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The news that the EU leaders had struck a deal to infuse additional cash into Spain's banks rallied the S&P futures significantly. Early this morning, it looked like the markets were likely to rally very strongly with at least a 10 or 20 point day on the S&P 500. But markets opened upward and abruptly turned downward. And it got pretty ugly during the last two hours of trading. SPX closed near its low for the day at $1309, down $17. RUT closed down $18 at $751. Trading volume was flat to slightly higher with 2.5 billion shares of the S&P 500 trading. Trading on the NYSE was up 8% and volume increased 6% on NASDAQ.
The VIX jumped over two points and closed at 23.6%. You might say this is closer to the "bad neighborhood".
My June iron condor on RUT at 690/700 and 880/890 stands at a P/L of +$1,800 with delta = +$32 and theta = +$297. Even after the dramatic loss on RUT this afternoon, the 690/700 put spreads are over two standard deviations OTM. If this late afternoon sell-off continues, we may be forced to close the put spreads after all. I had assumed they would expire worthless, but that isn't as clear now. My July iron condor at 610/620 and 750/760 stands at a P/L of +$1,420 with delta = -$3 and theta = +$61.
This is an extremely difficult market to trade. The intraday volatility is unnerving. Trying to discern a direction and trade it is nearly impossible as the market turns on a dime. A former neighbor is a big game hunter and he says one of the most dangerous game is the wild boar in Missouri and Arkansas. Apparently the boars stalk the hunters. It feels like this market is hunting the traders. Non-directional trading looks more and more attractive, but that isn't a cake walk either.
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The markets opened up tentatively this morning, but slowly built strength as the day went on. SPX closed with a nice gain of $11 at $1326. RUT gained $9 to close at $769. On the other hand, VIX ran as high as 23% before closing at 21.2%, so it's too early to relax. Trading volume fell off significantly with 2.5 billion shares of the S&P 500 trading. Volume on the NYSE dropped off 19% and trading volume on NASDAQ was down 15%.
The big question going into next week is news out of Europe over the weekend regarding assistance for Spain's sovereign debt issues. But it seems unlikely that anything definitive will be settled by Monday. But the jobs report from last week is still hanging over the markets. It's one thing to worry about Europe's effect on the global economy; it's quite another to speculate about the U.S. economy slipping back into recession.
My June iron condor on RUT passed its two sigma test today with both spreads over two standard deviations OTM. So I am leaving both spreads open and likely to go into expiration and expire worthless. The June position is now up about 10% and could expire worthless at 11% next week. The July position stands at a P/L of +$1,180 with delta = -$21 and theta = +$69.
So enjoy your weekend and try to forget about this crazy market until Monday.
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Rumors of another round of Fed easing and positive comments out of the ECB boosted markets today. In fact, the bounce back was so strong, it's worrisome. This reminds me of the volatility we experienced last fall: big up days followed by down days, etc. SPX closed at $1315, up $30. RUT closed at $765, up $19. Trading volume spiked up with 3.1 billion shares of the S&P 500 trading. Trading volume on the NYSE was up 20% and volume was up 10% on NASDAQ.
The market must have seen my blog yesterday when I said I would feel better if SPX broke the resistance levels at $1295 and $1305. Well, breaking through those levels in one session doesn't make me feel better - ironic, I know. Now I worry about this spike upward blowing out all of the shorts and then turning back down hard. Some calm sideways trading for a few days might ease my stress. The VIX dropped to 22% today, so we are definitely not yet out of the woods.
My June condor on RUT stands at a P/L of +$1,480 with delta = +$27 and theta = +$99. The Jul condor is up $860 with delta = -$23 and theta = +$73.
I will be watching the futures tonight and tomorrow morning, looking for clues...
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The markets were expecting good news from Bernanke as he testified before Congress this morning. The markets opened in positive territory and traded up as Bernanke testified. Interestingly, as this was going on, the VIX was also moving upward. That turned out to foretell the market's disappointment in Bernanke's remarks. Traders were expecting a promise of more quantitative easing, but Bernanke held his cards close and the markets retreated.
SPX traded as high as $1329 before retreating to close unchanged at $1315. RUT closed down $5 at $760. Trading volume also dropped off with 3.0 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE was off less than 1% but volume was down 7% on NASDAQ.
VIX closed the day down less than half of a point at 21.7% - still at anxious levels.
My June iron condor on RUT now stands at a net gain of about 9% with delta = +$26 and theta = +$104. Currently, the 690/700 put spreads are about two standard deviations OTM, so I may or may not close them tomorrow. The July RUT condor stands at a net gain of 7% with delta = -$14 and theta = +$66.
It appears we are on a cusp here: has the last couple of days been a brief short covering rally in an otherwise bearish trend downward? Or is the bullish trend resuming? It is too early to tell. Watch $1295 on SPX. If we close below there, watch out below.
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The markets staged a bit of a come-back today, but the trading volume was unenthusiastic. SPX closed near its session highs at $1286 for a gain of $7 and RUT gained $9 to close at $746. Trading volume declined across the board with 2.5 billion shares of the S&P 500 trading; trading on the NYSE dropped 14% and trading volume on NASDAQ declined 9%. The only real economic news of the day was the ISM Services Index which came in at 53.7 for May, up slightly from April's 53.5.
The big question is whether this is just a temporary rally before the market continues downward? One way to address that question is to look for significant resistance levels to be broken. On SPX, the first would be around $1295 where SPX appeared to bounce back upward in mid-May. The next level of resistance would be around $1305 from late January. If SPX can break through those levels with some volume, we could breathe a bit easier.
Today's rally prompted me to remove my hedges on the Jun condor; it now stands at a P/L of +$380 with a delta of +$71 and theta = +$172. The 690/700 put spreads are about 1.5 standard deviations OTM, but that doesn't feel very safe in this market. My July condor stands at a gain of $920 with delta = +$1 and theta = +$62. So the July position is almost perfectly delta neutral, but if the market rebounds strongly, those call spreads will be pressured next - if it isn't one thing, it's another!
