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Daily Market Update – December 14, 2015 (8:30 AM) If you woke up on the early side this morning then you probably had a little sigh of relief and said “finally.” If you then went to get yourself a cup of coffee and maybe engaged in a conversation or read the newspaper, you would have found that by the time you returned to your screen that the triple digit gain had become a loss, as the futures still had about another hour to go before the market opened for real. Last week’s 3.8% loss left the market’s fairly deep in the hole for the year, with just 3 weeks to go to dig out of that hole. For those who point to the fact that flat years are followed by strong years, with 3 weeks still left to go this year could still be something quite a distance from ending up flat. With this week perhaps having an historic FOMC Statement release, one in which everyone is expecting an interest rate increase for the first time in nearly a decade, it’s very possible that the market’s reaction could be equally historic. It has been so hard to figure out how the market will embrace rate increases once it demonstrated that it had the ability to accept an increase for what it actually represented. The ability to view such increases as a good thing, when it has occurred, has been a very brief phenomenon. For a day it looked as if the recent Employee SItuation Report was going to herald in a period of buying, at least until the FOMC Statement was actually released. That would have been consistent with the age old phenomenon of “buy on the rumor and sell on the news.” But the buying lasted only a single day and that led to last week. We all know about last week. I feel lucky to have been able to rollover all call positions and to have seen the short put position expire. That at least generated some cash for the week and replenished the cash reserve just a little, respectively. There was also another week with an unusually large number of ex-dividend positions for the week, so despite the large decline, I still felt pretty fortunate. This week there aren’t nearly as many ex-dividend positions and the positions that are set to expire don’t have the same likelihood of being rolled over. That leaves new position creation as the most likely means of generating income for the week, but this morning’s erosion in the futures, after last week’s debacle, doesn’t leave me very excited about spending down the all too small cash pile. With no new purchases last wee, I would love to find a reason to break that 1 week pattern, but there has to be some sign that there is something good ahead. While it’s possible that something good may come this week, perhaps during Janet Yellen’s press conference, we may have to wait until after the holidays. Maybe at that time we’ll get some good news about consumer shopping, as retailers will begin reporting their sales data. Otherwise, it may mean waiting for the next round of earnings releases in January, before we get any good news. Having believed that each of the past two quarters would bring that good news, I’m reluctant to hold my breath this time around. My expectation is that this week I won’t be parting with too much money and would be very happy to have any opportunity to rollover existing positions and would be ecstatic if I could actually even have an opportunity to find cover for positions just sitting there and adding nothing to income flow. Just as with last week, when there was a bit of luck involved, I may take any opportunity to rollover those positions if it presents itself during the week, even if fairly early in the week. Having taken that opportunity last Thursday when the market showed some early day strength made all of the difference, as that strength then faded and led to the next day’s 300 point loss. Waiting until the usual Friday for rollovers would have meant that none of the trades could have been made. This week, there may be reason to look for any chance to make those trades prior to the FOMC STatement release and then just crossing fingers. |
