Daily Market Update – May 18, 2015  (Close)

 

Closing at another new high and having some more cash to spend following some assignments creates some conflict.

Market technicians have been looking at the 2120 level on the S&P 500 as a “make it or break it” kind of level.

There’s nothing really newsworthy about that as the 2019 level had been the previous closing record high and there’s enough historical basis to realize that when  you get to those kind of levels it represents either a resistance point or a point of support.

Anyone’s guess is as good as anyone else’s as to whether the 2120 level leads us even higher or is a place to consolidate some gains, which is something that is about due right now, even if only on the basis of time.

Time has been the best indicator of where the market is going, as nearly every 2 months there has been a pause and some mini-correction taking place. The last of those was in March and here we are in May.

With much of the important earnings having now been reported, it’s going to be a fairly quiet week in that regard. However, there are some big retailers still to report this week, such as Wal-Mart and Home Depot which can say things about very different portions of the economy and can have an impact beyond their own shares.

Otherwise, there’s not too much going on, although there will be a release of previous FOMC Meeting Minutes, so that people can dissect some of the dynamics going on during those meetings, but that information should be far too dated to have any kind of impact.

What the week does have is a number of FOMC Governors speaking, including Stanley Fischer on Thursday and Janet Yellen on Friday.

While the market is likely to respond more to what Janet Yellen may say, I think the more interesting words may come from Fischer. That’s because he was widely perceived as an influential hawk on interest rates and he’s now looking at a data driven committee that doesn’t seem to have the data to suggest that there’s a reason to start increasing rates.

With more cash on hand after a few assignments last week and already having a number of positions set to expire this week and the market at a new high, I don’t have strong reason to look for spending opportunities.

I would like to be able to see chances to whittle down the number of uncovered positions, even if using some longer term expiration dates. While normally not too fond of those when volatility is so low, at the moment I also look at those longer time frames as offering some additional time to recover in the event of a near term decline in the market.

For some positions that have already been waiting quite a while and haven’t been generating much in the way of income, what’s another few months?

As the pre-opening futures were mildly lower as the week was about to begin, that’s was signal to just sit back and watch whether there are any waves and in what directions they may be going, before deciding to get too wet.

Today turned out to be mostly a day of calm. Somehow the market was able to slowly work its way higher and it began the week exactly the way it ended the previous week, by setting new all time closing highs.

 

Note: For
those purchasing shares of Cablevision, I decided to try and sell, what I hope will be deep in the money calls as shares are set to go ex-dividend on Wednesday. I’d like to see those shares get assigned early in order for the option buyer to capture the dividend.

In exchange, the trade, which would then only be of 2 day’s duration would have an ROI of about 1.9% and with little associated risk.

If it works out that way the only question remaining would be “why can’t there be more of those?”