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Daily Market Update – September 28, 2016 Close) Yesterday marked the third consecutive triple digit move. Even though at these levels a simple triple digit move doesn’t mean as much as it once did, they are still relative anomalies. Yesterday was also another day where there wasn’t much reason for that triple digit move, unless you believe that the previous two moves lower just created an over-sold condition and that the market had no recourse but to bounce back. That , of course, ignores past instances where more than 2 days of large losses have been followed by a third, maybe even a fourth day of large losses. This morning, there was again nothing to really give markets an excuse for a large move. The difference, at least early in the morning was that maybe today could have been the day that the market may actually not have made any big moves. Logically, that could have been the case for today and tomorrow, as we waited for the GDP to be released on Friday. Yesterday’s common sense, that is, the market not following oil lower, as there was word that there would not likely be a production cut, didn’t hold today. In fact, the market turned higher, even as it was lulled to sleep with Janet Yellen’s congressional testimony, precisely when an agreement was reached to cut oil production. Sure, it makes no sense for the market to respond positively to what kind only be bad news, but maybe any inflation is good inflation. With a couple of positions set to expire this week, at this point I want to see them add to cash reserves. That means assignment of the short calls and expiration of the short puts. Both are possible, but I wouldn’t necessarily be upset if that’s not the case, as long as there is some reasonable opportunity to keep those positions alive and generating revenue. When we get to the mid-week, I already start thinking about what the next week may hold, but this week, as it often is when there’s a big economic release on a Friday, such as with the GDP and the Employment Situation Report, I suspend those thoughts and await what Friday will bring. I had wanted to see some pullback this week, but now would like to see some good GDP news, in the belief that will spur buying, as investors come to grips with an increasing likelihood of a rate increase in December. As long as that increase doesn’t come as a surprise sometime sooner, I think that a flow of good economic news heading into the December FOMC meeting, particularly if also coupled with positive guidance as the next earnings season begins in a couple of weeks, could send us toward and beyond market highs. I don’t have a kidney stone at the moment, but that’s one ride I’d like to go on as we head into 2017. |
