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Category: Dr. Duke's Blog
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SPX backed off a bit today, trading down $7 to close at $2102. RUT was essentially flat, down one dollar at $1190. I was surprised to see volatility bump up a full point today with the VIX at 15.5%. Trading volume was flat with 2.4 billion shares of the S&P 500 stocks trading today. Trading on the NYSE was down 1% and trading volume increased 4% on NASDAQ.

The NASDAQ Composite is now at the high set in June and about one percent off of the all-time high set in July. SPX is about thirty points off of its all-time high set in June and then reaffirmed in July. RUT has been the laggard. RUT has not even made it back up to the 200 dma. Ever since the correction low was retested in late September, SPX has been on an incredible run, up $228, or 12% in about a month! Even more surprising, this run has occurred in the midst of almost nonstop news of China's slowdown, evidence that we can't trust China's numbers, and the global economic slowdown that is bound to follow China's decline. Apparently, the Fed's support is a more powerful tonic for the markets.

This strong recovery off of the correction books one more V-bottom, a phenomenon that once would have been considered unusual, but no more. SPX is now running along the upper edge of its Bollinger band, so we may be starting to see some moderation in the upward push of the past month.

The ISM services index reported 59.1 for October, up from September's 56.9. ADP reported private employment today at +182 thousand, down a bit from last month's 190k. The Non-Farm Payrolls Report, aka the jobs report, will be issued Friday morning before the market open.

Our Dec iron condor on SPX at 1870/1880 and 2160/2170 is being squeezed; I have hedged the trade with Jan 2140 calls. We'll see if that is enough to hold off the bulls.