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Daily Market Update – September 15, 2015 (Close)
Yesterday was a rare kind of day if you only look at the last month or two as your guide to what is normal. Instead of the wild swings that we’ve gotten used to and that have helped volatility start returning toward what we used to consider normal levels, there was virtually no range in trading yesterday. The market traded in as tight of a range as we’ve seen for a while as there was absolutely no reason to get excited about anything. Despite more weakness in Asia, which continues as we wee ready to get started this morning, the market was again looking as if it may be another flat day as it was moving away from trading in sympathy with Shanghai. When you think about the fact that Shanghai has now fallen 40% in the past 3 months, we are pretty fortunate to find ourselves down only about 9% to start the morning, in what is nothing more than what should be thought of as a normally occurring correction, from which recovery is routine. You can’t necessarily refer to anything about a 40% decline as routine, but it is good seeing that the co-dependence in trading seems to be waning as the realization comes that there’s no better place to be parking your money than in the United States. By the time today’s trading was done, that 9% decline was more like 7.5% in what could only be described as a surprising day, but without any surprises to make it so. With all attention being focused on this week’s FOMC Statement release and Chairman Yellen’s press conference to follow, there’s plenty of anticipation for something big to spring out from the market at that time, so for now, there’s not too much reason to expend much energy when it all may be called for on Thursday. But that didn’t matter today, as the enthusiasm for something began to bubble over. It’s was a little disappointing seeing the morning look as if it would be another flat or down kind of day, as I’d have liked to see more opportunity to do something with non-performing positions or find some opportunities to roll over those positions expiring this week. While the market was very nicely higher today, the disappointment continued, as there really was nothing that popped up as a new opportunity. As has been the case for quite a while, although less so now as volatility has been increasing, the relative costs of those rollovers is still higher than I would like. Although I really do dislike not being able to rollover a position, these days I’d rather not do a rollover than do one with virtually no benefit and obliging yourself to assignment. While it’s perhaps unrealistic to expect that you can have it all, you really can have it all when volatility gets sustained at a higher level, so there may be reason to not rollover positions as a matter of reflex. There’s definitely more and more reason to look at some longer term contracts as long as there’s the chance to lock into higher premiums and get paid to wait out some bounce back in the market. That is actually the case for a number of contracts expiring this Friday as those were sold as “Hail Mary” kind of sales to generate some income while awaiting some good news. As it is taking longer than we’ve become accustomed to for getting good news to return to the scene after a market dip, that may be the strategy for a while and just trying to grab any premium advantage while it’s available and while in waiting mode. Today looked as if it might have been a quiet day for portfolio trading before things got out of hand in a sort of subdued buying frenzy, but despite yesterday not offering any surprises, it probably doesn’t make too much sense to completely discount the possibility of something popping up to create opportunity even as we may still be in a state of suspended animation until Thursday afternoon. . |
