Daily Market Update – December 1, 2014 (Close)
Weak oil begins the week that begins the month that is often the best of the year.
For now it doesn’t look as if the month will get off to a good start, but the drop in oil seen late last night, that was a continuation of the real plunge on Friday, had already started greatly moderating before the market opened, so there’s always hope.
In what some think was just a relief bounce, oil ended up having a decent day, now all it has to do is string together about 15 similar increases to get back to its baseline.
This week we have an Employment Situation Report, and while it has been a non-event the past couple of months, the market could use its boost this time around. Otherwise, there’s not too much going on, with the exception of some Federal Reserve Governors making speeches.
Like last week, this week has lots of ex-dividend positions, so there is already a revenue stream in hand. With a reasonable number of positions set to expire in each of the next three weeks when the December 2014 option comes to its end, any purchases this week could fit in well into any of those three choices. However, I would like to be able to recycle some cash through assignments, so I may look a little bit more at those contracts expiring this week.
With energy trading so low it would seem like a good buying opportunity, but so far those who said oil would go below $75 have been right and many continue to talk about $50 being the next stop. Given that the crowd was right on that one, it’s not likely a good time to go against the crowd at the moment. Today was nice, but far from an indication that the pain is done if you’re already knee deep in energy.
While low oil prices seem to logically be a good thing for stock markets that hasn’t necessarily been borne out in reality, although low oil prices are usually driven by low demand which is rarely good for stock markets.
This time around it’s being driven by high supply and middling demand. What remains to be seen is whether that mediocre demand will be increased after having been enticed by what may be a rare opportunity to lock into low prices.
Other than oil being the big story now, retail is on everyone’s radar, as it is every Thanksgiving until the end of the year.
For at least the past 10 years it has seemed as if the same story has unfolded.
Sales are always reported to be weak after the frenzy surrounding Thanksgiving and dour projections are made for the holiday season. When it’s all done and the numbers are finally tallied after Christmas, it always seems to turn out to be better than expected.
This year, so far, it is all going according to script, as in-store numbers have been reported as being weak. Given how the “Black Friday” phenomenon has been very much downplayed this year, maybe the decrease shouldn’t come as too much of a surprise and may also be offset by on-line shopping, which we’re now being told may be more safe, as far as credit card identity theft goes, than actually shopping in a store.
In all likelihood, unless something unforeseen breaks on the international news front the two stories in front of us this morning are going to be the key two stories for the final trading month of the year.
Neither of those would appear to offer the kind of fuel that would send the market to even more highs.
However, as the US keeps looking comparatively better than most anyone else in the world our markets may become a magnet for more and more international funds to come to our shores and that could be the source of growth. Given efforts taken by the Bank of Japan and the ECB the expectation would have been that those stock markets would have benefitted just as ours had done during Quantitative Easing. However, with the real strength of the dollar, the reality may end up being very different.
I won’t be on a shopping spree this week and would like to see some reason to believe that the market can get beyond the heavy burden placed at the moment by the representation of the energy sector in the indexes.
Hopefully the direction will be higher this week if only anyone could figure out what will take us there, or anywhere.