Daily Market Update – November 19, 2014




Daily Market Update – November 19, 2014 (8:00 AM)

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 hold 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.

It’s very unlikely that I will make any new position trades today, at least before the FOMC Statement release.

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.

So far, 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 is 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.

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 doesn’t appear as if that will be the situation today, as the futures are trading about as flat as you can get.

So the likelihood is that the first half of the day will be one of watching and hoping for any outliers that happen to unexpectedly move in the right direction and then further hoping that any market moves after the FOMC Statement release will take us in a direction that will make rollovers and assignments more likely to occur.