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Daily Market Update – December 17, 2015 (Close) Yesterday was the day that many had expected since January 2015. The speculation about when interest rates would finally be lifted ended yesterday. Waiting for that day actually began right near the end of Ben Bernanke’s tenure and has been ever-present since Janet Yellen assumed the Chairmanship of the Federal Reserve. It finally happened yesterday, but in a smaller than historical level of rate increase. For most of the time that people have been expecting the increase, the expectation has been that it might be a very small one and that it might also be of the “one and done” variety. Yet despite the relatively innocuous nature of such an increase, the predominant market reaction to the expectation for it ever happening has been overwhelmingly negative. Only on 2 occasions in all of that time has there been a positive response to the likelihood of that rate increase and the second one is one that we were in the midst of this past week. Instead of selling on the news the market celebrated, but mostly that additional celebration after the FOMC Statement release occurred during Janet Yellen’s press conference, as she gave reason to believe that the FOMC viewed the economy as being stronger than many believed. This morning’s futures trading indicated a continuation of the rally that started in the final hour of Monday’s trading. Finding some additional strength as the week comes to its end and as the monthly options cycle comes to its end would have been nice, especially as each day has brought positions a little but closer to the possibility of some rollovers. That too would have been nice as many of those had calls sold on them a few months ago, also selling those calls into some market strength in a hope that time would bring some price recovery. That recovery, though, has been slow and it slowed down even more today as the DJIA lost 253 points. Why did it lose 253 points? Maybe it was a very delayed sell on the news kind of thing, but it really made no sense, as the selling started within minutes of the opening bell and just got worse and worse. Even as the market has challenged reaching and surpassing its August high levels, the reality remains that market strength continues to be concentrated in a relatively small number of names and the number of stocks that have been and continue to be in correction or bear mode is staggering. That may be the real theme of 2015, although when it’s all written most focus will probably go toward the fact that 2015 was the year in which interest rates were finally raised. That will omit the real nature of this year that still sits right near the flat line, but only thanks to those small number of positions in the DJIA and S&P 500 that have performed very well. Today, even those got rocked. Hopefully tomorrow will again bring us closer to making some income generating trades as we head into a Christmas shortened trading week, but I’m not as optimistic as I was 24 hours ago. |
