Daily Market Update – September 12, 2016 (8:30 AM)
The close to last week’s trading came as a surprise to everyone except those who have the uncanny ability to look backward.
Since market moves are really driven by professional traders, it appears that the only people who saw Friday’s nearly 400 point decline coming were those who were casual traders and they were able to leave the losses to the pros.
I certainly didn’t see any reason for the decline to come on Friday.
In fact, it’s hard to say that there’s any good reason for the market to make a strong statement in either direction, particularly as the last few years have shown that fundamentals aren’t very important.
It’s all been about investor psychology and at the moment there’s really no clue as to how the market would behave when an interest rate increase becomes reality.
The latest thinking is that despite seeming to accept such an increase, the market feels much more comfortable with it coming in December, rather than next week.
I suppose that would give everyone a few months of cheap money to get their houses in order.
With lots of ex-dividend positions last week and some rollover activity, in addition to a new trade, I had more to keep me interested than I thought would be the case.
This week, there are also a lot of ex-dividend positions, but also a fair number in need of rollover, as the monthly cycle comes to its end.
As I look at the number expiring, it’s still far less than I would have expected at a monthly expiration in any of the past 5 years, but still enough to offer some opportunities to trade.
Increasingly, there has been reason to look at some longer term expirations, even as volatility has remained so low.
Friday’s plunge and this morning’s weak opening do increase volatility, but there’s quite a ways to go until that level even returns to its historical lows.
With some money to spend this week, I wouldn’t mind doing so, but am going to remain cautious.
Some of the price plunges on Friday and perhaps some more today may make it more difficult to resist, but with the big unknown coming from next week’s FOMC meeting, it may just be best to remain tight fisted.
There are also three Federal Reserve GOvernors speaking today, so there will either be fuel added to the fire or perhaps a soothing word or two.
Otherwise, it appears as if the whole world may be a little nervous about central banks becoming less accommodative and cheap money disappearing.
It’s hard to know whether that’s the tale wagging the dog or the other way around, but the next 10 days will be interesting.