Well, surprise, surprise, we rallied into the close yesterday. Check out the rebound in the SPY - we continue to close above the key level of 115. Today, we are up as well, so between the TREND, options expiration week and the FOMC, it seems likely that we will push higher.
The term "extended" and dissenters may give the markets to reverse, but is there enough reason for the Fed to change their stance. Free money right? Everything is fine right?
One point I would like to get across is inflation. There isn't any if you look at the strength of the US dollar compared to other currencies when international fear, tension, downturns occur. If you think the Greenback is weak, look at other currencies during worrisome times.
If there isn't demand due to stagnant economy, then we don't need as many natural resources, thus price declines. We can only have inflation in a runaway economy and I don't see another runaway economy to the upside after last year's upmove. We can still go up, but not in the amount we did in 2009 and probably at a slower pace.
What does that mean? Covered calls of course - slow grind upwards is the perfect setting for selling time decay. And if the markets break? You have protection in place and can add more by doubling down, buying puts, etc...
In the forex markets, a Buffalo Bounce showed up after a 200 Pip move. The USD/CHF also had one a little earlier in the day.
Now that I am playing with house money for the day, going to be very cautious during FOMC as you never know, it could be a whopper!!! In big ranges, it doesn't take much size to have a very strong day! If nothing happens, it is outside to play as:
Park City is hitting 50 degrees today. Salt Lake will be in the 60's. Get out for a road bike ride on the roads in the Preserve - just be careful in the corners as rocks are present. Take is S-L-O-W as the workout is in the uphills!
Remember to Be Environmentally Cool with Locals Have More Fun apparel.
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