Daily Market Update – February 1, 2016 (Close)
There’s no doubt that the finish to last week was a nice one, but you do have to question the reasons for the market’s gain.
Sometimes following a big loss the market just has some sort of reflexive rebound. We’ve been having some of those over the past two months, but most of those have been pretty anemic.
The other reason that the market has gone higher on some rare occasions has been because oil prices moved higher.
That’s not a very good reason to move higher and at some point the market will realize that it may be a reason to move lower.
But it seems that the reason the market may have moved higher on Thursday and Friday was related to news of weakening global economies.
Why else would the Bank of Japan lower their interest rate to below zero?
In your wildest dreams did you ever imagine that you would get paid to borrow money?
But in addition to that came news that the GDP in the United States grew at what could also only be called an anemic pace.
The market looks as if it had gotten back to the belief that a weak economy would mean that the Federal Reserve would be pumping away in support of the economy and then indirectly support of stocks and to the detriment of bonds.
Good theory, but the Federal Reserve may not have quite the same ammunition it had when it first started in its efforts to save markets and the economy about 8 years ago.
This Friday brings the Employment Situation Report and it will be very interesting to see if there are downward adjustments, especially after last month’s blow away number.
In the current frame of mind the market looks as if it would embrace any bad news, just like it had done for much of the last few years.
For the briefest of times it looked as if we were finally growing up and were going to revel in good news, but that may no longer be the case.
This week may be the third successive week with no personal trades.
I’m not hoping for that to be the case, but as there is some weakness in the futures to start the week, I’m not very excited about jumping aboard after the large gains that came to end the previous week.
I was in a frame of mind to not mind seeing some flatness today. Although the day did finish flat, it looked as if it might be yet another sell-off as oil started to plunge again.
But there was a nice recovery in the market, maybe further signaling that the price of oil and the stock market are going to go back to a more normal kind of co-existence.
I hope the flatness continues tomorrow, but is listless all through the day and not just on a net basis I’d much rather see that than another in a series of large declines or even large gains
I’m not looking for deeper discounts on share price, but rather some reason to believe that a bottom is at least in the formation process.
The gains of Thursday and Friday were a little too much and too fast for very much comfort, so today was just another in that recently familiar stance of just watching.
That may change soon if there’s any evidence of stability, even for just a few days or so.