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Daily Market Update – June 17, 2015 (Close)
“What the market taketh, the market giveth“, although it could just as easily be “what the market giveth, the market taketh.” Yesterday it was the former, almost tick for tick erasing the performance from the day before. Not only in the amount of the change, but also in the quality of the trading. Neither day had much in the way of uncertainty associated with it, although Monday had a greater range. This morning, as the FOMC got ready for the second day of its meeting and about 5 hours in advance of its statement release, all was quiet in the futures, sending no signal as to what anyone believes will be coming from the FOMC. Some 30 minutes after the release was to be made would also come the last Chairman’s press conference until September, when many had already believed the first interest rate increase will happen and now have even more reason to believe so. Regardless of what new ideas of words may have been introduced in today’s statement, if there was to be no change in the interest rate, you can bet that there would be plenty of questions directed toward Janet Yellen focusing on the timing and her assessment of the changing pattern of economic growth. As it would turn out, there was no change, and there was plenty of time for questions. What Janet Yellen did, she did masterfully, as she skirted those questions that sought any kind of detail or that tried to pin her down. With almost every of these press conferences Yellen has been able to push markets higher. She didn’t really do that today, and I hadn’t been expecting her to do so, but at least she didn’t torpedo the mild gains that ensued from the FOMC Statement release. As expected, and she made it pretty clear, if rates aren’t raised today the only things that could be said is that those rate rises are coming soon. I thought that if that was to be the case, rather than being relieved at that news and getting on with life, traders would take that as a short term negative. But they didn’t. Maybe they were able to remember that most of them expected a rate increase as early as June. So when not introduced today, it would just represent another month or more of the gift that the Federal Reserve has been giving the stock market. Now it looks as if it may be another 3 months. That should be a cause for celebration, as should the actual raising of interest rates, when it does eventually come. While waiting for today’s scheduled events, there was also the continuing matter of Greece, which may account for some of the back and forth having been seen in the market the past couple of weeks. Also waiting have been some trades. After being close to desired prices on a few trades on Monday, I was really hopeful that they would have happened on Tuesday, especially as the market headed higher. But nothing. I would have liked like the chance to rollover any position that makes sense to do so before the FOMC Statement release in order to avoid any potential plunge, but it just didn’t happen that way, yet again. With the delay in an increase in interest rates for now, there was some bounce back in gold, so at least that gave a chance to rollover one of the Gold Miners ETF positions, yet again. However, as we now near the end of the monthly option cycle, I may end up making fewer trades than may be possible because I don’t really want to take on the cost of the transaction, including buying back an option position that almost certainly would have expired worthless. With volatility so low the relative cost of buying back some of those positions is just too high compared to the new premium received, unless that premium is boosted by an upcoming earnings release. While there’s always hope to extricate myself from some of the expiring positions this week, the clock is now really ticking. It would be especially nice to see some real follow through with another day of gains and most of all, for those gains to hold until the books are finally closed on this month’s options. |
