Daily Market Update – May 4, 2015 (8:30 AM)
Other than this week’s Employment Situation Report coming on Friday, there’s not too much to drive markets, as earnings reports are also now going to begin slowing down.
The week should be a fairly boring one as far as inputs go, but you never know what the output is going to look like. At least last week had the kind of news events that could be expected to shake markets. This week, we will have to wait until Friday for events, but the shaking could still come at any time while markets teeter at their tops.
Last week was somewhat rescued by Friday’s performance and the week ended with only a small loss, but still left the S&P 500 within about 0.4% of its all time high. Whatever the large moves were last week and there were those in both directions, there was little news or reason to account for the swings, other than by its very nature, swings move in opposite directions.
While the market has maintained its levels near those highs and actually built on them just a little, the prevailing question remains where the catalyst is coming from.
That’s always an ever-present question, but sometimes it’s harder to see answers. now is one of those times that it’s hard to see an answer.
In the longer term, that is the next earnings season, the catalyst might be the fact that we’ve been set up to have lowered expectations, but the bottom line could change for the better if the dollar weakens a little and top line revenues are enhanced.
But until that point it may be a mystery as to what leads us to the next level higher. Usually, it has to be the promise of growth and the latest promise of growth coming from lower oil prices hasn’t materialized, while in the meantime those prices have now begun edging higher.
The Employment Situation Report could give some reason to think that economic expansion is taking hold at a greater pace, but the past month was a disappointment. Since we’re pretty much assigned to interest rates going higher, a large number on new jobs creation shouldn’t frighten anyone away, but there aren’t too many indications that a really large number is in store for this month’s report.
With no assignments last week, but having had the good fortune of being able to make the rollover trades necessary, it was possible to create the week’s income stream. That was thanks to Friday’s recovery. But as a result of no cash recycling, I don’t expect to be in the market to add many new positions this week. Any new purchases are likely to look at expirations this week so that there is at least some chance of recycling money in order to be positioned to do something new the following week as the May 2015 option cycle will come to its close.
My hope is that there continues to be some opportunity to sell calls on existing uncovered positions and slowly attack that unwanted pile and see the market add to Friday’s gains so that the handful of positions expiring this week are at least in position to be rolled over.
Ultimately, it’s whatever it takes to make the week’s income and hopefully have some more money at the bottom line for the efforts.