Daily Market Update – August 2, 2016 (7:30 AM)
After 6 straight losing days we’re only about 8 points off the all time intra-day high on the S&P 500.
That’s the kind of support that needs to be built to have a platform to move higher and to create a situation where there could be a stopping station if it decides again to go lower.
Futures are again pointing mildly lower this morning, but there’s not too much reason to suspect that it will do anything other than continue to trade in a fairly narrow range.
At least until Friday when the Employment Situation report is released.
With the most recent GDP data release it’s hard to understand how the employment situation could be improving, but there hasn’t been too much of a correlation between the two for quite some time.
Even as wages increase and the unemployment rate falls, the expectation that a consumer led increase in the GDP would occur just hasn’t been realized.
At some point that has to change, just as some point the strange relationship between energy prices and the stock market has to change.
That latter change may be happening now, as the decline in oil prices hasn’t taken the same toll on stocks that it would have just a month or two ago.
Had this decline happened in April, the market would have responded strongly lower, just as it responded strongly higher when oil prices went higher.
The muting of the relationship may herald the breaking of the relationship.
With no trades even placed on the table yesterday, I don’t know if today will bring anything different.
All I would really like to do is sell some calls on uncovered positions, but it generally takes some sustained higher price moves to do that and none seem to be in the cards today.
With the real unknown coming on Friday there becomes less and less reason to want to get in front of that announcement as not only are the numbers in questions, but so would the response be hard to predict regardless of the numbers, direction or magnitude.
So this may be a very sleepy start to what is the least historic profitable month of the year.
Even as Japan announced a large economic stimulus package this morning, out own market appears to not really care or maybe it just wants to see details.
But if our futures can’t get very excited, i have a hard time doing so and will simply await some kind of a commitment in one direction or another.
For now, as long as I don’t think that I’ll be doing too much trading this week, I’m actually alright with any outcome.
I wouldn’t mind some continued stability if it’s going to act as a launch pad.
I also wouldn’t mind watching asset values move higher and getting a chance to sell some of those calls.
Finally, would it be that terrible to see some profit taking and the chance to perhaps find something more cheaply priced?
If only all of life had such equally acceptable possibilities.