Daily Market Update – September 3, 2015 (Close)
Yesterday’s nearly 300 point gain was nice, but it still wasn’t enough. The net result coming after a 469 point loss is still nothing to dance about, unless you’re celebrating the fact that it could have been worse.
While I like it when things do get worse, as that tends to lift volatility, I also like stability and certainty. Settling at a lower point and trading within a range can be a nice way to spend some time while waiting for the next leg up as long as the volatility can stay elevated, which it typically does at those lower levels.
Additionally, at some point volatility won’t offset loss in portfolio value or the decrease in income generated if you’re still unable to get call contracts sold.
This morning the pre-opening futures were moderately higher. They doubled, however, when news was released that the number of Jobless Claims increased.
That seems to look as if we are going to be in a “bad news is good news” frame of mind when the Employment Situation Report is released tomorrow. Sending stock futures higher on what can only be interpreted as a negative reflection on the economy can only mean that people interpret it as another reason for the FOMC to not raise interest rates at their upcoming September meeting.
Why there’s still worry about that is one of life’s great mysteries. Most people are probably happy to see that issue leave the scene and stop sucking up so much intellectual capital, allowing us to focus on other things for a change.
But that “bad news is good news” feeling may be the tone for the week. The ADP Report on Wednesday was a little bit lower than expected, but following that large loss the previous day, it’s hard to know whether yesterday’s gain was just a bounce from Tuesday or whether the celebrating of the mildly bad news had already started.
We began this morning without the Chinese stock market’s overnight shenanigans to lead us.
Their markets are closed in celebration of the end of World War II, although it does appear as if the government is trying to send some message to the rest of the world, at the same time.
So we were left to our own devices for two days without worrying about what may be happening in their markets or what new actions their government of central bank may be imposing.
While there may be some comfort in that, there’s usually some kind of a price to be paid when getting a temporary free pass.
That price may come when we wake up next Tuesday morning after our markets had been closed for the Labor Day Holiday to see that the Chinese markets, now once again having opened, went into a Sunday and Monday night meltdown.
Instead, having been left to our own devices today, somehow we ended up squandering what started out as a 200 point gain and after slowly watching that gain erode, it completely disappeared until the final 10 minutes of trading when it recovered some respectability.
Some, but still not enough.
Over the final 2 days of the week I would have loved to have seen any opportunity to sell calls on uncovered positions, but I would especially have liked to see some assignments, particularly as I’ve been borrowing from myself to open some new positions this week. I’d have loved to repay myself or at least continue to have the opportunity to selectively buy on the dip.
That’s a lot of love to spread, but I may be capable of all of it over the final day of the week if I can get what I want. After today, though, it does look less likely.
Thanks for nothing my own devices.