Daily Market Update – October 2, 2014 (Close)
After yesterday’s 238 point drop and following all of the tumult of the past two weeks, it’s hard to believe that the market is down only about 3% from its peak of just two weeks ago.
For the most part there really hasn’t been much in the way of meaningful news during the past two weeks but the market has certainly taken on a very, very different tone.
Whether the net movement is lower or higher there’s a palpable difference even if you have never heard of the word “volatility.”
For all intents and purposes the market was neither higher nor lower today, but you certainly know that it was volatile, having traded over an 180 point range, having lost 130 points at its lowest point.
When there are no real over-riding economic themes, as there haven’t been of late, you can at least see why the market is like a ping pong ball in active play. The movements of the past two weeks have really been dizzying and there’s no indication of when the next period of stability will be at hand.
The only thing that may return some fundamentals to trading may be the beginning of earnings season next week.
It would be nice to see a market trading on something tangible, such as fundamentals.
It lately has been ignoring geo-political events, which is a good thing, but has also been ignoring the precipitous drop in commodity prices which would ordinarily have a positive impact on growth and discretionary spending.
Of course the results from earnings season could cut both ways, especially as there is an increasing consensus looking for improved numbers. The problem with those kinds of expectations is that there is more possibility for disappointment.
We all know the phenomenon of “good not being good enough,” and that consistently extends to stocks when they report their earnings.
Before next week’s earnings there was still the matter of this morning’s statement from the ECB and tomorrow’s Employment Situation Report.
What may be increasingly noted on the ECB front is that its leader, Mario Draghi may be much better at rhetoric than action.
He has moved global markets on more than one occasion by making comments suggesting that the ECB can and will do whatever it takes to meet the ECB’s single mandate, which is to maintain price stability.
Most recently the expectation has been that the ECB would introduce its version of Quantitative Easing to help keep interest rates low, but it has really done nothing.
That didn’t change this morning as Draghi announced that the ECB will continue to observe the situation. He also lambasted the EU leadership and that pleased no one and may ahve been the ultimate reason for the morning’s weakness.
So that leave’s tomorrow’s Employment Situation Report to offer some respite to the negative trend.
After last month’s disappointment we really don’t need another, but too good of a number will get ebveryone all concerned again about the prospect of rising rates, so it may be another case of bad news better better than good news.
Hopefully, whatever the news , it will be interpreted as good news. If so, it couldn’t come at a better time, but at least today didn’t move positions further, or at least much further from their strike levels. That removes some of the burden from tomorrow’s market and it won’t be requiring an explosively upside move in order to get that desired combination of rollovers and assignments.