Daily Market Update – June 4, 2014 (9:00 AM)
With the exception of the monthly release of the FOMC statement, Wednesdays tend to be quiet trading days. Even the ADP employment statistics don’t do very much to shake up the market and today seems to be no exception.
At different times over the years different economic statistics have had acute importance. There was a time when it was the money supply. Then there was a time when it was the trade deficit. Inflation rate was once an important measure and so on and on.
This week there are still two potentially big events to come, but I don’t think that either will have too much of an impact, yet there’s very little reason to chance that belief.
A real contrarian would believe that all of the negative sentiment going around, even as we hit new highs, can be nothing more than a signal to commit even more to the long side.
While the crowd usually isn’t right, there has to be the realization that sometimes even the crowd gets it right.
This morning looks to get off to a mildly negative start and it’s not too likely that the market would commit very strongly in either direction in advance of the ECB announcement and then the Employment Situation Report.
At the moment, I think that it’s unlikely that I’ll be adding any new positions this week, although I believed that to be the case yesterday, as well. The difference is that today is Wednesday and that tends to be a slow trading day for me, as well as for the markets. For many positions the new option contracts don’t come out until tomorrow and the premium for just three days, especially in a low volatility environment makes it very difficult to justify taking on the risk. For a 7 day contract? Perhaps. But 3 days? Not likely.
One thing that caught my interest yesterday was a report by Goldman Sachs on commodities, which have basically been the bane of my recent existence.
They are shifting to a more bullish stance on commodities and they have been an influential voice in the past, although not always right.
This time, I hope they’re right.
Not only for the direct impact on commodity prices, but also on the indirect impact which would be reflected in increasing industrial activity and economic growth.
Not much happens overnight, but if anything, I’m patient and hopeful that this time Goldman has gotten it right. If they have it’s not too likely that the current stock market has anticipated that kind of growth and that could be a catalyst to go even higher, as it’s otherwise difficult to see what the catalyst would be.
This morning, as for the past 2 days, I’m hopeful for some opportunities to find new cover for some positions, but as the market has been so quiet and trading within such a narrow range, there haven’t been too many of those opportunities, so it has been a very slow week, made sustainable only by last week’s rollovers.
As with most event driven markets, that situation could easily change tomorrow or Friday, or on both days. Hopefully, the week will be one that finds no disappointment in the awaited reports and some of the market’s climb higher trickles down to more stocks and carries them along for a change.