All correct, but. Those are gradual long-term influences, and I suspect we'll see some short-term shocks in the next month ... say, until April options close.
1) All news will be "bad" news. AG and the Fed Board couldn't win this time. 1/4 point cut would have been seen as too little, therefore bad; 1/2 as expected, but still too little for some, therefore bad; 3/4 or more as an indicator that the Fed saw the "Recession" boogeyman closer, therefore *still* interpreted as bad.
2) Tax season / tax selling. Many folks sold out at a profit - albeit less than the peak - last year, and may be shocked at the Cap Gains they owe after a "bad" year. Expect them to raise cash for the tax bill by selling - a seasonal phenomenon.
3) SCE BTB will remain less than 1 - probably by a substantial amount. Always sucks the bears out of hibernation.
On the other hand, the April Max-Pain point stands at 50, with 47.5 as a very close second. We're nearly three option steps below 50, so I'd expect the prevailing tendency to be upward in an information vacuum.
So, the climate I expect to operate in is a tendency to the high 40's, taking advantage of spikes downward (like today) or up above 50. I think I'll grab some calls soon.
- Mitch |
