We will kick off with our note to the SLF Portfolio folk.

Boys And Girls;

Hey what a day. Ahead of the Fed announcement that there would be no rate changes the market was likin the retail news this morning and the sentiment news out of Germany. Once the news from the Fed came out the market really took off finishing up 1.6-1.8% depending upon which index you use. (As usually we suggest the broader market, the S&P 500.)

You could look at your account and ask "Brian if the market was up 1.7% how come my portfolio was not up by that much?" Great question. In fact, a couple of the portfolios in the mid five digit range were flat or showing a loss today. Here is the reason. Most of these accounts start with 10,000 dollars. Once we get to a point where we can see some profit and a few more dollars, we hedge the accounts to protect those profits. We do this using either the VIX ETF VXX or the gold ETN GLD. Today both took a hit as the dollar strengthened and the volatility of the market dropped. Your long positions all performed at or above the market movement today. (Except ACET). Here is a summary of today's noteworthy action.

AAPL

Up 2.92% today. (Our long position will definitely be called away on the 17th.) I cannot see shy it is up so much other than it is AAPL. There is a rumor about a 7 inch iPad made by Samsung. That would be about the size of the Kindle Fire. JUST A RUMOR.

MSFT

Right in line with the market.

XOM

In line

CELG

Had good day, and there is cyber banter out there about it being a takeover target. The noise does not even qualify as a rumor, but and interesting idea.

UNFI

UBS initiated coverage on the stock at a neutral rating and a $50.00 Target Price.

GWW

In line with the market.

MGRC

Out performed the market today. I can not find an explanation.

That's all we have in your core holdings. I did pull all of you out of EPAY at a break even point. I was not happy where we got in and still don't see a clear buy point. It goes back on the watch list. I took that cash and loaded up on more ACET. For a couple of you newbies, it was a new position. We got in today at 8.99 and have stops at 8.25.

While this is a nice day, it was big and fast. I will be running numbers tonight on the VIX versus the S&P 500. Stay tuned. Again of you have VXX or GLD in your portfolio it took some of the fun out of today's gain. Trust me its cheap insurance. Gold is falling because the good economic news is strengthening the dollar. Remember our three legs of commodity investing. (Supply and Demand, Speculation, and Currency flux. Today would be currency flux.)

What Goes Up . . .

We have seen a nice run in the market since we (and a bunch of folk more qualified than I) called a rally in December 2011. We are up 12.4% on the S&P 500. It closed today at 1,395. Please note that is well above my year end figure of 1,358.

As we mentioned in the note to the Salve Lucrum Family Portfolio, we hedge the accounts using the VIX via the ETF VXX. Now it is important to understand what the VIX is.

The actual goal of the VIX is to provide a tool for traders to determine the implied volatility of the S&P 500 over the next 30 days. Using statistical formulas to determine the variance between "at the money" call and put options with the next months expirations days. The larger the variance, the more volatility there is. The more volatility, the more fear there is in the market. The more fear, the less people are inclined to be or get in the market. The less people to be or get in the market, the lower equity prices and that is why it is called the fear index.

Now here is a chart to give you some food for thought.  

Adam Johnson on Bloomberg's StreetSmart did a great job explaining this today. In the last three years, every time the two lines have converged, there has been significant corrections in the market.

That is not to say that the VIX can go lower and the indexes can go hire, it is just a cautionary note to be aware of. This area of convergence should keep us on our toes. I know I am. 

Salve Lucrum