Daily Market Update – April 28, 2015 (9:00 AM)
Apple reported nice earnings yesterday and continued its assault on the $1 trillion market capitalization line, as it also approaches the $1,000/share level prior to its stock split.
The market cap of Apple is even more amazing when you consider how many shares have now been bought back and retired, no longer being counted toward that $1 trillion mark.
But unlike 2011 and much of 2012 when the S&P 500 could have been summarized simply on the basis of Apple’s moves, it is no longer the stock that moves markets up and down, just as IBM had been in an earlier era.
With the market in mild decline yesterday and with early indications of some mild decline continuing this morning, there doesn’t appear to be too much euphoria, even as Apple is pennies away from an all time high as the morning session is about to begin. The early DJIA numbers would be far weaker, though, if Apple and Merck, also having reported earnings, were not both up so stroingly.
As is often the case, news becomes stale quickly, especially as there’s more news coming and this week has plenty of more news coming, as earnings will keep pouring in all throughout the week.
With the FOMC meeting beginning today the last 2 months have gotten away from that strange habit of earlier months that saw unusual moves much higher on the day prior to the release.
Whatever confidence investors had about what would be contained in the FOMC Statement has vanished, as now it’s hard to know whether there is actually any news that could possibly be considered as being positive for the market in the near term.
The biggest fear, that of increasing interest rates coming sooner rather than later, could be assuaged if the GDP comes in weak tomorrow morning, as expected.
However, while those fears may be put on hold, a rational person would be concerned that the economy isn’t heating up enough to warrant even the slightest of interest rate increases.
Those rate increases usually come as corporate earnings are climbing strongly, but that’s not really the case at the moment. So if the FOMC is focused and hell bent on increasing rates, one has to wonder whether, in the face of lackluster profit growth, that interest rate increase might not be the straw that finally broke the camel’s back and created the correction that seems so long overdue.
I’m glad other people get paid to think about those sort of things. They are far too complex even for those people that know what they’re looking at, thinking about and creating policy.
With a couple of purchases yesterday, a rollover and the sale of a call on an uncovered position, I should maybe think about calling it a week.
But with cash available and some positions still within the realm of possibility of either being assigned or rolled over, I wouldn’t mind making some more purchases.
With the market appearing to open the morning with a mildly negative tone, I’m not expecting many opportunities to do what I would really like to do and simply sell more calls on uncovered positions. While there’s still the possibility of adding positions, something would have to seem as a really strong buy to do so before tomorrow’s potentially big GDP and FOMC news.