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The markets spent the day underwater, but a strong rally in the last 30 minutes of the trading session repaired almost all of the damage. SPX closed down one dollar at $1351 and RUT closed at $821, down $4. Trading volume bumped up to the 50 dma in the S&P 500 stocks with 2.9 billion shares. Trading on the NYSE increased 9% and spurted up 32% on NASDAQ. Retail sales increased 0.4% in January, but concern about the precarious situation in Greece appeared to weigh on the markets. Notice how SPX once again seemed unable to penetrate that $1350-$1355 area. Breaking through and holding above that level will be a strong bullish signal.
My Feb RUT iron condor spread at 770/780 and 850/860 stands at a P/L of +$1,940 with delta = -$1 and theta = +$304. The Mar position at 730/740 and 860/870 stands at a P/L of -$1,260 with delta = -$92 and theta = +$155. The Mar position is sitting right at the tipping point to require adjustment. We'll see if the bulls reassert themselves tomorrow - that last half hour today looked pretty strong...
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We ended last week worried about Greece; on Monday, all of those pesky problems have been solved. Of course, I am being sarcastic. The volatility of these markets over the past few years has been extremely challenging for traders. The markets jumped at the opening today and stayed pretty steady throughout the session. But SPX appears to be finding it tough to hold much above $1350. Today it closed at $1352, up $9. RUT ran up $11 to close at $825. Trading volume dropped off today with 2.5 billion shares of the S&P 500 trading; trading volume dropped 8% on the NYSE and dropped 10% on NASDAQ.
No significant economic reports were issued today.
My Feb iron condor on RUT stands at a P/L of +$1,500 with delta = -$46 and theta = +$477. The Mar position is underwater by $1,760 with delta = -$95 and theta = +$148. Now we wait to see what tomorrow brings - let's see: markets down Friday, and up Monday; tomorrow must be a down day.
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The markets surprised many of us with a very strong performance in January. Then we expected it to pull back in early February, but it didn't. We thought SPX couldn't break through $1330, but it did. Now, for the past several sessions, the markets open weak and trade lower. But in every case, the bulls trade it back up and close the day roughly even or for a slight increase. The bears just cannot generate any lasting case for their position. Many technical indicators support the "overbought" case, but the market just grinds higher. In the meantime, the Greek drama continues to unfold. But it appears that the stranglehold that the European debt crisis once held on the markets is loosening and may be gone altogether. If Greece defaults, it will be an interesting test of that theory. SPX gained $2 to close at $1352 and RUT closed down $3 at $825. Trading volume is holding steady with 3.1 billion shares of the S&P 500 (the 50 dma is at 2.9B). Trading volume on the NYSE was down 1% and trading volume was up 9% on NASDAQ.
The VIX closed up a bit for the second day in succession while the market was making modest gains. This may be an aberration, but it is worth watching. VIX closed at $18.6%, up about half of a point. Initial unemployment claims decreased to 358k from last week's 373k and continuing unemployment claims stand at 3.5 million.
My Feb RUT iron condor position stands at a P/L of +$140 with position delta = -$93 and theta = +$377 (20 contracts). This position is squeezed a little tightly on the call spread side, but time is now working in our favor. The Mar position is $1,800 underwater with delta = -$21 and theta = +$85. Both positions have strong theta/delta ratios.
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European finance ministers rejected Greece's austerity plans today, making it more likely that Greece will default on their bonds. The markets took it badly. SPX lost $9 to close at $1343 and RUT closed at $813, down $12. But this wasn't the panic selling one might have expected; trading volume actually dropped from yesterday with 2.7 billion shares of the S&P 500 trading. Trading volume dropped 2% on the NYSE and dropped 18% on NASDAQ. VIX spiked upward two points to close at 20.8%.
The University of Michigan consumer sentiment survey reported 72.5 for February, down a bit from January's 75.0.
My Feb RUT condor stands at a P/L of +$460 with delta = +$15 and theta = +$354. My Mar RUT position stands at -$1,460 with delta = -$64 and theta = +$138. I removed the call hedges from the March position today. The Feb condor is nearly perfectly delta neutral and theta is building rapidly.
Enjoy your weekend. It looks like I will be shoveling snow this weekend in Chicago.
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The markets continued to follow the Greek drama this morning and markets opened up lower and traded lower. But similar to yesterday, the market averages regained most or all of their losses by the end of the session. SPX closed up $3 at $1347 and RUT closed down $1 at $827. Trading volume rose a bit from yesterday at 2.7 billion shares of the S&P 500, but remains below the 50 dma at 2.9B. Trading volume rose 6% on both the NYSE and NASDAQ. I am impressed by the resilience of the bulls in this market. I had imagined after such a strong January, that any hesitation might lead to a round of profit-taking, but that hasn't been the case. Trading volume remains low which suggests a lot of spectators on the sidelines. But none of the news thus far has resulted in any panic selling.
The only economic data forthcoming today was Consumer Credit from December, $19.3 billion. Analysts were surprised; they had estimated $8.5 billion - that doesn't seem to indicate that we have learned our lesson!
My Feb condor on RUT stands at a P/L of -$1,070 with delta = -$49 and theta = +$328. The Mar iron condor is also underwater with a P/L of -$2,090 and delta = -$24 and theta = +$78. Both positions are hedged with long calls in Mar and Apr. And I rolled my Feb 840/850 call spreads up to 850/860. Many technical indicators are flashing "overbought", but the bulls seem to be firmly in control of this market thus far, containing any selling efforts to result only in the slight pause of the past couple of days. Several analysts that I respect have been predicting a correction, but so far, the bears can't seem to hold a down market into the close.
