Daily Market Update – September 16, 2014 (Close)

There is so much news packed into the latter half of this week that the market should have considered taking a few days off in preparation.

What really makes this week interesting is that the news is coming from all directions and none of it is additive, although if all pointing in the same direction can end up being very significant.

First, there’s monetary policy news coming from the FOMC. Then there’s political news come from Great Britain and Scotland and finally there’s stock market news coming from the all-time largest IPO offering on Friday and its reception in the secondary market, as well as the manner in which the IPO is executed.

So it’s hard to imagine much of significance happening today as most people wouldn’t want to make any kind of significant commitment in advance of what may be an avalanche of news, any specific bit of such news that could take the market in any direction.

But the market did tack on 100 Dow points today, despite what should have been a day for caution.

Why? Ostensibly because the Wall STreet Journal’s Jon Hilsenrath, who was considered to be the best at divining what the FOMC under Bernanke was thinking, may now have added Yellen to his mind powers.

At least that may be what the market believes as it reacted to Hilsenrath’s opinion that the wording in tomorrow’s statement that could hint at a more speedy introduction of rate hikes if changed, would remain unchanged.

Got that?

At least that deflected some of the Alibaba talk.

Yesterday so much of what was being discussed was how Friday’s upcoming Alibaba IPO could dry up liquidity, although I’m not certain why that was such a late consideration, as it seemed reasonably obvious from the time that the “roadshow” began last week.

As you would expect the money to get shares of Alibaba at or after the IPO has to come from somewhere and it’s extraordinarily unlikely that those who have been sitting on the sidelines with cash are going to be the ones pumping money into those shares. Rather, people tend to take profits first and then just re-circulate the money.

So it shouldn’t have come as too much of a surprise that some of the biggest momentum names, specifically the ones that may have generated some ni
ce capital gains for some people, would be the ones to feel the pressure, especially insofar as you may need settled funds or margin to make the purchase if offered an allocation.

The timing also shouldn’t have been too much of a surprise as it takes three days for settlement and the IPO is on Friday.

Funny how that all worked out.

Having executed two opening positions yesterday I wasn’t too certain that I was going to be actively looking to add anything to that, other than hoping to capitalize on any upward movement on existing, but uncovered positions. As the day progressed there really wasn’t much inviting as far as new positions would go, but I did enjoy the move higher.

Although the morning once again looked as if it would be opening with a downward bias, this time it didn’t last too long, perhaps also helped out by most of the IPO driven selling having been concluded.

While today ended up being more exciting and certainly more profitable than expected, tomorrow morning will likely be sedate as everyone awaits the afternoon’s FOMC release. While awaiting that release the first of the weekly challenges arises as trying to decide whether to attempt rollovers of positions that may have a chance of being assigned on Friday, in an attempt to avoid any nasty surprises.

Part of that quandary is answered by the still relatively high premiums for those contracts expiring on Friday, due to all of the uncertainty and the relatively low premiums for next week, once the uncertainty is history.

For now, that means more of the same. Just sitting back and seeing what direction and sentiment the market takes and going from there while hoping for the best and not feeling guilty if able to capitalize on anything.