Daily Market Update – November 19, 2014 (Close)
Yesterday broke that string of 5 consecutive days with the S&P 500 moving less than 0.1%
It took 35 years to repeat the last time that happened, but yesterday’s small gain, although bigger than 0.1%, has made that bit of trivia obsolete.
This morning appears to be shaping up to be a typical quiet morning in advance of the FOMC Statement release. Last month’s statement wasn’t met with any kind of over the top reaction, which itself was surprising, as the event usually has resulted in significant knee-jerk reactions, as well as large moves after the information has been digested and often large moves the following day, although frequently in the opposite direction.
More surprisingly, last month there was reason to believe that the FOMC had shifted somewhat toward the sentiments of the more hawkish members as none of those dissented, while a notable dove did do so.
That itself led to something even more surprising.
Based on that perceived shift, you would have expected a sell-off, even if it wasn’t really justified, but it never happened. Maybe that was a good sign, since everyone knows what direction we are headed toward and how that direction includes increased interest rates. There should be nothing to fear and amazingly the continued suggestion that those increases were coming didn’t produce fear or surprise.
Today’s FOMC shouldn’t have held much of a surprise for anyone, particularly as the economy gives no evidence of backsliding. If Janet Yellen’s suggestion that we focus more on the JOLT Summary is also something that the FOMC is doing, then we would expect that the timing of those interest rate increases will be getting nearer and nearer.
And so it was very unlikely that I would make any new position trades today, at least before the FOMC Statement release.
That’s exactly how things played out and in the aftermath of the release, nothing happened.
There were no surprises and there was no reaction, pretty much like last month’s experience.
While there are six speeches scheduled to be presented by Federal Reserve Governors before the week’s end, none of those is likely to really have any impact on the market. The only one that may be of interest will be one given by the newest appointee, Loretta Mester, who is still somewhat of a mystery, but is thought to have more hawkish sentiments than most of the other Governors.
Someone has to pick up where Richard Fisher will soon be leaving off and it could be Mester.
Prior to today’s trade in Joy Global, the single new position trade for the week, the Best Buy put sale will play out tomorrow morning and otherwise the only thing to look for looks like will simply be on the prowl for any opportunity to sell new calls or execute rollovers.
Despite yesterday’s small gain, there has been essentially no movement in stocks and little opportunity to make those kind of trades. Today didn’t change that, despite the move being in excess of 0.1%.
While there have been some recent FOMC Statement release days where the market has gone on a buying spree the previous day and even in the hours before the release, it didn’t appear as if that would be the situation today, as the futures were trading about as flat as you can get. The way the rest of the day went, there’s not too much reason to suspect that tomorrow will be much different.
So the likelihood that the first half of today would be one of watching and hoping for any outliers that happened to unexpectedly move in the right direction did turn out to be the case. What didn’t materialize was seeing the hope for further a market move higher after the FOMC Statement come to fruition.
There are still two days left to this week and these monthly option cycle expirations can bring their own level of excitement and activity, but for now, that too, seems remote. Yet, there’s still some hope for some key assignments and rollovers before it’s all over.