Daily Market Update – June 19, 2014 (Close)
With the market getting a nice boost from Janet Yellen during her press conference, as it seemed as if interest rates would continue to stay low until at least the end of 2014, all that needs to be done now is maintain those gains to be able to end the June 2014 option cycle in good position.
While it’s never a good idea to begin spending the money that may never materialize it again is the question of where the next catalyst is going to come from. Of course, the question of when is also important, especially since it can pop up at any moment.
The precious metals, for example, showed today just how true that can be. Why it elected to do so on such a delayed basis is pretty unclear, if you’re like most others that are some how trying to associate it with yesterday’s news. More likely it’s associated with world instability that is heading toward a crescendo, rather than an interlude.
With another S&P 500 record close being established yesterday and with volatility, as expected, hitting another new low, it’s hard to envision anything adversely impacting the current path, even though any rational person should know better.
The old expression “don’t fight the Fed” has lots of truth to it and gives reason to believe that there will be some continuation of market strength.
The challenge, if there are widespread assignments this Friday is to know just how strongly to embrace a market that just doesn’t seem to know how to give anything back.
With potentially lots of money available for re-investment you have to wonder just how aggressively to throw it back into the market at these levels and place it at risk.
In many ways it’s not much different from inheriting a big chunk of money. Usually the worst thing to do is to go and put it all at one time to work. While doing so may mean having the good fortune of entering at a market low, it could also have the bad luck of entering at a market high.
There are probably very few people, despite the recent endorsement by the Federal Reserve, who would consider the market to be at it lows and would probably believe that we are closer to near term highs than we are to near term lows.
So that has to color any ideas of how that money, if it is indeed realized this Friday, gets used beginning next week.
Basically, I’m not expecting a wild spending spree, but I would like to see some more activity than over the past few weeks, although I would like to get back to one of my goals of reducing the total number of open positions, as well as the number of uncovered positions.
With the FOMC statement out of the way the only known remaining challenge for the week is tomorrow’s quadruple witching day.
Unlike 20 or more years ago when the process wasn’t as orderly as it is these days, those were really frightening days and huge moves were expected.
These days they tend to be pretty tame, but the slightest little snfu could have really magnified effects that quickly ripple through the markets.
As a precursor to tomorrow, today looks to get off to a sedate start and there’s no good reason to overlook opportunities that may occur today because eyes are on tomorrow’s expiration.
I don’t expect too much action today, but you never know and so having learned to never be surprised, it seemed as if today there was some opportunity to add shres of MasterCard and maybe, more importantly, close the SInclair Broadcasting position.
That one is all speculative, in that it is a good, solid company that has lots of growth ahead of it, but it may fall prey to some short term pressure if the Supreme Court decision, which may come as early as today opr tomorrow, finds in favor of Aereo, the start up that captures broadcast television transmissions and charges people for the use of their mobile device.
With the contract ending tomorrow and worth the chance that an adverse decision could come tomorrow, it just wasn’t worth a roll of the dice.
Sometimes you just have to take your profits and live for another day.
Note: Price updates will be delayed today