Get The Ticker Tape delivered right to your inbox.

X
Investing

When Managing Your Portfolio, It's Wise to Watch the Clock

Print
February 24, 2015
When Managing Your Portfolio, It's Wise to Watch the Clock

Whether trading over the short term or investing for the long haul, keeping an up-to-date calendar within view is always a good idea. An accurate clock doesn’t hurt, either.

Something can happen somewhere in the world every day that may affect a particular stock or market. We know the first Friday of every month, at 8:30 a.m. sharp Eastern time, the Labor Department drops its latest monthly U.S. employment numbers. That’s a big deal.

But the jobs report is just one ingredient in the constantly shifting market cocktail. Moreover, it’s not just enough to know when something is scheduled to happen. It’s also important to pay close attention to how markets respond as news is made.

When it comes to market movers, few command attention like Janet Yellen, the Federal Reserve Chair. Yellen’s testimony before Congress today and tomorrow “trumps everything else” among expected news events this week, said JJ Kinahan, chief strategist at TD Ameritrade.

Many investors and traders will closely scrutinize Yellen’s words to gauge the Fed’s view on economic conditions, and to seek clues about when the central bank may hike benchmark short-term interest rates.

This takes us back to clock-watching. Unlike single-moment events like the monthly jobs report, Yellen’s testimony typically unfolds over several hours, and her use of certain words (for example, “patient”) or word combinations often triggers virtually instantaneous buying or selling across a wide range of assets.

What’s an individual investor or trader to do? Get granular. Before Yellen or another Fed official settles in front of the microphone, call up a one-minute chart for a widely followed bellwether, such as the 10-year Treasury note yield, on Trade Architect or another TD Ameritrade platform (see figure 1).

One-minute $TNX chart on Trade Architect

FIGURE 1: MINUTE BY MINUTE. One-minute intraday settings (yellow arrows) on Trade Architect charts offer a real-time picture of how news events affect specific assets, such as this CBOE index (ticker $TNX) linked to the 10-year Treasury yield. Source: TD Ameritrade’s Trade Architect platform. For illustrative purposes only.

Watching how markets react in real time can reveal valuable insight into what the professional traders and money managers are thinking and doing, and how your own positions might be affected.

Is the Fed content to hold steady on rates and see how inflation, job growth, and Europe play out? Or is the central bank signaling an imminent tightening of the monetary policy spigot? A sharp spike or dip, even if only for a few minutes, in the 10-year Treasury yield or another market gauge can be telling.

You may not have a spare couple of hours to devote to the blow-by-blow as lawmakers fire off questions at the Fed leader and she responds with meticulous, carefully worded answers. (As anyone who’s followed the central bank knows, describing anything the Fed says as “carefully worded” is basically a redundancy.)

But that’s okay. Keeping pace with major headline-grabbing events, as well as lower-profile items (such as corporate earnings reports), is still relatively straightforward through calendar functions on TD Ameritrade platforms. Additionally, the Portfolio Planner Analysis on tdameritrade.com offers a handy tool to check how your allocation targets are stacking up (see figure 2).

However much time you can spend following the markets at work, remember that even if Janet Yellen isn't speaking, we all have skin in the game. Important events happen every day, and, as Kinahan noted, “not every number comes out at 8:30 a.m. Eastern time.”

Portfolio Planner Analysis

FIGURE 2: TARGET PRACTICE. The Portfolio Planner, under My Account on tdameritrade.com, provides an indication of how recent market activity affected actual allocation levels compared to targets. Source: TD Ameritrade. For illustrative purposes only.

Scroll to Top