Daily Market Update – June 18, 2014 (Close)
With nothing noteworthy this morning it looks as if the market may be in a state of suspended animation until 2 PM when the FOMC statement is released.
In the few seconds afterward computers will scan the statement for any changes in wording or the frequency of certain words and may trigger buy or sell programs that can then, moments later, seem like they were the wrong initial decisions.
So sane people sit back and wait to see what’s left as things begin to settle.
And that is exactly the way the script was enacted, except that there wasn’t too much of a knee-jerk and that’s because there was really no material difference in the words or wording in the release.
At precisely 2 PM the market started moving higher and then took a little breather until about 10 minutes into the press conference, when the prepared statement was completed.
What was clear was that unless the FOMC moved the needle away from their $10 Billion in monthly tapering, perhaps adjusting in one direction or another by the loose $5 Billion so many were focused upon, there shouldn’t have been much reason to see any kind of marked reaction to the release.
Today’s post – 2 PM activity was nicely enhanced by the Chairman’s press conference, an activity started by Ben Bernanke, in his desire to make the thoughts behind the decisions to be more transparent.
Off hand, I can’t recall any slips of the tongue or inadvertent comments made by Bernanke during any of those press conferences that got the markets to over-react or misinterpret intent, but Janet Yellen may be remembered for a while for some misunderstandings during her first press conference.
But perhaps as with Ben Bernanke, who likely was part of some similar responses, that too will eventually be forgotten. But for now, the memory of that first Yellen press conference as Federal Reserve Chairman is still too fresh, so there is a continued expectation for some sort of slip and there are those who are standing ready to sell if they sense the slightest bit of negativity.
So far this has been a fairly dull week with extraordinarily little variance and range in trading. While that may change tomorrow and perhaps even on Friday, due to the quadruple witching, the bigger picture of low variation still seems to be intact, as there continues to be an absence of any catalyst to shake things up. Even with market movement coming out during today’s events, they’re not likely to have much lasting impact.
Even tomorrow may be an entirely different story.
For the past two years nothing has really had a substantive impact for more than a handful of trading sessions. While the early stages of conflict in Crimea got the market a little nervous for a few days, so far events in Iraq have done nothing to convince people to secure some profits and watch from the sidelines.
Even the revised GDP late last month did nothing to detract from the pervasive optimism that characterizes this market and the belief that there is very little risk for a reversal of fortune. With only expectations for economic growth going forward, even if only at a slow pace, there’s little reason to expect anything other than the current path.
So today is more of the same. Unless some screaming opportunity comes along, this being a Wednesday, the likelihood of adding a new position is small. This being an FOMC Wednesday makes it even smaller.
In the event that today’s events move the market strongly forward any chance to sell options on uncovered positions would be a well received gift. That market strength would also be a nice way to feel more secure about seeing sufficient assignments this Friday to be in a good position to start off the July 2014 option cycle with cash in hand.
With that in mind it now remains an exercise in sanity and patience for the next two days.