Daily Market Update – March 8, 2016 (7:30 AM)
It’s just another morning and oil is lower while stocks simply follow along.
Yesterday was more of the same, except that oil was higher and so were stocks.
In yesterday’s case oil was actually seriously higher, but stocks were sort of indifferent, with the DJIA showing the impact much more than the broader S&P 500.
This morning stocks are appearing to head lower than might be warranted by the move in oil.
But who knows what that means?
Most have to be looking for any signs of a break in the association between stocks and oil, but the few times that it looked as if they may be getting ready to go their own way, the association quickly returned.
For now it’s still hard to see where any real economic growth would justify strength in oil. Normally a rise in oil prices would be net negative for stocks, unless there was significant economic growth behind an increase in demand for oil.
Now, it’s hard to even get anyone to agree why the price of oil had gone so low to begin with. Sure, it was over-supply, but what was the reason for that over-supply.
Now, most agree that it was more a case of over-production than under-demand, but as the price of oil has been moving higher, there’s no real indication that either supply is decreasing or demand is increasing.
It could simply be speculation at play, which could also explain some of the large moves and the frequent back and forth, although the net has been to the upside lately for both oil and stocks.
This morning both are lower.
With a single new position opened yesterday, specifically identified for the dividend, I’d like to be able to capture that dividend.
While I don’t expect to be doing much more dipping into cash this day, if faced with losing shares to early assignment, I would likely try to roll those short calls over an additional week to at least be able to get some extra premium if those shares are still going to end up being exercised early.
Otherwise, we’ll see where the winds take us today.