A Bullish Case Going Forward

NEW YORK (TheStreet) -- The bullish case? I can't possibly make one, having been expecting a market correction similar to that of April 2012 since April 2013. I'm an inveterate covered-option writer. By nature, I dwell on potential pitfalls of every trade that I make or suggest.

After all, why would you need protection in the form of options if your stock thesis was sound?

After nearly 30 years of marriage, my wife recently told me that only about 40% of what I say turns out to actually be correct. If I was that good at timing stocks, I'd be in the pantheon of the world's greatest investors instead of world's greatest husbands.
Conveniently ignoring my track record of premature pessimism, the coming week holds lots of risk for portfolios.

It was a little disconcerting that the news of what looks like a successful budget deal being reached wasn't greeted with great enthusiasm. In fact, even the architects of the deal seemed to minimize the achievement. Considering Capitol Hill's recent track record, one would be excused for thinking a budget deal well ahead of a deadline was monumental.

Suggesting that the market had simply discounted the deal is convenient, but without basis. Watching House Speaker John Boehner and Majority Leader Eric Cantor rail against the Affordable Care Act while they addressed the nation (fighting yesterday's war instead of rallying the markets by celebrating a rare accomplishment) wasn't helpful.

However, that's yesterday's news and, other than painting a picture of a squeamish market, doesn't offer any forward looking guidance.
Does the coming week's release of the FOMC minutes and, perhaps more importantly, outgoing Fed Chairman Ben Bernanke's press conference to follow, present an immediate risk?

Having sold many options with an expiration date just two days after the FOMC release, I'm forced to recall two other occasions this year when I was smugly anticipating assignment of many positions and counting the cash when the market turned on a dime.

Just a few days ago, there were very few investors believing there was any possibility that the "taper" -- the Fed dialing back $85 billion of bond purchases every month -- could begin or be announced in December. That may be why last week's sturdy employment report was greeted as good news. Without the fear of tapering beginning sooner rather than later, the market rallied. But remember, in the previous days the market sputtered as a synthetic version of tapering, the rising yield on 10-Year Treasury Notes, showed us what is in store when the real thing hits.

While the outcome of what awaits next week isn't preordained, I like to know when obstacles are ahead and what lessons can be learned from the past.

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