Daily Market Update – June 2, 2014 (Close)
The week ahead has lots of events and news that could potentially move the markets.
Apparently, the once important ISM Manufacturing Index isn’t that important, anymore, as it came in with some awful numbers and the market really didn’t react very much. Then it also didn’t react much when the numbers were corrected due to an error in calculation that was spotted by some astute people.
As if that wasn’t bad enough, sometime later, a second revision to the statistics released this morning was made and for the most part the market just yawned, as all eyes were on Apple instead, hearkening back to the days when Apple ruled and lead the markets.
The always interesting Apple World Wide Developers Conference (WWDC) kicked off today in the week that the Apple stock split takes effect.
The week ends with the Employment Situation Report and in-between is a much awaited ECB announcement on interest rates, which are widely expected to be reduced.
While there may be some positive news ahead for Apple, at least in the short term, that may move shares even higher once the split occurs, I don’t know if anything this week really is of such magnitude that it can convincingly cause the market to create new highs, rather than eking them out.
With only two positions closed last week while I’m willing to dip into cash reserves for new purchases, I’m not willing to go in too much.
As has been the case of late, I would much rather generate income by being able to sell calls on currently uncovered positions rather than putting new money at risk and when all else fails just simply rollover existing positions, which is usually a good kind of failyre.
With the market setting new high after new high a rational person would likely jump in and join the fun, but I think a toe at a time is fun enough right now unless there is some evidence of a breakout higher.
At some point it would be nice to see some conviction, whether it takes us higher or lower, rather than a tepidly trading market that just can’t seem to make its mind up as to whether to trade the market we have opr the market of the future.
As far as what awaits us in the past the axiom was always that trading was discounting the future by 6 months and was more reflective of the future than the present.
If that’s the case the outlook for the next 6 months is clouded, at best and certainly not enthusiastically embraced.
A lot of emphasis is being placed this week on Thursday’s ECB report on interest rates. While it’s widely expected that Mario Draghi, the Janet Yellen of the EU will announce a rate reduction it doesn’t seem too likely that if that news is confirmed that it will drive markets higher, simply because it is so anticipated.
On the other hand if what is anticipated ends up becoming a disappointment, by either not happening or being different than anticipated, there’s no telling what the result may be.
The very next day after that ECB announcement is the Employment Situation Report and lately the association between that report and the market moving higher on that same day has been breaking down a bit, although the entire week association, that is the week moving higher, has been holding.
So with a bit of tentativeness, I think this week may end up being a net positive, but there may be some bumps along the way.
With a number of positions already set to expire this week and having been able to roll over a fair number of positions last week, I may be somewhat more interested in finding expirations for next week, as looking at any potential new purchases. Additionally, where feasible, it may make some sense to execute rollovers before the ESR on Friday and possibly even before Thursday morning’s ECB report.
At least that was the plan this morning.
Instead, during a very lackluster day with trading in a very narrow range there was vert little to get excited about and the only two opportunities that seemed to come along ended up getting weekly contracts written.
So much for planning out the course of action.
There’s always tomorrow and we’ll see whether it being a Tuesday lives up to its expectations.