Market Voyeur

mdaily20170110

In NYC, our hotel window faced this window. The only object in the room was the bed. The inhabitant made the bed each day and left the room clearly visible.

At the risk of appearing a bit of a voyeur, I found this room both inviting and ominous at the same time.

Starting out 2017 appearing as a bit of a market voyeur, I find the trading action both inviting and ominous at the same time.

Participating mainly through a lens, I have watched certain instruments make spectacular moves. For example, Brookdale Senior Living (BKD), one of my 2017 picks, ran up 20% in one minute on takeover rumors. (Impossible to catch if not already long.)

Conversely, listed as “one to watch” JC Penney (JCP) fell dramatically by nearly 20%. (That took 5 days rather than 1 minute).

The indices, except for Nasdaq, are as exciting as an empty bedroom. Their inaction has kept my voyeurism high and my risk exposure low.

What will transform me from safe voyeur to active risk taker?

Like the apartment dweller, investors wake up each morning, tidy the bed and then leave the room.

The opening bell has for the most part, been a non-event with the indices beginning the sessions basically unchanged.

Since the start of the year, the S&P 500 has traded within a $4.00 range. Most of the exciting action is in the Nasdaq 100. That has made the market inviting.

Moreover, a rotation in certain other instruments have made the market more ominous. For instance, the 20 + Year Treasury Bonds rise in price suggests some flight to safety.

Last night, I wrote about the 6-month January Calendar Range, now only 4 trading days away from completion. Granted, waiting for the range to set up by Tuesday the 17th is four days ahead of a new administration.

Nonetheless, I suspect how the confirmation hearings go over the next few days will help build enough confidence to follow whichever way the calendar ranges break.

Last year, under very different circumstances, we sat out for the first 10 trading days. Then, the lights turned on. This year, we are hardly aside, but hold a comfortable and relatively low risk portfolio.

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Disclosure: None. 

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