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Daily Market Update – August 1, 2016 (Close) With August now getting ready to get underway, a quick look back shows that we’ve just come off 6 consecutive monthly moves higher. That’s the case even as last week consisted of 5 consecutive losing days. I didn’t mind that kind of a finish to July for a couple of reasons. The first reason was that after the 9% run higher from the “Brexit” lows of barely a month ago, it was good to get some consolidation, even if it was minimal. What is was, was orderly. The other thing that really appealed to me is that the orderly decline came as oil had another bad week. For stocks and oil to go their own ways hasn’t really been the story of 2016. Sooner or later you had to believe that if oil prices were really being driven by supply excess in the face of reasonably healthy demand, that the market would move higher as oil moved lower. Maybe that normal relationship can now begin and begin to take hold. With still lots of earnings to come this week, but reasonably unimportant, we really are awaiting the retail reports that begin in a couple of weeks. Those may tell us something different from what last week’s GDP said about the consumer led economy. The other thing that may have an influence this week is Friday’s Employment Situation Report. Lately, there has been a really good argument for not releasing that data on a monthly basis as the variances have been staggering. There’s probably no telling where the numbers may be on Friday, just as there’s no telling what the reaction would be to any strong number. My guess is that the market would finally start treating good news as good news and bad news for what it really is. A strong employment number may be the signal to investors that the interest rate increase we’ve been waiting for all year is going to happen sooner rather than later, and perhaps with enough time to even squeeze an additional one in before year’s end. This week I have no expiring positions and only 2 ex-dividend positions, so I would like to supplement those with some income producing moves. I would have loved to have had the opportunity to continue with last week’s ability to sell calls on uncovered positions that haven’t been doing me any good, even as they may have been collected dividends. But that wasn’t going to be the case today as the market traded in a fairly tight range and with no conviction at all. What it did do was to continue the losing streak and continue to distance itself from the direction of oil prices. So I ended up doing nothing today. While I’m not against spending down any of my limited cash reserve, i would much prefer to make use of whatever has been sitting around and still have some hopes of that being the case tomorrow. With some of those positions, I’m also not opposed to continuing to sell longer term dated calls in an effort to collect some additional premium and maybe an extra dividend or two. Even as volatility is so very low, some of those positions offer the chance to wait for their continued rebounds while enhancing their returns. Ultimately, I would like to see them get assigned and contribute to the cash pile, but for now I do enjoy their climb, even if only valued in paper. . |
