HI Financial Services Mid-Week Commentary 01-19-2016

HI Financial Services Mid-Week Commentary 01-19-2016

I ask myself daily does all of this news about oil, China and Iran really mean anything to our stock market? Kevin Hurley

Year to Date : DJIA down 8.24%, S&P 500 down 8.1%, COMP down 10.46%

My three worries are China, oil and the Forgotten Europe fiasco. WHY?

Is there any reason I should be worried about these three – Only in perception

HOW?

China is exporter and we only sell 120 Billion or 0.7 % of GDP output is linked to China

BUT, they’ve bought up so many commodities – Oil, Copper, Gold, etc….

They were on the wrong side of the trade and probably punished for manipulating their currency

OIL – WHY does market worry about oil?

Tons of supply for a slowly growing demand – US, Mexico, Venezuela, Russia, Iran, Iraq, all coming online or producing more oil

Low price = low to slow growth NOT TRUE Lower demand = low to slower growth which in turn means a lower price

I see low oil helping every industry except the energy industry because lower cost to produce, ship and run businesses & acts like a tax break to the consumers

Europe = Has payments coming due this year on QE but they have a central bank, more QE to go and the need to improve the economy

I think consumers are weaker due to health care costs? Yes no maybe so ?

No they health care has gone up the doctors should be making more but they also are making less

THIS IS MY BELIEF – We haven’t recovered from 2008 we’ve only placed a 5.5 Trillion dollar band aid over the problems

I think this year all comes down to earnings and for three years they’ve been lower on a the S&P 500

Real wage growth has also come down in the last 6 years. = People working again but for less money

Remember the Quantitative Easing is nothing more than a Fed experiment.

An experience with Limit orders that I want to share with you this evening:

I had V 75 January 16 long puts ITM by over $3. I was trying to roll the long puts to a March $72.50 to protect thru earnings and here’s what happened

Spreads were $0.25 to $0.30 and now OptionsHouse says you can close a short options trade commission free if the position is $0.10 or less of value!

What’s happening this week and why?

Much more indecision and selling into the rally with key support levels being tested.

I wish we would just have the bottom fall out and let’s get a 20 to 30 to 40 % drop over with

BECAUSE as stock break key levels of support I just add more long put contracts

Where will our market end this week?

Down probably another 3% or 1% a day for today

DJIA – Still Technically bearish