Daily Market Update – June 4, 2015 (Close)
With the Employment Situation Report coming tomorrow, the pre-open futures was continuing its recent pattern of indecisiveness, as the morning was going counter to yesterday’s trading.
The futures were improving as the morning had proceeded, with the early triple digit losses reflecting some bad overseas sessions over Greek concerns getting more manageable
However, given that there has been a 0.5% move higher in the S&P 500 over the course of the first 3 trading days of the week and the uncertainty contained in tomorrow’s Employment Situation Report, it’s completely understandable why the market might be reluctant to add to those gains.
What there wasn’t was any reason to lose nearly 200 points on the day.
While there were reasons to be optimistic following the first 2 days of trading this week, it was less easy to be so yesterday, despite the market gains.
Those gains were much better in the DJIA than they were in the S&P 500, although as the DJIA gains eroded heading into the close, the gap between the two indexes did get smaller. Still, the gains weren’t as broad as they may have appeared.
Today was disappointing, not only for the size of the loss, but because the market had actually erased the pre-futures losses after tumbling about 100 points at the open and was looking as if it might really sky rocket.
And then it didn’t.
This morning there had to be concern about the upcoming Employment Situation Report, not just for what the data happens to be, but also because there’s no telling how the market will react if the data is outside of the expected range.
On top of that, with talk of more adjustments to previously released GDP data comes lots of uncertainty about the validity of economic data to date.
With so many people now taking a position that interest rate hikes may be held at bay until 2016, there could be a very significant surprise in store if revised data shows that the economy has been much stronger than we’ve been lead to believe.
While most understand that interest rate increases would be a good thing for the economy, even while likely causing some near term and short lived selling pressure, that scenario might be less likely if interest rate increases occurred as a result of the sudden realization that previous data had been invalid.
It’s much easier to deal with what may be perceived as bad news if you can prepare yourself for it or if it’s expected. Despite anecdotes of an economy much better than what economic data has reflected, the market has been taking its lead from the expectation that a stagnant economy would delay hold interest rate increases.
With the next FOMC meeting occurring just 2 days before the end of the June 2015 option cycle, any indication that the economy is stronger than previous data has indicated would be a good reason to want to rollover those positions well in advance of their expiration.
Just in case.
With only 3 positions now set to expire tomorrow, there’s not that much at stake as we get closer to the big reveal tomorrow morning.
However, just as was the case earlier this week, even though I generally like to wait until Friday to try my rollover trades, I would have liked to take any opportunity as it may have arisen. It’s just that today wasn’t going to be that day..
While I’d like to see some assignments in order to replenish the cash reserve that was spent down this week in the pursuit of dividends and premiums, I think I would rather get the chance to rollover positions and pocket the premiums with certainty, than to await the uncertainty of their assignment.
Maybe tomorrow will be that day.