Daily Market Update – September 22, 2016 (7:30 AM)
The market moved about 160 points higher yesterday as the FOMC announced that there wouldn’t be an interest rate increase.
At least right now.
The market, did as it had done other times, it seemed to accept the fact that there wouild be an interest rate ahead, as the FOMC hinted very strongly that there was room and time for such a hike still in 2016.
Actually, it didn’t do any of that until Chairman Yellen’s press conference.
Up until that point traders were trying to figure out what to do and actually reversed their initial knee jerk reaction which had returned the market to its opening highs and took it to its intra-day lows.
The Chairman’s words were the ones that soothed, as the market went higher as she recited her prepared text and then continued during the question and answer period and continued right until the closing bell.
Investors also got some good news from the Bank of Japan, which basically admitted that a negative interest rate environment had not been working.
For some here in the United States, there was still a fear that negative interest rates could have become the Federal Reserve’s next weapon.
So the market celebrated and there may be as many as 3 more months ahead, but it has been clear that whenever the market believes that there might be a chance of an interest rate increase in the near term, it doesn’t like the idea.
With the FOMC strongly suggesting that there was still time for an interest rate increase in 2016, we’ll see what happens as we draw near.
While most interpret that to mean December, there is nothing sacred to prevent an increase from being implemented before then.
That would likely get investors upset, even if the underlying economy was in good enough health to support that increase.
In the meantime all eyes will be focused on whatever economic reports might justify that increase.
Best of all, however, would be some cheery guidance coming from companies as earnings season starts all over again in about 3 weeks.
I suspect that there will be little for me to do for the rest of this week, with no expiring positions to think about.
Maybe any residual rally today or tomorrow may give some opportunity for call sales on uncovered positions, but as has been the case for much of 2016, I’m happy just going for the ride and catching any opportunity that might come along.