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Daily Market Update – August 17, 2016 (Close) The futures were again pointing to a flat open this morning. That’s something that we should be getting used to, perhaps being a sign that the market is getting jittery about what is coming next. The biggest reason to be worried is that maybe nothing is coming next. If the economy continues as it has been going and there is no real evidence of the kind of growth that would justify even the smallest of interest rate increases, it’s going to be pretty hard to keep interest in buying sustained. After hearing 2 of the Federal Reserve’s Presidents speak yesterday, ahead of today’s FOMC meeting minutes release, you would think that they’re seeing some kind of data or pattern that would justify a rate increase, but the market is getting far too many mixed signals. Still, even with yesterday’s minor decline, it continues to be record high after record high. We are even now at the point that this is only the 4th time in history that the market has gone up more than another 2% after surpassing its previous record closing high. So this isn’t necessarily a unique period in time, but it is a pretty rare one. At some point traders will wake up. What we don’t know is whether they wake up to a realization that nothing has been warranted on the basis of fundamentals or whether they realized that as old as this bull market may now be, we’re still at the beginning. It’s hard to believe that the latter will be the case, but as long as it’s surprises that you’re going to dismiss, you may as well dismiss everything that has already gotten us to where we are and whose reality has been validated. As we were to come upon mid-week and the FOMC minutes were to be released, we did find reason for the market to wander from its flatness of the morning. There were also some more earnings reports due and those were reason for an early market reaction, although yesterday’s news from Home Depot was met with a very muted response. Today, the response was less muted, but it was also shorter. That’s because the market liked what it saw in those FOMC minutes, even as they said nothing. My expectations for any action today were small, but there were a couple of potential trades to open short call positions on currently uncovered positions. That alone would have given me a reason to think that this week was worthwhile, but I’ll still be asking that question as tomorrow comes around. . |
