Daily Market Update – May 19, 2015 (Close)
With markets all around the world up strongly overnight and with our own markets hitting all time highs to start the week, the expectation has to be for a strong day today as trading begins in US markets.
While the pre-opening futures are higher, they are only modestly up, though, so that enthusiasm heard around the world isn’t necessarily making a big splash on our shores. Still, enthusiasm has a way of getting magnified or waning as you move further from the source, so it was only a case of waiting to see what may add to or detract to the mood felt everywhere else heading into this morning.
As it would turn out, it was a day for yet another new closing record in the DJIA, but not for the S&P 500, nor the NASDAQ.
That alone should tell you that whatever gain may have been see in the DJIA that it wasn’t very impressive.
And it wasn’t.
Early morning disappointing retail sales from Wal-Mart didn’t appear to be throwing cold water onto that early party, but maybe it was the beat at Home Depot that was offsetting yet another in a series of retail disappointments.
As the major national retailers are almost done with reporting their earnings the next shoe to drop, literally or figuratively, may be the more specialty retailers. Those earnings reports are now starting to come in and those, too, are looking like disappointments may be in store.
However, before getting too critical about any of that, there’s always the realization that we are sitting at all time highs and markets are setting up for the next earnings season with lowered expectations, but with currency exchange rates not as bad as had been expected and buy backs continuing and even expanded.
If looking for catalysts, those are a powerful one-two punch, but may have to wait for nearly another two months before they come into play.
In the interim it’s still likely to focus on expectations for interest rate increases and their timing.
Tomorrow;s release of FOMC Minutes may give some insights into the thought processes and who is influential in shaping that process. Identifying the key players then puts increasing focus on them and their words as the FOMC Governors make their rounds and give speeches, as they all do on a regular basis.
With just a single purchase yesterday, I would love to see it get assigned early after today’s close and would happily give up the dividend in order to see it wind up being a 2 day trade with a nearly 2% ROI. Normally, I would expect a high degree of likelihood of that being the case, even with nearly a full month of time remaining on the contract, since it is so deep in the money. However, with an upcoming shareholder’s meeting it is possible that some option buyers are expecting something of substance to occur, although there are no substantive items on the agenda.
Otherwise, I think I’d like to hold onto and preserve my cash reserves.
I might feel otherwise if believing that those positions set to expire this week had a greater chance of themselves being assigned.
Right now, however, the more reasonable hope is that most get a chance to get rolled over, so I’m not counting on too much money getting recycled from new assignments.
Still, there’s rarely a day when there’s not some opportunity to stray from the script. Sometimes it’s just a question of controlling those impulses and thinking about consequences or just thinking about a couple of steps ahead.
Sitting at all time highs the bulls would much rather have seen an explosive or decisive move higher above what had been resistance. So far, that’s not happening. Other bulls would take comfort in some kind of base being built at this level.
I’m agnostic on both of those and just want to be shown what is going on and not what may be going on. before thinking about straying from the script.
Today did nothing to demonstrate where the path was leading. Maybe that will have to wait until at least tomorrow.