Daily Market Update – March 4, 2015 (Close)
After the first 2 days of this week that looked as if they were going to be quiet trading days, based on the pre-opening futures, there wasn’t too much reason to try to guess what this morning’s futures trading would mean.
It certainly didn’t send a message that the DJIA would have its first triple digit loss in over a month.
Each of the first two days had large moves, albeit in opposite directions, but not for any real discernible reason. Following that pattern, there was absolutely no reason to believe that today would follow the other pattern.
This morning the futures were showing a mildly negative opening and it showed no change after the ADP job numbers were released, as those seemed to fall in line with what most expect for Friday’s Employment Situation Report.
With no real news until Friday morning there simply was not much reason to suspect that much would happen between now and Friday morning, but there really wasn’t any news on Monday or Tuesday, either.
Sometimes, stuff just happens.
The continuing stories for the week have been energy prices and interest rates and those are likely to go on, but there hasn’t been any theme to those stories, as they have bounced up and down as there are no markets that currently seem to have any idea of where they are going.
Today was the same, as there was every reason for energy prices to head lower as inventories keep growing and will soon result in the inability to store any more product, therby requiring a need to release it onto the market.
Instead prices turned around and closed nicely higher.
With a number of positions set for expiration this week I had hope that between now and Friday’s closing bell there would be an upward bias to the stock market and a mildly higher bias to energy prices.
Still, despite today’s broad weakness the expiring positions aren’t much worse the wear for the experience.
With a few positions now occupying next week’s expiration that gives a little more leeway in terms of actions for the week. Rollovers, if any can look at next week or the use of an extended option, however the week after next is already the end of the monthly option cycle and already has plenty of positions set to expire. Going much beyond that in a low volatility environment isn’t that appealing.
For that reason, my preference would be to see those positions expiring this week get assigned, although I wouldn’t mind continuing the energy – airline pair trade if that opportunity presents itself, as it surprisingly did last Friday.
Otherwise, I don’t expect that there will be much reason to think about any new purchases for the rest of the week, although there are some possible trades for stocks going ex-dividend on Monday, which would require trades by Friday’s close.
With a little bit of cash in reserve there is still the possibility of opening those new positions, such as in General Motors and Baxter International, but the likelihood is that I would wait until after the market shows its reaction to the Employment Situation Report, before making any decision. Additionally, before making those additional purchases I’d like to have some better assurance of whether some of the existing positions will be assigned or not.
Although I know not to count those chickens before they’re hatched, I still tend to do so every week. Last week was another good example of why it’s a bad idea to do so, but I’m sure I’ll still do the same this week, as well, despite today’s potential sp[iler.
Hopefully, I’ll be able to show some restraint, though, before committing next week’s money that may or may not be there when the dust settles.