels of a rally in oil as everyone was piling on and some even talking about a $15 per barrel level.
That kind of unanimity is often a sure fire way to see just the opposite happen, but now we get to watch just how long that will last or whether the slide in oil will continue.
Other than the past 2 days the sharp decline in the price of oil has only been matched in direction by stocks and not in magnitude.
The past 2 days there wasn’t much in terms of magnitude, but the close association and moves back and forth in tandem were pretty convincing.
This morning both markets are fairly flat, although traders are awaiting an announcement from the bank of England.
No one expects any kind of surprise, but there is reason to wait, especially as tomorrow can bring another big data release when the Employment Situation Report is released.
For the most part, other than retail earnings, which begin to get released next week and the week after, we are now done with most of the important earnings releases and at least the numbers and guidances haven’t been disappointing.
Even as GDP hasn’t pointed toward the kind of growth necessary to support an interest rate increase, corporate earnings aren’t totally embarrassing and they aren’t sending anyone into spasms of selling.
This looks as if it will end up as a week of no trades, which is the most painful experience I can imagine if there’s not much in the way of asset growth at the same time.
So far, and likely for the next 2 days, this would have been a good day to have closed up shop and gone to the beach.
I don’t know if next week will be any different, but as those retailers do begin releasing their earnings, it will be interesting to see the reaction, given that sector’s weakness this past week.
Some decent numbers, or at least a respite from the perceived bad news this week could be a broad catalyst that has been long missing from the market, even as it was setting new highs.