Daily Market Update – December 30, 2014 (Close)

If you wanted another example of how oil and the energy sector have stopped taking control of the broader market, yesterday was a good example for you.

The pre-open futures yesterday and the trading right up until noon had oil prices going modestly.

In the meantime the market was just treading water and not traveling very far up or down up until that point.

At noon the factor that was believed to have sent oil higher, some potential for reduced oil output by Libya was realized to not have been new news. How the people who follow this sort of thing 24/7 didn’t realize that there was no new news to digest is a question in itself, but the realization that it wasn’t made for a reversal in oil and brought it below that $54 level.

In the meantime the stock market didn’t even notice, although energy stocks did, but not by that much. Most shares just kept treading water and the S&P 500 traded in only an 8 point range, finishing less than 0.1% higher, while the DJIA finished less than 0.1% lower.

With that test now done and out of the way  and with more evidence that US stocks may be able to separate themselves from falling energy prices, is the realization that most global economies that count, will benefit from falling crude oil prices. There really isn’t too much in the near term that should act to get in the way of the market being able to maintain or surpass current levels, although Greece is trying to get back onto the front page again as it may be making noises about leaving the European Union and that can drag European and US markets lower.

But, it is the final 2 trading days of December, after all, and that means that Greece can’t possibly matter yet, but now we’re left with even less time for the traditional rally to take place.

Yesterday, low volume and all, just wasn’t able to get that anticipated rally started, but maybe today could have been a little different?

Not really.

With such little movement yesterday there wasn’t too much opportunity to do anything, other than a longer term position that oil will be headed higher in a 3 month time frame. Otherwise, the range was so narrow and the volatility returning to such low levels, that there is very little that can entice, especially as this is a shortened trading week and has already chopped about 20% off from already low premiums.

Today the range was wider, but still not to much opportunity to do anything, although energy is beginning to look as if there may be some room for entry, but cautiously. The same may be true for those that dabble in metals; precious and otherwise.

This morning’s pre-open futures looked just like they did at this time yesterday morning except that oil is slightly weaker to start off the morning. The changes through the day of trading were really very mi
nor, with no one really committing one way or the other, as many may have already headed for, or are still on their ski or beach vacations.

As that early trend set the tone for today’s trading that now leaves it all to tomorrow to deliver on the promise and hope of a Santa Claus Rally, although the purists will tell you that it really encompasses the 5 trading days after Christmas, which would then also include the first trading day of 2015.

So there’s still some hope, but today was a good day to start cleaning out the garage and tomorrow may be more of the same.