Daily Market Update – April 22, 2014 (Close)
Although the morning appeared to be getting ready to get off to a quiet start the morning started with more activist related news in a suddenly strong pharmaceutical sector that could have served as a catalyst to wake everyone up. With all of the recent negative news regarding high prices for pharmaceuticals, what was clear was that when it comes to discretionary health care, such as Botox and other cosmetic enhancers, no one is threatening congressional investigation into pricing structure.
On top of that today is a busy earnings day from some big names and it is also a Tuesday, which is once again a day that the market seems to want to go higher much more than on any other day.
I don’t recall the statistic, but I believe it was something on the order of more than 20 consecutive higher moving Tuesdays last year that is now finding a match, at least on statistical terms, with this year. While the consecutive streak is safe, at least for now, the likelihood of the market moving higher is as likely this year as it was last year and both years defied logic. Yet they both have created believers who will put aside other, more rationally based approaches, to go along for the ride that they presume will simply continue.
It’s often said that “hope is not a strategy,” yet many who should not be swayed by such things aren’t as dismissive of streaks, despite the fact that they may have as much basis as hope does.
When little is going on that may serve as a potential catalyst for markets, things like streaks, including the recent streak of the S&P 500 moving higher for six consecutive sessions, gets more and more attention.
After all of the recent concern about the market dropping, we’re now just 1% way from its high.
When the session was over, after having spent most of its time in tripe digit territory, we cut that distance from the closing high by nearly half.
That’s a pattern also, although not as newsworthy as consecutive streaks, but the market has just continued to be incredibly resilient regardless of what kind of news comes its way. That’s something that you can believe in. The market goes up to a new high, then begins a half-hearted correction and then moves on to another new high.
RInse and repeat.
I don’t know if any of this has meaning for me today, tomorrow or for the next generation of Tuesdays.
All of these discussions are fads of the moment.
By the time you jump onto the pharmaceutical ship, it will have sailed. The broad paint brush is usually only used right after some news breaks. After that there’s lots of luck involved in getting it right when a choice is made trying to find the next likely company to be a target of activism or takeover.
When it comes to betting on streaks, by the time you figure out how to reposition yourself to take advantage of any obvious streak it is just as likely to come to its logical conclusion.. Yet we get fascinated by these momentary blips and factoids, thinking that they offer great insights into what awaits down the road.
Clearly something had everyone fascinated today. I had only one trade that I tried to make all day and within seconds of entering it the price sailed higher, which is definitely not something you want in a Double DIvidend trade, which in this case would have been Bank of New York. Instead, I was happy to just watch most everything move higher, but still disappointed in being unable to sell calls on uncovered positions.
If today was not a Tuesday there would be no reason to believe that much was in store as even with earnings news coming out from those big names there isn’t too much impact. The market itself has little to move it in any direction at the moment, other than discussion of completely irrelevant streaks and statistical momentum that really doesn’t exist as anything other than wishful thinking.
Which is the same as hope.
Unfortunately, Tuesdays are followed by Wednesdays when the market is as likely to go up as it is to go down, just as it is during the three other days of the week.
Still, there’s probably something that can be hoped for as a short lived Tuesday has run its course.
I don’t know what that is, but I’m content to let the market get lifted higher by whatever mechanism it can use, but staying flat for the rest of the week would be especially nice.
Is asking for nothing extra asking for too much?
I hope not.