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Daily Market Update – September 19, 2016 (Close) This could be a big week, but there’s really no telling in which direction things might go. It’s also possible that this past week already brought all of the wavering we could summon, as markets went back and forth on nothing at all. This week, at least we have a central focus. That’s Wednesday’s FOMC Statement release. “Will they or won’t they?” is what’s on everyone’s minds, with guessing as to the immediate response being the second thing on everyone’s minds. Since the FOMC is not likely to want to be perceived as being reactive in implementation of fiscal policy, there shouldn’t be too much surprise if they do raise rates this week. Based on how markets have reacted whenever anyone of importance said anything resembling a hawkish stance, we could reasonably guess that an increase this week would result in a large sell-off. But who knows? The more things seem obvious, the less obvious they turn out to be. Today was certainly a day when nothing was obvious, as the market gave up some nice gains and did so even after the market attempted to recover the first round of losses. With 3 assignments last week, I had more cash than I’ve had for a while and I was not very anxious to spend it. But I did spend some of it. While I wouldn’t begrudge a nice move higher, at this point, I’d rather find some newly created bargains to purchase with that cash. Alternatively, if the market does move higher, I wouldn’t mind selling some more call contracts, but I also wouldn’t mind some more positions getting closer to their strike prices and perhaps becoming potential assignments, as well. That’s a change in tone for me. While I’m always expecting some kind of sell-off, that hasn’t kept me from deploying cash, nor has it prompted me to raise cash. This time may be a little bit different, as I really wouldn’t mind having more cash on hand. Of course, I didn’t really pay attention to wait I really wouldn’t mind. I certainly wouldn’t want to stay that way and I certainly would want to put cash to work, but at some point, unless the economy shows some reason to justify an increase in interest rates, there has to be some fallout, particularly if oil does start to move higher. That would especially be the case if OPEC could ever get its act together and cause the price of oil to rise because of a decrease in supply. For now, I’ll be glued to the screen until the mid-point of this week as the FOMC Statement is finally released. This morning, markets were somewhat positive. You would have thought that they would be tentative, but logically, you would have thought that to be the case last week, too. Ultimately, the market was tentative, as it ended unchanged. I ended up with less cash, but hedged my bet by using a monthly option when a weekly was available. Right now, hedging you bets or hiding underneat |
