Daily Market Update – September 17, 2014 (Close)
While yesterday’s 100 point gain seems inexplicable, given that the uncertainties for the week are all set to begin this afternoon, I suppose that the 3 day settlement time defined when selling would have to end for those needing to raise money to participate in Friday’s huge Alibaba IPO, may have played a role.
That, at least, would have put some kind of a stop to the rampant selling that went on in many high profile positions that had racked up big gains this year, but doesn’t really account for buying that came in yesterday, unless there are still bargain hunters out there, who took advantage of those same decliners the day after.
Still, yesterday was a nice surprise and it would be wonderful if it could continue today up until and then through the actual time of the FOMC statement release.
Yesterday’s rally was said to be related to Jon Hilsenrath, of the Wall Street Journal, stating a belief that there would be no change in the wording of the FOMC statement that would have indicated the possibility of interest rate hikes coming sooner rather than later.
Hilsenrath seemed to have had an inside track into the Bernanke Federal Reserve’s thinking, and his “scoops” could and did move markets, but even then there were some misses.
He hasn’t established his Yellen Federal Reserve credentials yet, but the market acted as if he was the real thing and knew precisely what wording was going to be contained in this afternoon’s statement.
As it turned out, he was right, in what was really a binary opportunity. No one really factored in the possibility of the wording being changed or unchanged, but qualified in some fashion.
That didn’t happen, but it would have really fooled with everyone and created lots of confusion.
Ultimately, I don’t understand all of the concern. It is similar to what occurred when the market was concerned about the time table for tapering to Quantitative Easing. We all knew that QE had to end and we all know that interest will someday begin to rise. The pre-occupation with the difference a month or two can make in the initiation of those increases is about as ridiculous as the worries over whether tapering would be done over 6 months or 8 months.
We eventually did find that Hilsenrath was correct, but the pre-opening futures appeared to have completed its party mode and was back to awaiting something more tangible and then preparing itself for tomorrow’s results of the independence referendum vote in Scotland, which could easily go either way and could easily send markets in either direction and in unknown magnitude.
For the sake of Hilsenrath’s reputation and my stock holdings, I hoped that he would be right about the Federal Reserve continuing on its same path and not giving any hint of an acceleration.
Mostly I cared about my stocks.
As it turned out, the best thing for stocks was Janet Yellen.
Specifically, it was Janet Yellen speaking. While some began wondering why her press conference was running so long, they failed to notice that while she spoke the market liked what it was hearing. As soon as she stopped the market gave up much of those gains.
The timing of this week’s series of events, including Friday’s IPO is somewhat unfortunate as the monthly options expire this Friday and many of the positions could stand to see some strength going into that date, rather than seeing continued uncertainty and ambivalence.
I had been looking for any possible rollover opportunities prior to the 2 PM announcement, but didn’t not want to eliminate the possibility of some assignments by rolling over too early, thereby limiting cash available to begin next week’s trading activity.
Sometimes you have to roll the dice, instead and at least the rug wasn’t pulled out from under the market.
And my stocks.
Hopefully the voters of Scotland will be every bit as mindful of my needs as our Federal Reserve.