Daily Market Update – March 27, 2014 (Close)
Interesting day today that ended up being much busier than I would have expected and in a good way, despite a market that basically did nothing all day.
With the day starting off with the discovery that my Walter Energy puts were assigned to me early. it wasn’t exactly a good start to the day, but I was still focused on news from the day before.
It’s not often that I end the day and then begin the new one being upset about things, but I’m still seething about yesterday afternoon’s news that Citigroup failed its banking stress test.
It’s not that I have a large position in Citigroup. It’s just a position, really no different from others in terms of overall proportion. I usually have either one, two or three lots of any stock and generally fairly well balanced, other than for speculative kind of positions, which are under-represented.
In this case, I have two lots of shares and was expecting that one would be assigned this Friday.
That seems much less likely right now.
That wasn’t supposed to happen and I doubt that any apologists will step forward with anything to say other than it was pretty inexcusable, given that they had the precise guidelines of what needed to be done.
It was bad enough that nearly everybody else passed the test and started to immediately announce share buy backs and raised dividends. But what was really bad was that this stress test was the equivalent of an open book test.
How do you fail one of those?
While unwritten, there was a sort of social contract between investors that these “too big too fail banks” would pass their imposed stress tests and get back to their usual dividends and efforts to keep stock prices higher, through buy backs. In turn, investors bought shares.
Vikram Pandit, the previous CEO of CItigroup, was said to have been fired after not passing the previous stress test and criticized for not having been a “banking guy,” as he came from the hedge fund world.
His replacement, Michael Corbat, was known as a no nonsense guy with a reputation of delivering troubled banks to health.
Maybe not so much this time, although there’s still 30 days to appeal the decision.
Or, there’s always next time.
I probably wouldn’t advise using that in their next ad campaign.
This morning doesn’t hold much promise for moving the market higher and Citigroup isn’t helping things.
With less positions looking as if they may be assigned this week keeping some of the cash back may have been an unintended positive thing, as there is also suddenly less of a positive aura around the market.
It seems to simply be looking for direction.
I’m content to let it try and find its way and sit back while it goes through those efforts. At least in a couple of weeks an entirely new earnings season will be ready to begin and then we’ll have something a little more tangible to be basing decisions upon, rather than the vacuum of the past few days.
As it would turn out there really wasn’t much in the way of self-discovery today, but at least there were plenty of opportunities to generate some revenue through rollovers and outright call sales. That also makes for a less hectic day tomorrow and provides more opportunity to think about next week and the week after.
Hopefully, some of you have been following along and making the DOH trades and the less adevnturous, “mini-DOH” version trades. Sometimes they are a little bit of a nail biter kind of trade, because you really don’t want to see positions get assigned at a strike lower than the entry level, but bya and large, those premiums will and do add up. For me, at least, it’s worth the added anxiety.
Besides, I could use a few more gray hairs.