Another day, another all time high for the markets. Today is Fed day and an important one since there is an expected decision on tapering. There is an expectation that it will be slow and steady but any time liquidity is reduced, things don’t often go as planned. That is the risk now since everything is going so well. Markets go up when all issues are known and earnings are strong. That is where we are today but the risk of a Fed policy error is high based on past history. It is clear based on the past few weeks that the market is not pricing in any issues at this time, but it is always what we don’t know catches the market by surprise. It could be that the gains in the market already have been made. So a buy the rumor and sell the news event could transpire. Yesterday I took off most of my bullish spreads just to be on the safe side. They are all nicely profitable. I realize that I may be overly cautious, but that mentality is what has allowed me to significantly reduce large losses and that’s the name of the game! Stay long but always be nimble.
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