Daily Market Update – April 15, 2015 (Close)
Over the course of Wednesday and Thursday there will be no fewer than 7 speeches being given by Federal Reserve Governors, any of which could get enough attention to cause some shifts in the market. Considering that there isn’t really any compelling reason to believe that the economy is getting so heated that interest rate hikes are going to be necessary very soon, for the most part, however, those seven speeches should be offering nothing new.
In the meantime earnings will continue having now gotten off to a decent start.
With Bank of America reporting this morning and being roughly in line with expectations there will be more to come from Citibank, Morgan Stanley and Goldman Sachs and after those we’ll have a good idea of where the financial sector has been and where it thinks it may be going. At least from what we’ve heard so far the past quarter was just a sleepy one that still paid all of the bills and left a little something over for everyone’s efforts.
That’s no small accomplishment for banks when interest rates are so low, so there is something positive coming out of even mediocre kind of earnings reports.
Of particular importance yesterday were Johnson and Johnson, before trading started and Intel, after trading ended.
Different businesses for certain, but both have significant stakes overseas and both reported significant currency related issues decreasing their bottom line.
More importantly after both cut guidance for the coming quarter due to the expectation of continuing currency head winds the market didn’t act surprised and didn’t punish the companies on top of whatever has already been factored into their prices.
While it would seem logical for it to not over-react to news that had been widely expected, you wouldn’t be overly confident in predicting a calm and rational response if you factored in past responses to what were widely expected events.
I still think back to the winter of 2014 when retail stocks were feeling the pressure of the bad weather and their share prices went lower in expectation of what would eventually be reported. Then when the reports became reality they all went down sharply as if it was the first time anyone had considered that weather could have been an earnings factor.
Sometimes you just look for good news wherever you can find it and so far, the restrained response to reduced guidance is promising.
If looking for a catalyst to drive the markets higher it may not require anything more than simply wiping the collective brow of the market in relief that the earnings and forward guidances being given just aren’t as bad as we had all been expecting.
As we come up on the middle of the week and the end of the monthly option cycle now easily in sight, I would just like to see the next few days at least tread water so that the week can end with a combination of assignments and rollovers that is skewed toward more assignments.
Today, the market did more than just tread water, even as it lost some steam in the final 30 minutes of trading.
That was despite a sharp climb in energy prices that was to the same level as the recent 5% decline, neither of which seemed to matter, despite the superficial importance that was attached to those gyrations when they first started months ago.
It’s unlikely that there will be any additional new purchases for the week, but as always, it’s hard to stick to the script if an opportunity appears to pop up. But otherwise, I would be happy to raise some cash to be in a better position to take advantage of any future opportunities that may be awaiting next week.
Today’s market just gave a little bit an added cushion while awaiting Friday and happily offered some chance to sell some more calls on uncovered positions.
Hopefully some of the paper gains today will become realized gains sooner rather than later.