Daily Market Update – July 31, 2014 (9:00 AM)
Whenever I wake up to visions of red on the screen as this morning the first thought that comes to my mind is “what day is it?”
Looking at the prospects of a DJIA opening approximately 100 points lower based on the futures trading the thought occurs that such an open would be far more welcome on a Monday than on a Thursday.
How much better is it to wake up on a Monday morning with freshly freed up cash from assignments and to be greeted by falling prices?
Contrast that with wanting to get rid of positions or roll them over and to be greeted by declining prices.
I know which order I prefer and it’s strongly associated with the concept of “buy low, sell high” or in my case, “buy low, sell somewhere near low, but preferably a little higher and with a dividend, too, if that’s not asking too much.”
When they say “what a difference a day makes,” I doubt that they had stock markets on the mind, but the relative order of daily results can have such a significant impact on outcomes, sometimes for good and sometimes less so.
This morning’s poorly timed news event on everyone’s mind is primarily related to Argentina and how it has perceived its debt obligations and its various class of debt holders.. It’s one thing to be unable to pay back a nation’s debt, but it may be another thing when it’s the eighth time.
With Argentina in technical default of loans after a very protracted legal battle you can understand how the market may take that as a negative signal, although there’s really no reason to believe that problem goes any further or deeper. The expectation shouldn’t be that it becomes the nidus for a larger and systemic market decline.
Beyond Argentina there are increasing concerns that growing sanctions against Russia will also have adverse impact on a number of corporations, particularly in the energy sector, but there is always the threat of trickle down and growing economic “tit for tat” that take out the innocent, as well. It might come as no surprise if suddenly McDonalds or Coca Cola were to find themselves in the cross hairs of some previously inert regulatory mechanism.
Adding to those bits of international news was some further futures weakening as jobless claims rose in the most recent period.
That’s consistent with the less than expected numbers seen in yesterday’s ADP report and may hold some clue as to what we might expect with tomorrow’s Employment Situation Report.
No one, other than a Republican in a congressional race, really wants to see anything that can be construed as a slowing down of the growth of employment. Most of us would prefer to see growth, especially to confirm the good GDP numbers that were released yesterday, to only transient applause.
So today may hold some challenges and tomorrow will be a wild card as the non-farm payroll numbers will have their influence one way or another.
That likely means that today will be a day to look for whatever rollover opportunities may exist and attempt to secure those trades, if any, while they are still possibilities, as you never know what tomorrow will bring.
I only wish I would have realized that expression had so much meaning yesterday.