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Daily Market Update – April 1, 2014 (9:00 AM) This morning the futures are off to the same kind of start that we had yesterday. Trading was pointing slightly higher and suggested a mildly stronger opening. That alone would have been nice except for the fact that lately these kind of positive openings have had a hard time maintaining themselves. What no one expected, however, was that during some prepared comments and appearances later in the day Janet Yellen would remove any question about whether she is dovish or not. With a long body of work and official positions, when she was initially considered as a possible successor to Ben Bernanke, she couldn’t escape the moniker “dove.” Given that long and documented history, it’s surprising that anyone would have any doubts about where her heart and intellect stood. But somehow markets still found a reason to get worried when she may have mis-spoken during her first press conference as Federal Reserve Chairperson and the whispers were that she wasn’t anywhere near as dovish as we all thought. If you believe that our market rally has been closely tied to an accommodative Federal Reserve than you had good reason to worry, but still not good reason to be worried. As a result the market plunged and then quickly reversed when someone must have realized that it would be unlikely if she suddenly changed a lifetime of opinions. She seemingly finally put those fears to rest yesterday as she did what Federal Reserve Chairs before her had never done. She acted like a politician, photo opportunities and all, during a highly visible and orchestrated visit that was supposed to reflect the need to maintain and create jobs. You couldn’t possibly have been more direct in getting a message across and it really was unlike anything her predecessors had done or said before, preferring to cloak their thoughts in various layers of obfuscation. What was nice was that the boost given to the market that now is comforted to know that they won’t be abandoned by the Federal Reserve, even while tapering is proceeding, is that the gain lasted throughout the entire trading session and didn’t fade after the first hour of trading. I don’t know if there will be another unexpected catalyst this morning, but I hope not, as I would like to get at least a few more new purchases done without wondering whether something has gone up too much and would I be chasing the shares if I bought them. Yesterday, much of what was on the drawing board would have required chasing and that’s usually a certain formula for disappointment. Since there’s never a shortage of unexpected disappointment, there’s probably little need to add some expected disappointment to the mix.
Hopefully some of those opportunities will appear and perhaps will be in positions with expanded options choices. While the expectation is that this week will be a net positive, since it is an Employment Situation Report week, a little diversification in expirations would still be nice, in the event that the week falls short and leaves expired contracts behind. As usually is the case, the reality may end up being very different from the theory. Ultimately, whatever looks good is good enough for me..
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