Daily Market Update – December 23, 2014 (Close)
This morning’s GDP report, plus any revisions, was expected to give us a glimpse into what lower energy prices can do for the economy.
At best, it will only be a glimpse, as those lower energy prices haven’t been around for too long, but all you have to do is speak to anyone and you know that they feel as if they have more money in their pockets.
Americans like to spend money that’s in their pockets, so hopefully that sensation of feeling better off will translate into something tangible.
If the parking lots at the malls are any indication, they are doing just that, but we haven’t heard too much from retailers, as everyone has been talking about nothing but fuel prices, but in a good way..
That lack of retail in the conversation will end soon, just as Christmas Day is now just a couple of days away.
As it turned out that glimpse offered some good news as the GDP is now indicating 5% growth, which is the highest rate in 10 years.
Not quite what we used stand in awe over when it was China reporting rates even higher, but ours are a bit more believable and if the law of large numbers ever applies to anything, it’s not that easy to grow an economy the size of the United States.
The real fun may start next month, as the next scheduled GDP comes the morning after the FOMC Statement release. Of course, if today’s report shows too much growth, there’s always a chance that a data driven FOMC would see that kind of accelerating growth as a reason to begin to move interest rates higher in an effort to prevent over-heating off the economy.
But that’s an issue for another day.
This morning, in anticipation of the GDP the futures market seemed as if it is willing to add to yesterday’s record closing high. It looked as if the markets were dropping their good is bad and bad is good perspective and getting ready to make an expression of “good is good.”
With oil headed lower yesterday it was another example of the de-coupling that started last week, as stocks went very nicely higher, although this time they left the energy sector behind.
Mt thinking early this morning was that another nice day today, maybe fueled by the GDP could give some opportunity to sell some calls on those uncovered positions and that would be more important to me today than adding another new position or two, or three.
Instead, I sold those one or two new positions and only one new covered position. So much for plans.
With trading for the week rapidly coming to an end there’s even more reason to begin looking at expanded weekly options or those ending at the month’s conclusion.
This morning was a morning to watch and see where the news leads us and hopefully be able to sit passively for a while as they move higher. Instead, the trades ended up being relatively early in the session and then sitting back and watching as most everything went higher, although the S&P 500 continues to lag the DJIA, which topped 18000 for the first time ever, today.
The continuing challenge, as it has been for the past week, has been to wonder whether any climb higher is just part of the dead cat and should be taken advantage of, or part of a concerted climb higher.
So far, it has been good to resist some of the moves higher, although energy sector prices have been going back and forth. But what may have been a full correction in the making looks as if it was just another of those regular mini-corrections that come along every two months.
For the moment it looks good not having committed to strike prices, especially of a longer term nature, as there may be even more recovery ahead.
But time will tell soon enough.