Mid Day Trading Update – Quiet On The Set

After the morning weakness in the broad markets, the action has gotten quite choppy as traders & investors sit patiently waiting for the FED minutes to be released around 2 PM. Sentiment today is definitely biased towards the sell side but actual short opportunities are few & far between. If markets are able to push through their lows from the morning we could continue the selling, however and that is starting to happen as we speak.

The Financial as well as the Credit Card sectors are the worst performers today, after Mastercard MA reported earnings and investors responded by pricing the stock down almost 3%. This is of course in stark contrast to yesterday’s price action where she was able to print all time highs.

A surprise announcement from the FED could jolt the markets aggressively one way or the other so I would highly recommend you refrain from holding positions through the release of the minutes. Many pundits are saying Bernanke won’t surprise and FED policy will stay the same but everyone is keeping their ears open for signs that FED policy may change in the future. As you all know, the market is a discounting mechanism so if words come out insinuating any kind of change, the market will react accordingly.

Writing options during environments like this is usually the best way to go about booking profits without having to deal with the hassle of choppy options prices. Even if you’re write on a particular direction doesn’t mean that you’ll come out ahead because of all the shakeouts you must hold through.

Make sure to register for our free webinar this evening at 4:30 PM to discuss the topic “Trading with Twitter”.