Daily Market Update – February 25, 2015 (Close)
Yesterday was a very quiet day in the market until Janet Yellen got going in front of her congressional questioners as part of her mandated bi-annual report to them.
Once she got started the overall impression she gave was that her more dovish side had re-taken center stage.after a few months of seemingly being somewhat coy about the timing of any interest rate increases that we all know have to come.
The most recent FOMC report even went to lengths to explain the adverse impact of prolonged low rates.
It doesn’t take a genius to figure out that when you hear that sort of thing you’re being set up to come to some sort of reluctant acceptance of something that you’re being told is good for you, even though it doesn’t feel very good.
But yesterday there was a sense that there was no real rush to get those rates moving higher which is something that typically makes stock people happy and bond people doing whatever they do to send rates lower.
Today was Day 2 of the testimony and we didn’t see her bring a repeat to yesterday’s new closing highs to both the DJIA and S&P 500. Those were the first since Monday or last Friday. I forget, as it’s been so long since that has happened. Today we just had to make do with a new closing high on the DJIA.
With now 2 days of trading still left for the week there’s plenty that can happen, especially with Friday being the release of the latest GDP data.
With yesterday’s 3 rollover trades, a little surprising having come so early in the week, that leaves only 4 positions that could potentially be rolled over or assigned this week and now the same number expiring next week.
That may result in looking at potential rollovers to the March 13, 2015 contract in an effort to get some more time diversification, as long as it doesn’t give up too much in premiums, as volatility is again very low for most positions, with the continuing notable exceptions in energy related stocks.
I made an after-hours trade yesterday, which is something that I very infrequently do, having purchased shares of Hewlett Packard after they tumbled once earnings were released and the conference call was near its conclusion.
Depending on its price behavior this morning and how the option premiums would begin to look I thought that I might make it an OTP trade as well, with its ex-dividend date conveniently and maybe coincidentally enough being on the Monday of the week of the March 13 contracts.
But that didn’t happen as shares traded down even further, which was surprising as shares had closed the previous evening’s after hours session well off the lows following the conference call. However, Meg Whitman’s appearance on CNBC did nothing to inspire confidence, as her responses to questions really seemed muddled and she put far too much empasis on currency issues and future cists associted with the planned breakuo of HP near the end of the year.
Instead, Lexmark, which goes ex-dividend and which was assigned just a week and a half ago at $43 was now on sale, having plunged along with HP, even though Lexmark is no longer in the oprinter business. Somehow smart investors have forgotten that Lexmark has followed in the strategy of its one time parent, IBM, and gone the consulting route.
Other than that additional new position I don’t think there will be too much reason to consider any more new positions for the week, but then again, you never know what the day will hold once the bell rings and people start making believe that they are rational players with perfect vision of what the future will hold.