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Daily Market Update – December 22, 2015 (8:00 AM) Yesterday looked as if it might be just the remedy for what ailed us during the latter half of the previous week. The market did its best, however, to squander the early gains, but somehow was able to turn things around and ended the day with the same kind of gains that were being telegraphed early in the sessions trading. Today the futures are more tentative as we await the GDP release before trading begins. A strong number would be an interesting test of how the market really feels about the interest rate increase announced last week. The issue at hand is that Janet Yellen indicated that the FOMC was not in a “one and done” mode and that subsequent interest rate increases were likely in 2016. You can only assume that if that’s going to be the case that there would be some good economic news regarding expansion of the economy to account for those increases. However, given how badly traders reacted through the vast majority of 2015 to the idea of a rate increase, you really have to wonder how quick they would be to embrace any really strong economic news related to underlying growth. We may be back in the “bad news is good news” kind of mentality, with the thinking going that if the economy isn’t expanding all too quickly then the FOMC won’t be so quick to raise rates yet again. Everyone still thinks that we’re in the Gerald Ford – Jimmy Carter era when the predominant effort to battle inflation was to wear buttons with the acronym “W.I.N.” Whip Inflation, Now. That didn’t seem to work, but since then the Federal reserve has been pretty on top of things and you can be reasonably assured that Janet Yellen is going to do everything to keep inflation under control, short of strangling the economy. With no new positions opened yesterday and with only 3 days of premium remaining this week, I don’t think that I’ll be spending too much money, unless looking at the next week’s options, which also will reflect four days worth of premium. Instead, I’d much rather add the market add on to yesterday’s late day gains and do what it can to erase last week’s losses. As we open today the futures are flat ahead of the GDP release and the S&P 500 is still down nearly 2% for the year with just a handful of trading days left to go. Today’s reaction to the GDP release could spell the trading remaining in 2015, unless retail sales come up with some big surprises as the Christmas shopping season is coming to its own end. Unlike the past 2 years when retailers blamed unusually cold and snowy weather around the country for their woes, this year it may end up being complaints regarding the unusually warm weather to put a damper on retail sales figures. Hopefully, a resurging consumer may be able to offset the weather, particularly if all of those new jobs and higher wages are going to come into play and energy prices continue to remain so low. So today will likely be another quiet day of sitting back and just hoping for some opportunity to see calls into strength or at least be in some better position to see assignments or rollovers heading into the final week of the year. |
