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Do you know any trading coaches who publish the results of their trades daily, as the trade progresses? Dr. Duke analyzes the market and reviews the progress of his iron condor spreads in the Flying With The Condor™ service each day in this blog. If you have questions about any of the trades, Ask Dr. Duke.

The November 2014 position in the Flying With The Condor™ account survived the downturn in October very nicely and was closed with a 13% gain. We also dodged the flash crash on August 24th by going to cash the previous week. The Flying With The Condor™ service ended 2015 up 40%, handily beating the S&P 500 Index. Check the Track Record in the Downloads section for details.


 
Dr. Duke practices what he preaches! You are entering the "No Hype Zone"!

 

The retail sales numbers that were released today appeared to put a damper on the market, but the market has really been lackluster for the last three days. We seem to be in a "three days up and then three days down" pattern - not really, but you get the point. The market is going nowhere. SPX closed down $18 to $2047 and RUT closed down $6 to $1102. Volatility inched up almost one point on the VIX to 15.1%. Trading volume declined with 2.1 billion shares of the S&P 500 trading. Trading volume declined 8% on the NYSE and declined 13% on NASDAQ. So we have declining prices on declining volume - not very inspiring for the bulls or the bears.

Retail sales came in at a modest +1.3% for April, up from -0.3% for March. FactSet reported that internet sales were up in the first quarter (year over year) 143%. Next best was home improvement at +12%. Department stores were down 48%. The Producers price Index (PPI) reported +0.2% for April, up from last month's -0.3%. The University of Michigan's consumer sentiment survey increased from 89.7 to 95.8 in May.

The bulls have just enough strength to hold support (so far), but not enough strength to push to new highs. On the other hand, the bears can't seem to take control to break major support levels. We may be stuck in this sideways channel until after the election.

Have a great weekend.

Consider the last three days of trading in the S&P 500. On Tuesday, SPX gained $25, but turned around and gave back $20 yesterday. Today, SPX closed at $2064, effectively unchanged (more precisely, down thirty five cents). RUT lost $6 to close at $1109. Volatility decreased a bit with the VIX closing at 14.4%. Trading volume was slightly up with 2.3 billion shares of the S&P 500 trading. Trading volume was only up 1% on th NYSE and was up 4% on NASDAQ.

SPX traded down to touch its 50 dma at $2054, but then executed a textbook bounce off support to close unchanged on the day. RUT broke its 50 dma during today's trading, but recovered to close precisely at the 50 dma of $1109. So we continue to watch a market that seems to be trapped in a sideways consolidation pattern. Perhaps traders will be treading water until after the presidential election? This scenario also conforms with historical patterns of lackluster trading through the summer (the "sell in May and go away" pattern). The Stock Traders Almanac has documented the historical strength of being long the market from November through April. $10,000 invested during those months would have grown to $838,486 for the past 65 years as compared to a $221 loss for May through October. This November, we will have the additional factor of a possible dramatic change in the White House. I can't predict who will be elected, much less how the market will react, but I think we have many forces that are uniting for a sideways market leading to November.

Initial unemployment claims rose this week to 294 thousand from last week's 274 thousand. Continuing unemployment claims also rose by 37 thousand to 2.161 million. That is the third week in succession of rising weekly claims; that may not be statistically significant yet, but I still find it concerning.

AMZN is representative of this market. Some stocks like AMZN and FB are making surprising moves higher, but others are lethargic or being pummeled after a mediocre earnings announcement. But AMZN's influence was the key today. SPX closed today at $2084, up $26. RUT followed with an increase of $11, closing at $1129. VIX fell a point to 13.6%. Trading volume fell off a bit with 2.1 billion shares of the S&P 500 trading. Trading volume declined 5% on the NYSE, but rose 9% on NASDAQ.

As I look at SPX's chart, I have to wonder if we aren't locked in a sideways channel from about $2040 to $2110. Maybe the bulls and bears are at stalemate.

I'm at the Money Show in Las Vegas. It has been great to see many of my friends and clients. The program has been first class. I'm glad to say that my talk was full with people standing all around the room. But I need to get back to the meeting.

The jobs report came in this morning well under analyst estimates with 160 thousand jobs, down from last month's 208k. The markets opened lower, but recovered to post gains for the day.

SPX gained $7 to close at $2057, while RUT closed up $7 at $1115. Even more encouraging for the bulls was a drop in volatility with the VIX closing at 14.7%, down 1.2 points. SPX dipped down to touch support at $2040, but then bounced to close seventeen points higher. SPX also closed  above the 50 dma at $2045, which often acts as support. Some analysts interpreted the market's strength in light of the weak jobs report as traders presuming that the Fed will delay raising interest rates as a result of the weak employment numbers.

Trading volume was flat to weak with 2.2 billion shares of the S&P 500 trading, well below the 50 dma at 2.4B. Trading volume fell 2% on the NYSE, but rose 2% on NASDAQ.

I conclude that the stalemate between the bulls and the bears is likely to continue.

Have a great weekend. If you are going to the Money Show in Las Vegas next week, let me know so we can get together.

Markets continued lower today, but trading volume declined. SPX closed at $2051, down $12 and RUT lost $9 to close at $1113. The VIX increased a half point to 16.1%. This decline seems to be slowing as though it will settle into support at $2040, where the market hesitated in the first couple of weeks of April, before moving higher. The 50 dma is also at $2041. In three of the last four trading days, SPX has traded down to lows for the day and then recovered into the close. Closes at the lows for the day are the scary signs of a pull back that may turn into a correction.

Trading volume fell off today with 2.3 billion shares of the S&P 500 stocks trading. Trading volume was flat on the NYSE and declined 3% on NASDAQ.

ADP's private payrolls report came out at 156 thousand jobs for April, down from March's 194k. If that is a sign of a weak jobs report Friday, this recent market decline could get worse. Factory orders were up 1.1% for March, a big improvement over February's 1.9% decline. The ISM Services survey increased slightly to 55.7 for April, up from 54.5.

I closed the SPX May condor in the Flying With The Condor™  service for a nice gain of 16%. The June condor is positioned delta neutral in the Russell 2000 Index and is up 5%.

Today's trading volume decline may carry into tomorrow as traders look to the jobs report on Friday.

 

This market keeps traders on edge. I am starting to think that day traders may be better off than long term investors. At least, they may sleep better.

After Thursday and Friday's declines, Monday's rally was welcome. But then we gave it back today. SPX closed down $18 to $2063 and RUT lost $19 to close at $1122. The common denominator between Friday and today's trading was the late recovery. SPX dipped to $2055 today, but then recovered somewhat to close at $2063. That suggests that the bulls are still in the game; they haven't panicked and headed for the exits just yet. Maybe this is just a sideways consolidation market with high levels of price volatility. Many of us have been remarking on the exceptional price volatility for a couple of years now. Maybe it's time to admit this is part of the new world. Blame it on high speed computer algorithms or whatever, but it is what it is. If we are going to play this game, we have to accept the basic nature of the market.

The decline in implied volatility as measured by the VIX yesterday was given back today with VIX closing at 15.6%. Trading volume increased today with 2.5 billion shares of the S&P 500 companies trading. Trading increased 4% on the NYSE and increased 6% on NASDAQ.

We didn't have any significant U.S. economic news today. Tomorrow brings the ADP private payrolls number that many view as a precursor to the jobs report Friday. Sleep well...

Yesterday’s positive, but also rather weak, response to the FOMC announcement was interesting. On the one hand, you could take it as evidence that the bulls were still in control. But, it was definitely contained enthusiasm. As I mentioned in yesterday’s blog, it often takes the markets a day or two to fully digest the FOMC announcement. So, maybe today’s pull back was the “on further thought” reaction. And today's weak GDP report didn’t help.

SPX lost $19 to close at $2076. RUT closed down $14 to $1140. Trading volume rose again today with 2.7 billion shares of the S&P 500 stocks trading. Trading volume rose 3% on the NYSE and rose 12% on NASDAQ.

The first estimate of first quarter GDP growth came in at a meager +0.5%, positive, but certainly causing many to wonder about prospects of recession. Initial unemployment claims rose to 257k from 248k, but this remains in line with the flat trend of the past several months. Continuing unemployment claims dropped five thousand to 2.130 million.

I continue to believe this market will remain range bound for the immediate future, perhaps until after the election. Economic data simply don’t support a bullish path forward, even with the Fed supporting the market. But I don’t see the evidence for a new recession either (although today’s GDP data are a concern). We’ll see.

The FOMC passed on this opportunity to raise interest rates. The announcement stated that while the U.S. economy is growing only moderately, the risk from global turmoil has been reduced. Most Fed observers seem to be expecting the next rate hike to come toward the end of the year. The news was taken weakly favorably by the markets with SPX gaining $3 to $2095. RUT rose $3 to $1154. Volatility continued to contract with the VIX dropping to 13.8%. Trading volume spiked up above the 50 dma today with 2.6 billion shares of the S&P 500 trading. Trading was higher by 15% on the NYSE and rose 5% on NASDAQ.

SPX is nearing the "fish or cut bait" stage. November's high at $2110 and the all-time high at $2131 are nearby and support has formed over the past couple of weeks around $2075 to $2080. The price trend seems to have slowed as SPX approached these previous highs. Today's Fed announcement didn't supply the energy to drive the market strongly higher. However, it is true that market reaction to FOMC announcements often take 24 hours to "gel", so we will see what tomorrow brings.

Markets continued to trade quietly on lower volume as traders focus on the FOMC announcement due tomorrow afternoon. SPX gained $4 to close at $2092, but RUT gained $13, closing at $1151. Volatility was flat with the VIX virtually unchanged at 14%. Trading volume remains below the 50 day moving averages (dma), but rose a bit today with 2.2 billion shares of the S&P 500 stocks trading. Trading volume rose 7% on the NYSE and rose 15% on NASDAQ.

Markets are holding up rather well as the uncertainty of the Fed's actions weigh on traders. That tells me the general mood remains bullish. Absent a surprise from the Fed tomorrow, we are probably headed higher once again.

Durable goods orders came in higher by 0.8% in March, a big improvement from February's 3.1% decline that spooked the markets. The Case Schiller housing price survey continues to post annualized price increases above 5%, with 5.4% for February. The real estate market may not be booming, but it isn't declining. The Conference Board's consumer confidence survey reported at 94.2 for April, down a bit from March's 96.1.

Members of my trading group sold a weekly iron condor on CMG today in advance of the earnings announcement this evening. Based on after hours trading, this trade looks like it may gain 35% or more tomorrow. Join us at our next meeting on May 5th.

Trading volume dropped off significantly today with two billion shares of the S&P 500 stocks trading, well below the 50 dma at 2.5B. Trading dropped 10% on the NYSE and declined 22% on NASDAQ. SPX traded as low as $2078 before recovering to close at $2088, down $4 on the day. Today's trading reinforced the $2080 level as support for SPX. RUT fell nine dollars to $1138. Volatility rose a full percentage point with the VIX closing at 14.1%. This is probably due to additional hedging ahead of the Fed announcement Wednesday.

New home sales dropped from an annualized rate of 519 thousand in February to 511 thousand for March. Real estate isn't booming, but it is far healthier than many sectors of the economy.

Will the FOMC raise interest rates at this meeting? Or will they use this announcement to prepare the market for an interest rate hike in June? In either case, we may see the market pull back in reaction. Much of the downside push in January came from the silly analysis that suggested four rate hikes in 2016 (I say "silly" because those analysts drew that conclusion from the economic projections for the next 12 months made by committee members. Since when do we take economic forecasts seriously?)

The FOMC meeting begins tomorrow but the announcement won't come out until Wednesday afternoon. I would be surprised if we see much trading volume or price movement tomorrow. Traders will probably just be waiting on the Fed...