Monthly Archives: January 2016

Daily Market Update – January 27, 2016 (Close)

Yesterday was a really nice day, but it came after a really bad day, both of which simply followed oil down and then up.

And so, after yesterday’s gains, we’re still closing in on ending the first month of the year with a loss of about 8%.

Make that about 10% after today was finally over.

With so many expectations for 2016 to have been a good year, because scant data suggested that the year following a flat year, as was 2015, would be a good year, we have a long way to go just to end up flat again.

The same type of scantiness of data is what the FOMC was facing, as they prepared their statement release this afternoon.

Many expected that the FOMC Statement would suggest that there is room for more interest rate increases to come in 2016 and they did just that.

There’s no question that there’s room, considering still how low rates are, but where is the data to support the notion that such interest rates are warranted? It looks as if investors may have been asking exactly that question as the market dropped about 350 points from 2 PM, until recovering some of that by the close.

So now that we found out how the market would react to basically no real news, we’ll get to see what happens when real numbers are released on Friday with the GDP..

What was a question earlier in the day and was an uncomfortable unknown was how market traders would react to news of any kind, which may have also included the absence of any substantive news.

Well, that was the case this afternoon.

With no really good reason to move stocks higher now, as earnings aren’t yet delivering any kind of boost, you do have to wonder what the FOMC has in its reserve if the economy is in need of any boost.

This morning’s futures trading is giving back a small portion of yesterday’s gain, but that’s not too surprising, considering the recent back and forth and the uncertainty associated with what may come just 6 or so hours from now.

Of course, all could be undone or irrelevant if the market continues its association with the movement of oil prices.

Those moves of late have really had nothing to do with supply and demand and have likely been driven by more opportunism than is usually the case.

While it would be nice to see oil and stocks go in their own ways, the sharp decline in oil just the past few weeks does give some further opportunity for those opportunists to step in, so I hope the association continues for a while longer.

That is, until we get to the point that many are still expecting oil to start re-testing the $20 level.

That would be a perfectly good time for investors to realize that there has to be a net benefit when the plunging price of oil is still more likely associated with a supply glut that’s driven by a glut of suppliers rather than a dearth of users.

Like most everything else that’s part of some kind of cycle, that day will assuredly come, but it has already been such a long, long time in coming.

For my perspective, each day brings that eventuality a day closer and I’m going to stay liquid for as long as the market can stay irrational.

Today, though, the market was irrational.

Again.

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Daily Market Update – January 27, 2016 (Close)

Yesterday was a really nice day, but it came after a really bad day, both of which simply followed oil down and then up.

And so, after yesterday’s gains, we’re still closing in on ending the first month of the year with a loss of about 8%.

With so many expectations for 2016 to have been a good year, because scant data suggested that the year following a flat year, as was 2015, would be a good year, we have a long way to go just to end up flat again.

The same type of scantiness of data is what the FOMC is facing, as they prepare their statement release this afternoon.

Many expect that the FOMC Statement will suggest that there is room for more interest rate increases to come in 2016.

There’s no question that there’s room, considering still how low rates are, but where is the data to support the notion that such interest rates are warranted?

We may find that out this afternoon and there may be more data to come on Friday as some GDP data is released.

But what continues to remain unknown is how market traders will react to news of any kind, which may also include the absence of any substantive news this afternoon.

With no really good reason to move stocks higher now, as earnings aren’t yet delivering any kind of boost, you do have to wonder what the FOMC has in its reserve if the economy is in need of any boost.

This morning’s futures trading is giving back a small portion of yesterday’s gain, but that’s not too surprising, considering the recent back and forth and the uncertainty associated with what may come just 6 or so hours from now.

Of course, all could be undone or irrelevant if the market continues its association with the movement of oil prices.

Those moves of late have really had nothing to do with supply and demand and have likely been driven by more opportunism than is usually the case.

While it would be nice to see oil and stocks go in their own ways, the sharp decline in oil just the past few weeks does give some further opportunity for those opportunists to step in, so I hope the association continues for a while longer.

That is, until we get to the point that many are still expecting oil to start re-testing the $20 level.

That would be a perfectly good time for investors to realize that there has to be a net benefit when the plunging price of oil is still more likely associated with a supply glut that’s driven by a glut of suppliers rather than a dearth of users.

Like most everything else that’s part of some kind of cycle, that day will assuredly come, but it has already been such a long, long time in coming.

For my perspective, each day brings that eventuality a day closer and I’m going to stay liquid for as long as the market can stay irrational.

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Daily Market Update – January 26, 2016 (Close)

Yesterday was just more of the same.

Oil was much lower and the stock market went much lower.

Everyone keeps waiting for something to give.

Either oil finally starts to move higher or someone comes to the realization that oil at these levels and with continuing job growth, this would be a good time to take advantage of the low input costs and build for future growth.

But yesterday wasn’t going to be that day.

This morning, oil was up slightly as were the stock futures. Never mind that Shanghai plunged overnight.

That was so much yesterday’s story and we’re on to new things now

That new thing was the same as the old thing as oil went from being slightly higher to nicely higher and guess what happened?

Just like the story goes, the market went well higher.

As has been the story for 2016 and the final month of 2015, the gains that we’ve been seeing on days here and there haven’t come close to offsetting the losses of the days before or the losses to come the days after.

Today, though, it at least the DJIA offset the day before and the S&P 500 came close to doing so.

Since the post-August recovery high seen in the early part of December 2015, the S&P 500 was about 11% lower to start the day and there hadn’t been many days like the last two of the previous week that saw two decent sized day’s gains come in succession.

Earnings keep coming in and will start building to a crescendo in the next couple of weeks, but so far, everyone’s expectation of being disappointed with those earnings reports are being met.

If earnings aren’t going to lift the market and there’s no reason to believe that economic activity will result in oil demand and price increasing any time soon, it’s hard to know what will bring good news.

The FOMC meets this week and GDP is announced on Friday, but what can either do to lead to optimism?

This morning the 10 Year Treasury Note was again below 2%.

It’s not likely that you could find anyone who would have bet on that being the case a few months ago. You definitely won’t find any people who are deeply engaged in the financial sector who would have predicted that to be the case and it’s not likely that you would have found any bond traders, either, who would have guessed this morning’s rate.

And those are reportedly the smartest guys around.

With nothing to do yesterday, I didn’t see any reason to believe that this morning’s early strength had any meaning, nor that yesterday’s sell-off was happening at the bottom. The real key may be if oil and stocks go their individual ways.

That was definitely not the case today.

Mark Faber, a noted gloom guy, mentioned yesterday that the average stock was now trading 26% below its 2015 high.

I don’t know how he arrived at that figure and how he selected stocks to exclude from his calculation or whether the calculation was weighted by market capitalization or anything at all, but it definitely feels that way once you exclude the very few winning stocks of the past 13 months.

With the 2016 action added in, the list of winning stocks is only getting smaller, at
this point, despite today’s nice gains.

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Daily Market Update – January 26, 2016 (7:30 AM)

Yesterday was just more of the same.

Oil was much lower and the stock market went much lower.

Everyone keeps waiting for something to give.

Either oil finally starts to move higher or someone comes to the realization that oil at these levels and with continuing job growth, this would be a good time to take advantage of the low input costs and build for future growth.

But yesterday wasn’t going to be that day.

This morning, oil is up slightly as are the stock futures. Never mind that Shanghai plunged overnight.

That was so much yesterday’s story and we’re on to new things now

As has been the story for 2016 and the final month of 2015, the gains that we’ve been seeing on days here and there haven’t come close to offsetting the losses of the days before or the losses to come the days after.

Since the post-August recovery high seen in the early part of December 2015, the S&P 500 is about 11% lower and there haven’t been many days like the last two of the previous week that saw two decent sized day’s gains come in succession.

Earnings keep coming in and will start building to a crescendo in the next couple of weeks, but so far, everyone’s expectation of being disappointed with those earnings reports are being met.

If earnings aren’t going to lift the market and there’s no reason to believe that economic activity will result in oil demand and price increasing any time soon, it’s hard to know what will bring good news.

The FOMC meets this week and GDP is announced on Friday, but what can either do to lead to optimism?

This morning the 10 Year Treasury Note is again below 2%.

It’s not likely that you could find anyone who would have bet on that being the case a few months ago. You definitely won’t find any people who are deeply engaged in the financial sector who would have predicted that to be the case and it’s not likely that you would have found any bond traders, either, who would have guessed this morning’s rate.

And those are reportedly the smartest guys around.

With nothing to do yesterday, I don’t see any reason to believe that this morning’s early strength has any meaning, nor that yesterday’s sell-off was happening at the bottom.

Mark Faber, a noted gloom guy, mentioned yesterday that the average stock was now trading 26% below its 2015 high.

I don’t know how he arrived at that figure and how he selected stocks to exclude from his calculation or whether the calculation was weighted by market capitalization or anything at all, but it definitely feels that way once you exclude the very few winning stocks of the past 13 months.

With the 2016 action added in, the list of winning stocks is only getting smaller, at this point.

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Daily Market Update – January 25, 2016 (Close)

The week gets off to its start once again being led by the price of oil, which was again sinking in the early morning.

After about a 23% increase in the price in just a couple of days, you can’t blame people for taking short term profits, especially as there was no real news to account for the rise in price, other than perhaps having been in a really oversold condition.

That’s not good enough to sustain a move.

The good news was that the stock market was still following the oil market, but it was not doing so in a big way.

Maybe that’s because traders were still snowed in somewhere, even though things should be reasonably back to normal and you don’t really need to leave your house to trade.

At least that was the situation early in the session, but that all changed.

I was not too anxious to do much of anything this week, so I’m glad that today did nothing to entice me. I certainly didn’t want to chase the late week gains, but I’d have been happy to commit some money if I thought those gains were going to be more than just transient ones, as has been the case for the past 2 months.

And today.

There are still some potentially big market movers this week with an FOMC announcement and the latest GDP report, but it’s really anyone’s guess what the FOMC will say in light of the less than robust economic activity since rates were raised and there’s no clue as to what GDP may look like after a lackluster holiday sales season.

What’s also a big question mark is how any news would be greeted. Will good news be bad or will it be good?

At the moment it’s hard to see any news being interpreted as being good.

That’s more than enough uncertainty to keep me on the sidelines awaiting some kind of meaningful feeling of where things are headed.

What we do have this week are some big earnings announcements.

So far, no one has been bowled over by the first 2 weeks of those, but maybe some good news from the likes of Apple and Microsoft could give markets some reason to be optimistic about what may be in our future.

For one, I just hope that there is a reason to have that optimism and get back on a path of some trading activity.

Last week was just horrible in not having made any trades at all.

At least this week has a number of ex-dividend positions to generate some income, but ultimately, it’s trades that drive the ship.

Today that ship was in dock and it may not be going anywhere too soon.

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