Daily Market Update – March 31, 2014 (Close)
Nothing much happened over the weekend and so the markets continue with their non-committal trading in the pre-open to begin this week. That’s a pattern that has been going on for a while, even though as the days have unfolded there have been large, but usually alternating directional moves, including on intra-day bases.
Today was one of those days, but at least this time the cause was readily identifiable.
And better yet, it was higher and never even made a serious attempt at reversing itself. No nervousness, no profit taking. Just everyone going along for the ride.
It was a very dovish sounding Federal Reserve Chairman Janet Yellen, who during the course of a scheduled presentation made it clear that the Federal Reserve was going nowhere and would be a continued partner in assuring an economic recovery.
Otherwise we would have been held hostage to another weekend of no news and nothing to convince the markets of the need to move anywhere.
While Secretary of State Kerry did have an unscheduled and lengthy meeting with his Russian counterpart on Sunday, it seemed that the results of that meeting were the source of any non-committal sentiment this morning. I listened to the press conference and wasn’t really certain of what had been said and certainly there was no suggestion of accomplishment nor failure of those discussions, that could have served as catalysts for this morning.
Faced with lots of positions set to expire this week and coupled with a dearth of assignments last week, I’m a little more reluctant than usual to dip into reserves in order to open new positions. That money is there for real and screaming opportunities and there aren’t many of those, although their beginnings are becoming more evident, despite some advances in last Friday’s trading. Sitting near all time highs, even with a slight hint of optimism to start the week isn’t enough of a motivator to dig too deeply, at least until seeing some evidence of stability and not the early positive opens that gave way to late morning selling, as we’ve been seeing lately.
Although this is also an Employment Situation Report week and that usually means a net positive for the weekly performance, it’s difficult to take that information and use it as a counter to common sense.
With so many expirations set for this week, this seems to be another week to consider looking for those opportunities that have expanded weekly options in an effort to diversify expiration dates.
As with last week I would like to see additional uncovered positions get their coverage and add to the week’s income stream. Where appropriate, that mean mean more DOH trades, as they have helped of late in having existing positions outperform the weekly market. If your goal is additional weekly premium income then it’s worth the additional attention that’s needed and the aggravation that may ensue when those shares mat suddenly spike. As long as they don’t do so immediately before expiration there’s always hope and even then there may be some.
This morning I planned to continue the strategy of sitting back a bit and watching to see how sentiment develops and where it may take us. As it turned out it took us higher and never looked back.
With cash reserves up to 37%, I was willing to get down to about 25%, which would have meant only as many as 4 tor 6 new positions for the week. However, with the market jumping quickly and early there weren’t too many opportunities to grab much. But having rolled over a nice number of positions last week I’ve already met income objectives for this week, so there wasn’t not as much additional reason to extend the portfolio, certainly not in order to chase income.
Sometimes that’s a luxury to begin the week, but you can’t necessarily blame anyone for wanting even more