Sunday, June 15, 2014

The Week Ahead: FOMC meeting, Yellen news conference

The Federal Open Market Committee concludes a two-day meeting on Wednesday with a money-policy announcement and release of member forecasts at 2 p.m. New York time, followed by a news conference with Fed Chair Janet Yellen at 2:30 p.m.

Minutes from the FOMC's April meeting showed that members had begun to formally consider options for "normalization"; that's Fed-speak for an interest rate increase sometime down the road, and so interest in parsing her words will be greater than is usual, even at these high-profile events.

Several reports with market-moving potential will be published during the week, adding some spice to Fed-watchers' meditations: Industrial production on Monday at 9:15 a.m., the consumer price index and housing starts on Tuesday at 8:30 a.m., and the Philadelphia Federal Reserve Bank's business outlook survey within the bank's mid-Atlantic district.

Leading indicators (in descending order of importance):

The interest rate spread between 10-year Treasuries and the federal funds rate, reported continually during market hours.

The M2 money supply, at 4:30 p.m. Thursday.

The S&P 500 index, reported continually during market hours.

Average weekly initial jobless claims, at 8:30 a.m. Thursday. 

Building permits for new private homes from housing starts, at 8:30 a.m. Tuesday.

Other items of interest:

Monday: Empire State manufacturing survey at 8:30 a.m. and Treasury's international capital report on flows into and out of the United States, and the Home Builders' housing market index at 10 a.m.

Wednesday:  Petroleum inventories at 10:30 a.m.

I also keep an eye on the Baltic Dry Index, updated daily.


None aside from Yellen; when the Chair speaks, the Fed glitterati fall silent.

Analytical universe

This week I shall be analyzing new bull and bear signals among 3,851 small-cap and larger stocks and exchange-traded funds.

Trading calendar

By my rules, I'm trading July options and later for the short legs of vertical, diagonal and calendar spreads and covered calls, and for all legs of butterfly spreads and iron condors. I'm trading September options and later for single calls and puts as well as straddles. Shares, of course, are good at any time.

Good trading.

-- Tim Bovee, Portland, Oregon, June 15, 2014

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