Daily Market Update – August 30, 2016 (7:30 AM)
Yesterday was a nice surprise.
I don’t really understand its basis, as the conventional wisdom was that positive consumer economic news was of the kind that didn’t give reason to suspect that interest rates would go higher in September.
While that was happening, what did make sense was that oil had a sharp decline, stocks went higher.
That hasn’t really been the case all through 2016, but yesterday made sense, while 2016 hasn’t.
This morning there appears to be no follow through to yesterday’s strength and you would expect that to continue being the case, at least until Friday morning.
That’s when the Employment Situation Report is released and a really strong number could mean an interest rate increase as early as September.
At the moment, it feels as if that were to be the case, the market might react negatively, as it appears that most everyone has emotionally accepted a December increase, but not any sooner.
For my part, I think that if there are strong numbers on Friday, traders will quickly get over any disappointment and go on toward a strong buying spree.
Then, heading into the end of the year, it will either be disappointment that the economy wasn’t strong enough to support a second rate hike or disappointment that it did.
So, I would love to see a little disappointment now and the rebound after, just to have a chance to lighten up on some positions and move into more cash as the year comes to its end.
2016 has been a good year and I wouldn’t mind freezing it in time by securing some of the profits, while still trying to milk as many option premiums and dividends out from the portfolio.