It’s Halftime – Blow the Whistle!

Here we are starting the second half of the year and so much has transpired.  Markets are up strong, double digits or more through the end of June amid some recent turmoil.  When most were expecting a slew of selling after a scorching first few months all we had were some brief bouts of fear.  Amazing how the market continues to remain resilient in the face of a weak economy (or, is it really weak?).  Chairman Bernanke continues down the path of QE and doing what he can to help spur growth and change psychology.  Of course, the other part of the equation is good fiscal policy as he has stated, but that is conversation for another day.

Lately we have seen bond yields creeping higher toward 3% on the long bond, probably for the wrong reasons (and temporary).  You see, bondholders hate one thing – INFLATION.  And while we can debate whether there are higher prices filtering through our economy, we have yet to see it materialize in the data.  The jury is still out on China, Japan and Europe but they may be turning the corner.  Hope springs eternal.

We’re on the cusp of third quarter earnings season and many are expecting a mixed bag – which sounds about right.  Recent results from BBRY, NKE and ACN show companies may struggle to hurdle any lofty expectations.  On the other hand, financial stocks may show some robust numbers – this coming week we’ll hear from JPM and WFC.  Technology will be focus the following week in the biggest week of earnings.  Much like the last few quarters we’ll see the ‘haves and the have nots’.  Alcoa as usual kicks things off on July 8.

I love trading options during this time of year — because the earnings tend to surprise everyone.  The moves are drastic and unexpected even with with a low volatility environment.  I tend to favor playing different options trading strategies like volatility moves rather than directional or timing bets (though the timing bets may work our well this time around).   As usual, I’ll let the charts/technicals guide me.  We’ll have plenty of opportunity this earnings season!