Daily Market Update – January 15, 2015 (Close)
This morning brought more bad news, at least in the financial sector, as Citigroup and Bank of America added to yesterday’s disappointments from JP Morgan and Wells Fargo.
That’s a very tough way to get an earnings season underway. If the financial sector, specifically the major banks aren’t healthy, that casts a shadow on everything else, even if the lower revenues may be related to lower and lower interest rates, which may in turn be good for consumers and businesses.
But even as that significant bad news hit the wires this morning, the futures were still trading higher and it appeared as if this morning would be different from the rest of this week’s openings.
The difference may simply be that oil was trading higher this morning after suddenly have turned higher late in yesterday’s session as energy options were expiring.
The question that was posed yesterday was whether that late climb would be lasting or whether it was due solely to those option expirations.
Funny thing about that, though.
The same thing happened today, except in the other direction, with the oil reversal to a lower level being one of the largest intra-day moves traders could seem to remember.
And the markets followed today, just as they followed the reversal yesterday.
Those energy prices in the morning were just a little bit higher and that may have been enough to prop the market up a little, as it has had three very bad days, despite yesterday’s oil related recovery late in the afternoon.
With the adverse reversal and the move of the broader market lower, and unable to avoid another triple digit loss, all that leaves for this week is to now try and dispose of whatever positions are set to expire this week, as getting prepared for the February 2015 option cycle.
In hindsight, it has helped.that of the 12 originally set to expire this week, 5 have already been rolled over and one assigned. That leaves this Friday as somewhat less important or critical if subject to the kind of declines as we’ve seen in the past three days, that would have put more positions out of contention for expiration or assignment.
Still, it would have been nice to have seen some recovery today and to have taken a break from the really terrible trading of the past three days.
If considering only the past 3 years, these past few days have brought about yet another sharp decline, in just the past month. Instead of what we have become used to, that is seeing a 5% decline every 2 months, we’ve now seen 3 of these declines in the past month, with the market now about 4% off from its high just 3 weeks ago.
In the meantime while the US economy seems to be improving, this week’s data suggesting that the improvement wasn’t resulting in more retail sales, added to falling energy and commodity prices points to a world economy that isn’t necessarily doing that well.
As long as this now remains an international effort, US companies and their stocks rely on more than the US economy to thrive, so while no one necessarily wants to pay more for oil or copper, it may be the key to the next catalyst to drive share prices higher if consumer spending doesn’t kick in soon.