Daily Market Update – February 23, 2016 (7:30 AM)
Yesterday was just like almost all of the rest of the days in 2016 and for many in 2015, too.
Oil went higher.
So stocks went higher.
Why oil went higher is anyone’s guess, as it was actually more than 7% higher at one point yesterday, with absolutely no change in anything in te supply – demand part of the equation.
While precious metals were lower yesterday, there was also a rebound in commodity prices, very notably in copper.
Those commodity price increases, if sustained, could be a big part of a justification to institute another interest rate increase.
Commodity cycles are often where it all begins, but there also has to be consumer demand and consumer ability to actually pay for the things that they demand.
With wages moving higher and unemployment falling and rents rising, you can see a scenario where demand for homes increases and basic building commodities follow.
Ordinarily the stock market would pounce on that kind of early news of an economy heating up, but recent past history says otherwise.
Maybe Friday’s GDP report will shed some light on what the consumer is demanding and paying for.
This morning the market looks as if it is going to give back some of yesterday’s gains, but again, 2 steps back for every 3 forward isn’t a bad way to get up the mountain.
That was the formula used last week and it wouldn’t be a bad idea to do the same this week if the summit is the goal.
While I’m not eager to trade when the market is showing a real move higher and prefer to do so on down days, I wouldn’t mind of few days of consolidation as an alternative and would make trades if some of the recent gains can be digested.
The fact that prices aren’t at the same bargain level that they were at a week ago doesn’t necessarily mean that they still aren’t at bargain levels, but a small sale would still be welcome or at least a slow down in the price increase.
With that in mind, I don’t think that I’ll be doing much today, but wouldn’t mind seeing some of yesterday’s big winners add to some of those gains, just to get a better opportunity to sell some calls on uncovered positions.
There were a number of trades that i was trying or at least hoping to make yesterday, so maybe today or tomorrow can become the day.