The Hawkish Talking Fed, but Timid Acting Dove
The August Fed Meeting in Jackson Hole brought some volatility, as Fed speakers hawkishly chirped in public that the September meeting is definitely on the table for a possible rate hike. Fast forward to the September 21st meeting, and alas, the Yellen didn't budge as uncertainty remained, and that there were concerns in the data. But, the November meeting is still "live". Like last year in December, the Fed has painted themselves in a corner with all of its hawkish talk and the need to raise rates, so they may be forced to show some credibility and pull the trigger on a rate hike. Will the Doves finally do it in 2016? (After promising 4 hikes in 2016)
Hillary Versus the Donald: Debate I
The market actually got a bit nervous going into the debate as Trump has seized some momentum due to Clinton's scandals(Email Deletions, Email Leaks) and health issues. I didn't watch the debate, as I watched Monday Night Football, but I did watch the Futures markets and the S&P Futures were up overnight. From there I knew that Hillary won the debate. Today, the market gave some of it back, but a Hillary win in November is now expected. This will actually calm the markets as the status quo, while not necessarily attractive, is much more stable than an uncertain Trump presidency. So, where do we go from here?
Melt it Up
Until the next Fed Meeting, the market should grind steadily up until the SPX hits 2,200. Expectations for companies earnings expectations are low, so the market will probably go up instead of down and several companies will beat the low expectations keeping the market propped up. The next big catalyst will be the Fed December meeting, and Yellen's speech afterwards.
What to Do in a Market Like This?
The way that I have been playing this market has been using an options strategy called the Broken Wing Butterfly. I have been trading them on the SPX, RUT, and AMZN for short term(8 to 16 Days to Expiration) theta decay positions. I do not make a lot of money on them, but it keeps me engaged in the market and I place these positions far enough away that they can expire worthless or I can exit the positions for small profits. I also have some crash ready Put Ratio Backspread positions on the QQQ and the SPY, just in case the markets want to crash and burn. Of course, Janet Yellen will never let that happen. Not on her watch. [more]
Is Restoration Hardware a Broken Stock? [more]
Crude Oil has rallied furiously in the past few days trading hitting an intraday high of $34.21, up almost 3% on the day thus far. The big headline moving the oil market is that some OPEC producers(Saudi Arabia, Venenzuela to name a few) have met with one of the big Non-OPEC producers, Russia, and have agreed to start cutting production. Great! Right? Well, the agreement is contingent on Iran and Iraq also cut back on production. [more]
Another tough day, as the SPX is down another 1.6% to 1821. Will the market take this down past the 1812 low of last month? EXPE, TRIP, CSCO, and TSLA are fighting the market after their respective earnings reports. It is hard to be long, or even going long. AMZN is up slightly, buoyed by news of an increase in their buyback program. The SEC is opening up an investigation on Boeing, sending the stock down 8%, putting pressure on the Dow. [more]
Another trading day, and another bad day for McDonalds as the 25 year company veteran and CEO Don Thompson resigns amid continued detoriation of financial results and brand image. One of the heavyweights of American culture has had trouble with changing palettes, fickle millenials, and shifting health food trends. How can this American instituion start falling into the dinosaur category with the likes of General Motors, JC Penney, Sears, and Radioshack? One reason: Ronald McDonald let the core burger business get eaten up by the competition. [more]