Daily Market Update – July 14, 2015 (Close)
It looks as if the US stock market places greater value on a possible solution to the Greek debt crisis than it does to the agreement between the US and other nations with Iran over its nuclear programs.
Yesterday’s news from the EU and Greece helped to deliver a 200 point gain to the DJIA, while this morning’s news regarding the agreement with Iran had the futures trading virtually unchanged and left the market trading in a fauirly sedate fashion throughout the day.
Still, given the back and forth and the big give and take kind of moves over the past few weeks, even a flat day coming immediately after a 200 point climb could be considered a sort of victory, as the market has quickly gone from an intra-day 5% decline from its all time highs to now being less than 2% below those highs.
All during the course of the past week.
With news of the Iran deal greeting traders this morning and yesterday evening’s news of a proposed Chinese buyout of Micron Technolgies, bank earnings beginning today and tomorrow’s Congressional testimony from Janet Yellen, there’s enough going on to give markets plenty to ponder and digest.
Today it was neither ecstasy nor fear that dominated the market. Instead, it just cautiously moved higher after a tentative start to the day.
The initial earnings coming from the financial sector this morning were pointing in the right direction, although the financial sector’s performance doesn’t necessarily mean much for the rest of the market. When banks are thriving and their earnings reflect those good times, the rest of the market can go in either direction. It’s when the financial sector releases earnings that are disappointing that you can reasonably well predict that everyone else will be following along in the same path.
So the early indication this morning at least offered some hope for things to come as companies may be in a position to report better than expected revenues thanks to a better than expected currency exchange rate. Additionally, with news of this morning’s Iran deal comes new pressure on the price of oil, which has already been under renewed pressure over the past 2 weeks.
Higher revenues and lower costs is a good way to see share prices move higher, especially if neither was really expected.
That combination could easily push the markets to new highs, especially if the efforts in China put a temporary lid on the sharp downward pressures that have been building in that market.
With a little bit of money to spend and a desire to see some additional income generated this week, I’m not resistant to trying to add any new positions this week, but would still continue to prefer some further advances and any possibility of rollovers or assignments of this week’s positions, although only one of the three may be in a position for either.
With what may be a pause, I’d be more inclined to spend that money, although you do have to be aware that lately there hasn’t been any kind of pattern in the overall market, other than there’s been no pattern. While the market may be taking a pause today, there’s as much reason to believe that the next move, maybe tomorrow’s move, can be much higher as it can be much lower.
As we await more earnings, perhaps Yellen’s testimony over two days beginning tomorrow can provide some optimism to send prices higher. The history of the Humphrey-Hawkings mandated testimony is that greater moves tend to come during the first day of testimony and Janet Yellen has been very much of a calming voice for markets, in general.
Hopefully, there will be a stream of good news for the rest of the week, or at least an absence of anything bad and maybe that will allow us to focus on some earnings fundamentals for a change.