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Daily Market Update – December 28, 2015 (8:30 AM) There are just 4 days left in trading for 2015 and it would be hard to tell by the numbers that we weren’t still in 2014. The path, though, wasn’t so quiet and there was very little redeeming about the way the year transpired, as a handful of really well performing positions have essentially prevented markets from having a really bad year. That’s just the nature of an index and the more narrow it is the easier it is to mask an overall trend. With 2015 coming to an end much of the strength seen in the year, even among those that didn’t perform all that well, was based on manipulating EPS data, by the record amount of share buybacks through the year. While there’s still money allocated to those buybacks, historically companies aren’t the best in their timing and use of shareholder money. While you would prefer to buy things that are bargain priced, they prefer to buy their own shares as they are on the upswing. That doesn’t necessarily make sense, but as they say, “it is what it is.” Also, there’s no requirement that they actually spend the money that they said was being allocated to those share buybacks, so that impetus may be going away or at least becoming less of a factor until something gets lit under the market. Still, the past does indicate that the year following a flat year, such as ours is headed toward, tends to be a good year. I’m more inclined to believe that an improving economy is what will move 2016 forward and investors will reward themselves on the basis of real growth at the top line that translates into real EPS growth data. This week, with some assignments from last week, I do have some cash in hand to look for a spending opportunity or two. It has been an unusually slow three weeks in that regard and I would love to find a bargain, since it is my own money that’s at stake. With only 2 expiring positions this week, I wouldn’t mind adding some names to that list, but with only 4 days of premium as markets are closed in celebration of New Years, there’s a little less reason to look at adding to that list. There may be better reason to look at the following week or perhaps the week after the end of the January 2016 option cycle, which may already have too many names on its list. With the futures pointing to a moderately weaker open, having shown some improvement from earlier in the session, I think that I would prefer to see what tone the market takes on before thinking about spending any of that money. At this point I wouldn’t mind seeing some of 2015’s theatrics take a break and just let us start 2016 without too much overhang from another of those strong up or down weeks to further confuse us about what’s really going on in the economy or in the minds of investors. |
