Stock equity market ends higher this week. Trading volume remains relatively low for a gradual increase in broad market index. As mentioned in the Yahoo! video "It Ain't Over Till It's Over: Stocks Can Continue to Climb Wall of Worry, Says Jon Najarian", institutional and individual investors with prior holding on stock equity are not selling for profit taking. Some impatient investors with money on the sideline seeing the recent rally start to allocate more stock equity into the portfolio. This provides support for the market despite unfavorable news.
Stocks in the portfolio increase significantly in value. However the portfolio value does not increase proportionally because the sold stock options have a negative impact. The majority of options become in the money and will probably be exercised at the option price which is currently about 5% below market value. Market performs much better than previously expected.
Market movement is tightly range bounded most of the time during this week. It appears that investors waiting on the sideline for a dip to enter the market need to continue to wait. Opportunistic traders can day trade while the market moves sideways.
Since market has reached recent high, it would remain calm for some time. Earnings announcement may create oscillations. Although the outlook of stock equity in the long run is optimistic, short term trading in the speculative trading portfolio emphasizes more on instantaneous market movement. The stock portion of portfolio will be held until option expiration. The leveraged ETFs portion will be used for day trading with caution.
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