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The jobs report coincided well with ADP's earlier report this week on private payrolls, citing a weak increase in new jobs and a slight decrease in the unemployment rate to 8.1%. But many analysts noted that the labor participation rate has hit historic lows, thus making the unemployment rate look better than it actually is. Investors reacted negatively and this was fueled by concerns about upcoming elections in Europe. Many traders chose to pare down their exposure. SPX dropped $22 to close at $1369 and RUT dropped $15 to close at $792. SPX solidly broke through support at $1390; the next major support level to watch is $1360. The analogous support level for RUT is $785. I suspect today's severe drop won't continue into next week, but we'll see.
Surprisingly, trading volume was only slightly up from the previous session, at 2.7 billion shares of the S&P 500. Trading on the NYSE dropped 3% on the NYSE and rose 4% on NASDAQ.
My iron condor on RUT for May now stands at a P/L of +$680 with delta = +$41 and theta = +$110. The June condor stands at a P/L of +$1140 with delta = +$2 and theta = +$60. The volatility spike today reduced our P/L temporarily, but they are both well positioned.
Have a great weekend.
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ADP announced only 119k new jobs were added to their private payrolls numbers for April, lower than the 170k expected and much lower than March's 201k. This started the market off on a down note this morning. SPX traded as low as $1394 but managed to close at $1402, down $4. RUT dropped to $808 but then rallied to close up $3 at $819. Trading volume remains low with 2.6 billion shares of the S&P 500 trading. Trading volume on the NYSE was up 2% and volume was down 1% on NASDAQ. VIX closed at 16.9%, which isn't too ominous. I would still characterize this market as cautiously bullish.
My May iron condor on RUT stands at a P/L of +$1,220 with delta = +$12 and theta = +$84. The June position stands near break-even with delta = -$51 and theta = +$94.
After the disappointing ADP report today, I expect trading tomorrow will be largely sideways with low volume as traders anticipate Friday's jobs report. But Friday's reaction to the jobs report is anyone's guess. Be careful.
I will start a new coaching course, Options A to Z, on May 21. Register today; it is an exceptional value.
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The markets started the week lower this morning and just drifted sideways most of the day on lower volume. SPX closed down $5 at $1398 and RUT closed at $817, down $9. RUT closed right at its 50 day moving average. SPX remains firmly in the trading range banded by $1390 and $1420. Trading volume dropped to 2.3 billion shares of the S&P 500. Trading on the NYSE was down less than one per cent and trading volume on NASDAQ was down 10%.
The Chicago PMI came out for April at 56.2, down significantly from last month's 62.2. That may have discouraged traders a bit, or at least curbed their enthusiasm. VIX jumped up almost a full percentage point to 17.2%, reminding us to be cautious.
My May iron condor on RUT stands at a P/L of +$960 with a position delta of +$19 and position theta of +$92. The June condor stands at a P/L of -$160 with delta = -$46 and theta = +$85.
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Markets opened weakly this morning, but then traded up and hit their intraday highs around noon and gradually traded off until the close. SPX hit a high of $1415, but closed at $1406, up $8. RUT followed the same pattern, but the afternoon losses were not contained; RUT closed at $816, down $1.Volatility dropped a bit with VIX closing down about half a point at 16.6% after hitting intraday lows at 16.0%. RUT's chart looks much more bearish than SPX with a classic shooting star candlestick today and closing right at the $815 support level. By contrast, SPX is well above support at $1390, even after trading off this afternoon.
Trading volume increased modestly with 2.7 billion shares of the S&P 500 stocks trading today. Trading on NYSE rose 2% and volume rose 15% on NASDAQ.
The ISM manufacturing index came in at 54.8 for April, up from March's 53.4. Most analysts were expecting 53.0, so this surprise may have driven the strong trading this morning. This market continues to be characterized by a strong bullish undercurrent that minimizes the negatives and emphasizes the positives. Your overall trading posture should be cautiously bullish.
My iron condor on RUT for May stands at a P/L of +$1,260 with position delta = +$10 and position theta = +$67. The June condor stands at a P/L of +$300 with position delta = -$48 and position theta = +$77. So, in general, these positions are in pretty solid shape.
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After yesterday's market closed, Standard and Poors downgraded Spain's sovereign debt by two grades. This took the S&P futures into negative territory, but by this morning's open, all was forgotten. SPX opened above that $1390 support level at $1400 and advanced $3 to close at $1403. RUT closed at $825, up $7. Trading volume dropped well below the 50 day moving average today with 2.5 billion shares of the S&P 500 stocks trading. Trading volume was down 10% on the NYSE, but was up 1% on NASDAQ.
First quarter GDP came in at 2.2%, down from the 3% growth that analysts expected. The University of Michigan Consumer Sentiment survey came in at 76.4 for April, up a bit from the previous reading at 75.7.
In view of the disappointing GDP numbers and the downgrade of Spain's debt, one might have expected a push lower by the bears today, but that wasn't the case. Today's market was one more data point for the continuation of the bullish trend. We may see a bit of the summer doldrums set in soon, but the bears do not seem to have the ability to drive this market down.
My iron condor on RUT for May stands at a P/L of +$1,280 with delta = +$15 and theta = +$46. The June condor at 690/700 and 880/890 stands at a P/L of -$900 with delta = -$67 and theta = +$89.
Have great weekend.
