Daily Market Update – June 25, 2015 (Close)
Yesterday was one of those days that no one really saw coming.
The futures market certainly didn’t have any clue and there really wasn’t much in the way of news to have sent the market reeling, erasing all of the gains for the week.
With no news coming from Greece, the only real news for the day was the revision of the first quarter’s GDP, indicating that the decline was only 0.2% and not the 0.7% that was previously reported.
What that may mean to some is that the slowdown wasn’t as bad as the market had been discounting, with regard to how long interest rate increases could be held off.
That’s a pretty big stretch of the importance of the GDP revision. It’s not too likely that the FOMC will look back at 4 month old data and use it to make forward predictions. No matter how you look at it the GDP still shrunk during the first quarter and at its current rate, the first half year will be a very slow one as far as economic growth goes.
That doesn’t give the kind of data that an increase in interest rates would be predicated upon. While there’s still more data to come between now and the next FOMC meeting in July, it looks as if there’s going to need to be some significant additional data to even warrant an interest rate increase in September.
Too bad, because most are beginning to be in agreement that we just need to get it over and move on in the realization that a small increase in the interest rate, especially if it’s not the first of a series of increases, isn’t going to choke the economy to a standstill.
With the market’s pre-opening futures showing some bounce back, but only a fraction of what was lost yesteday, this was mounting up to be a week that I’ve been sitting and watching trades expire as they wait for price points that never came. Today was more of the same as 2 trades that were attempted just sat all day, even as I tried to tweak the prices.
Even with any bounce higher and that bounce was getting smaller as the early futures trading was nearing the opening bell, there was very little reason to think about adding new positions, as there’s so much uncertainty. The market continues to sit at a very precarious position, not necessarily because of its heights, but more because of its continuing tentativeness and inability to have any kind of breakout.
The fact that the market can’t even do more than a 3% rollback is a little worrisome and may give some creedance to Carl Icahn, you expressed the opinion that the market is overheated, although he put particular emphasis on high yielding investments.
Add to that the flurry of IPOs lately and you begin to draw some parallels in your mind about all of the previous times when companies were tripping over one another in trying to bring their shares public.
By this time next week we should at least have some near term answer to what will be happening in Greece and we will be just 2 weeks away from another earnings season, but until then, there’s not much reason to expect that any of these triple digit moves higher that we’ve seen lately have any real basis as being anything other than reactions to the large losses that immediately preceded them.
There’s still a little time to see some trades get made this week, but it’s looking like it may be a complete shutout. Even where a rollover may be possible, the cost of closing the position relative to the premium received is just so small for anything other than looking at a longer term timeframe.
I’ve spent a good deal of time looking at October and even January 2016 expirations.
Hopefully, when the dust settles tomorrow, the portfolio will at least keep pace with the market, which for this week, to this point, still means being at a loss for the week.
Even that can be a victory, but if you’re in it for the income, as I am, that victory has little meaning during weeks like this.