Sir, I’m Not Made of Steel.
Well, that was exciting. Tax reform. Deregulation. Fiscal spending. Repatriation. We will have none of that, thank you. Instead, we’ll take hour upon hour of “Russia interfered with the election” When did Russia begin interfering in US politics? Decades. Oh. Wire tap? Not legally. Yeah, well no kidding. Basically nothing new was undiscovered at today’s hearings, with the exception that there is an ongoing investigation that we all well suspected was underway already anyway. More time was spent avoiding answering questions than actually answering them. The markets, for the most part… yawned.
Continued strength in US Treasuries has to be the day’s biggest story. Not only at the long end, where the ten year now yield just a bit more than 2.46%, and the 30 year is giving up less than 3.08%, but the yield on the closely watched two year note moved down to 1.288%. That wasn’t enough to save the bond proxies, though. The Utility sector gave up -0.7%, and Telecom backed up -0.4%. The Financials were again the weaklings (-0.9%), as banks and consumer finance type names took the brunt of the day’s action. As for the commodity space, Oil was once again hit with the ugly stick, though the Energy sector skated closer to the flat-line.
I don’t know if you kids will agree, but it is starting to feel like we are walking on egg shells. Stuck between not wanting to bail before reaching the promised land, and being sorry that you never bailed in case we just never reach it. You know how to ease that feeling, right? Sector Diversification, and purchased protection in the name(s) that scare you the most. In the meantime, for your other names (if you are not already), see which names you already own that have correlated options that might trade at anything resembling a decent premium. Go out on expiration if you must. Writing calls against holdings may not provide much, but it does provide something… and you may get away with it in a sideways market. Revenue… a whole lot better than a sharp stick in the eye.
SPX: I gave you 2377 this morning. That was a little sloppy. Morning support showed up at 2375, and survived a multitude of rapid testing. After the breakdown, the index found resistance at 2376.
RUT: After the opening the slid, the small cap index gave you a range of 1381/1388 versus my range of 1382/1390. Sort of close, no cigar.