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As expected, concerns about the European debt crisis resurfaced today. SPX lost $16 to close at $1250. RUT also lost $16 to close at $735. Significantly, SPX closed about $1 off its low of the day - a very bearish sign. Trading volume was up a bit from yesterday but still down significantly from the averages. Only 1.7 billion shares of the S&P 500 traded; trading volume on the NYSE increased 8% from yesterday's low numbers and NASDAQ increased 13%. The S&P 500 closed 2010 at $1258, so today's action took SPX back underwater for the year. It appears the Santa Claus rally didn't last very long.
No significant economic data was reported today, but unemployment claims and the Chicago PMI will be reported tomorrow.
My Jan RUT iron condor stands at a P/L of +$800 with delta = -$75 and theta = +$241. The Feb RUT condor has a net gain of $540 with delta = -$11 and theta = +$74. The Feb position is nearly delta neutral but has a long way to go before we can celebrate victory. If I can nurse the Jan condor into next week, I will be tempted to take my gains and run.
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The markets were open today, but very few people showed up to trade. SPX was in the black most of the day, but ended up closing at $1265 for no change on the day. RUT gained $3 to close at $751. Only 1.5 billion shares of the S&P 500 traded today; the 50 dma is 3.1B. Trading volume on the NYSE was up 2% and down 1% on NASDAQ. Interestingly, the VIX was up over one point to close at 21.9% and this rise occurred while the market was up this morning.
The Case Schiller home price index came out with a 3.4% decline in October, but consumer confidence jumped to 64.5 (up from the previous 55.2). Minimal news came out of Europe, which contributed to the market's lackluster pace.
I opened a new January iron condor on RUT last week, positioned tighter than normal at 670/680 and 770/780. This position stands at a P/L of -$400 with delta = -$111 and theta = +$175. My Feb RUT 590/600 and 840/850 condor stands at a P/L of +$160 with delta = -$34 and theta = +$79. Both positions contain 20 contracts. Absent any compelling news from Europe, we may see more slow, low volume days like today before we return to normal after New Year's.
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Our markets opened lower this morning and traded lower until around noon when the buyers started picking up the bargains and actually recovered all of the losses before the close. SPX closed the day at $1244 with a small $2 gain. RUT gained $2 to close at $740. Trading volume was flat to slightly downward with 3.0 billion shares of the S&P 500 stocks trading today; this is down from yesterday and below the 50 dma. Trading was flat on the NYSE and up 4% on NASDAQ, propelled by trading in the tech stocks after the disappointing Oracle earnings report.
Existing home sales for November came in at an annualized rate of 4.42 million, up from last month, but well below the five million expected by analysts. Early softness in the market was attributed to an ECB report that suggested several European banks would be in need of additional funding.
Today's market action can be considered bullish, in my opinion. SPX traded down as low as $1230 before recovering to end the day with a small gain. However, there is strong resistance in the $1260 to $1270 range, including the 200 dma at $1260. IBD moved to a market rating of "Confirmed Uptrend" yesterday, which surprised me. Certainly yesterday's move was impressive, but it takes more than one day to define a trend. So my view of this market remains that we are trapped in a narrow trading range until sufficient good economic data builds to eliminate the European debt worries or some surprising bad news pushes us over the edge. Of course, this is wonderful news for us non-directional traders, but tough for stock pickers. The VIX closed down at 21.4% today, a little surprising since the market traded down most of the day. In spite of the lower VIX, I still regard this market as an extremely volatile monster that can turn on a dime in either direction. Perhaps I am jaded from the wild swings we have seen this year, or maybe I have learned a valuable lesson.
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Markets opened higher this morning and then climbed a bit higher around noon and didn't give any of it back as the afternoon wore on. SPX gained $10 to close at $1254 and RUT gained $5 to close at $746. SPX is nearing significant resistance at $1260 - $1270 with the 200 dma at $1259. That will be a critical level to monitor. VIX dropped again today, closing at 21.2%, seeming to suggest that most traders have accepted that Santa has arrived. Trading volume dropped at 2.7 billion shares of the S&P 500. Trading volume dropped 12% on the NYSE and 19% on NASDAQ.
Several media sources highlighted the drop in initial unemployment claims to 364k, just four thousand less than last week - I suppose we are desperate for good news. Continuing unemployment claims dropped from 3.63 million to 3.55M. Third quarter GDP grew 1.8% and the University of Michigan consumer sentiment indicator rose slightly from 67.7 to 69.9.
I will be watching SPX as it tries to break out above the 200 dma tomorrow; if it manages to close above $1260, I may believe in Santa Claus after all.
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The stock markets opened up strongly this morning and steadily rose to close near their highs of the day. SPX rose $36 to close at $1241 and RUT tacked on $30 to close at $738. The talking heads cited the favorable Spanish bond auction and the favorable housing starts data for this rally. Housing starts for November came in at 685k, up from last month's 627k. Building permits also rose to 681k from the previous month's 644k. These are good signs, but hardly extraordinary. If this is the long awaited Santa Claus rally, it would be expected to continue into the new year, but that would be surprising behavior for this market. Maintaining an upward or a downward trend for more than two or three trading sessions has been unusual this year. The European debt crisis is far from resolved and while our own economy is showing signs of recovery, it is a very slow recovery at best. So I have to conclude that this rally will last only until the next negative news item comes out of Europe.
Trading volume spiked up today with 3.1 billion shares of the S&P 500 stocks trading, although this is slightly below the 50 day moving average at 3.2B. Trading on the NYSE rose 7% and volume increased 14% on NASDAQ.
Well, let's see what Santa brings us for the balance of the week...
