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Daily Market Update – December 30, 2015 (7:30 AM) There are now just 2 days left in trading for 2015 and this morning may offer something interesting. For more than a year the market has pretty much followed the direction of oil. That itself has been somewhat of a departure from the natural nature of things. Logic tells you that with the exception of its impact on the indexes, when oil goes down, most everything else should go up, even during a general economic slowdown. What there hasn’t been, though, is that kind of general economic slowdown, even as China may be doing so. Still, as oil has gone down, the market has followed and as oil has gone higher, the market has done the same. That’s really been obvious the last couple of weeks as market strength has only come when oil moved momentarily higher. Following yesterday’s large market gain you would have understood why this morning’s futures might have been poised to give some or most of it back, as that’s been the script for most of the year. You would have especially thought that would be the case when seeing that oil futures were sharply lower this morning. Yet, for some reason, the S&P 500 futures were only very mildly lower.. That seems surprising. You certainly don’t want to read too much into any single data point, but that does seem to be a fairly big departure from a year’s worth of behavior. Does that portend for a year end rally? Well, with only 2 days left in the year and the futures still pointing lower, there’s not too much time for much of a rally, but maybe that may mean something for 2016. Even though there’s little reason to believe that things change from one day to the next just because the calendar changes from one year to the next, they often do. For some reason there are often very qualitative changes as the year flips over to the next one, even though nothing obvious has changed. What I think is in store for 2016 is that earnings will finally begin to show some positive movement in both top and bottom lines and that investors will begin to reward or punish companies on those real basic elements of investing. There’s not too much doubt that continuing low energy prices contribute to the well being of lots of companies, so maybe 2016 will be the time to demonstrate that. Finally. Today is again likely to be a day of watching the action. I’d like to see yesterday’s momentum continue just so existing positions will be in better shape for either rollover or assignment as we head into 2016. While those futures are just slightly lower this morning, maybe someone will take note of how they are disconnected for a change from energy and look at that as a positive sign to keep moving forward. I wouldn’t argue with them and would happily go along for the ride and enjoy the view looking out the window as they do the heavy lifting still required for most of the S&P 500 left behind in 2015. |
