Daily Market Update – June 17, 2015 (8:45 AM)
“What the market taketh, the market giveth“, although it could just as easily be “what the market giveth, the market taketh.”
Yesterday it was the former, almost tick for tick erasing the performance from the day before. Not only in the amount of the change, but also in the quality of the trading. Neither day had much in the way of uncertainty associated with it, although Monday had a greater range.
This morning, as the FOMC gets ready for the second day of its meeting and about 5 hours in advance of its statement release, all is quiet in the futures, sending no signal as to what anyone believes will be coming from the FOMC.
Some 30 minutes after the release is made will come the last Chairman’s press conference until September, when many now believe the first interest rate increase will happen.
Regardless of what new ideas of words may be introduced in today’s statement, if there’s no change in the interest rate, you can bet that there will be plenty of questions directed toward Janet Yellen focusing on the timing and her assessment of the chnaging pattern of economic growth.
With almost every of these press conferences Yellen has been able to push markets higher. Today, I’m not certain that will be the case.
If rates aren’t raised today the only things that she could say or infer, is that they’re coming soon.
The likelihood is that rather than being relieved at that news and getting on with life, traders would take that as a short term negative.
Instead, they should remember that most of them expected a rate increase as early as June. So if not introduced today, it would just represent another month or more of the gift that the Federal Reserve has been giving the stock market.
That should be a cause for celebration, as should the actual raising of interest rates, when it does eventually come.
While waiting for today’s scheduled events, there’s also the continuing matter of Greece, which may account for some of the back and forth having been seen in the market the past couple of weeks.
Alos waiting have been some trades.
After being close to desired prices on a few trades on Monday, I was really hopeful that they would have happened on Tuesday, especially as the market headed higher.
I’d still like the chance to rollover any position that makes sense to do so before the FOMC Statement release in order to avoid any potential plunge. In some cases, however, I don’t really want to take on the cost of the transaction, including buying back an option position that almost certainly would have expired worthless. With volatility so low the relative cost of buying back that position is just too high compared to the new premium received, unless that premium is boosted by an upcoming earnings release.
Today, then, may be the equivalent of two days of trading.
Whatever happens before 2 PM and whatever happens afterward. That afterward component may also be two different sessions depending on the press conference.
While I’d like to be busy trading today, the pre-open futures just aren’t adding to yesterday’s nice showing in a significant way, although they’re not taking away from those gains either.
So there’s always that hope.