- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1842
The markets opened up in positive territory and chopped sideways, but retained positive gains all day. It appeared that traders decided the crisis in Egypt was not the threat to global markets that was feared on Friday. The huge jump in the Chicago PMI probably was a factor as well. Its value for December came in at 68.8; this is the highest level for this index since 1988.
SPX closed at $1286, a rise of $10 and RUT gained $6 to close at $781. Trading volume was down from Friday; 3.5 billion shares of S&P stocks traded today; although this was down from Friday, it remains above the 50 dma. Trading volume on the NYSE dropped 16% and decreased 18% on NASDAQ. Today's gain on SPX confirmed a 2.3% increase for the month of January; this is the first positive gain for the month of January on SPX since 2007. Many analysts believe January's performance foretells the performance for the year; I'm not sure I believe that, but it does set a tone for traders at a minimum.
My Feb iron condor on RUT stands at a P/L of +$2,580 with delta = +$18 and theta = +$65. My Mar iron condor on RUT at 690/700 and 875/885 stands at a P/L of -$140 with delta = +$17 and theta = +$56.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1771
Markets were alarmed today about possible ramifications of unrest in Egypt on oil prices and the possibility of unrest spreading in the Middle East. A disappointing GDP report for the 4th quarter didn't help. Growth in Q4 GDP was 3.2%, which isn't too bad, but traders were expecting 3.7%. Markets opened down and sank throughout the day. SPX closed just above its lows for the day at $1276, down $23 on the day. RUT lost $20 to close at $775. Trading volume was up with 4.5 billion shares of the S&P 500 stocks trading. Volume increased 34% on the NYSE and increased 17% on NASDAQ. The VIX opened the day under 16% but closed at 20%, a huge jump upward, reflecting the market's anxiety over global events and where this might drive the markets.
My Feb iron condor on RUT stands at a P/L of +$2,400 with delta = +$19 and theta = +$62. Increasing IV diminished the gains on this position, but it remains well positioned in spite of today's big downward move.
I was somewhat encouraged that SPX basically hit its lows for the day around noon and bounced around the 1275-1280 area the rest of the day. That isn't to say it can't go lower Monday, but it wasn't a case of free fall either. Some of the market's leaders, like AAPL and PCLN didn't lose much today, so wholesale selling hasn't yet broken out. But we'll see what next week brings. Perhaps things will calm down a bit in Egypt over the weekend.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1737
The markets ran to new highs today. The Dow broke through the $12,000 target everyone has been watching, but couldn't hold it into the close. SPX closed up $5 at $1297, the highest level of this index since September of 2008. RUT rocketed up $14 today to close at $794, but is still below its 52 week high of $808 set last week. Trading volume in the S&P 500 was down a bit from yesterday at 3.6 billion shares, but remains above the 50 dma. Trading on the NYSE was up 3% and volume was up 5% on NASDAQ. New home sales were encouraging, coming in at 329k for December, up from 280k in November. The FOMC statement was released this afternoon, but there were no surprises, and consequently no effect on the markets. Interest rates remain unchanged and the current round of quantitative easing continues.
My Feb iron condor on RUT stands at a P/L of +$2480 with a position delta of -$12 and position theta of +$82. We will be establishing our March iron condor soon and may close the Feb position early and take that risk off the table.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1727
The markets opened flat this morning and chopped sideways most of the day, but managed to hang onto some modest gains into the close. The Dow continues to flirt with $12,000 but can't quite make it there. SPX closed up $3 at $1300. This is seen as a significant technical resistance level because this was the last high for SPX before the market fell off the cliff in the fall of 2008. RUT closed at $795, up $2. The S&P 500 stocks traded down a bit from yesterday at 3.5 billion shares. Trading on the NYSE was down 8% and flat on NASDAQ. Initial unemployment claims jumped 51k to 454k and the number of continuing unemployment claims also increased by 94k. But this didn't seem to disturb the market too much, although it may have tempered the bullish action a bit.
My Feb RUT iron condor stands at a P/L of +$2,640 with delta = -$9 and theta = +$66. We are now standing at about 80% of the maximum profit which argues to close the trade. On the other hand, the call spreads are about 1.5 standard deviations OTM and the put spreads are nearly three standard deviations OTM, so that would argue that it is safe to allow this trade to continue to gain in profit ($660 remains on the table). I will probably allow the time decay to progress through another weekend before closing the position. Being too greedy can get one into trouble, but not collecting the gains when the probabilities are on your side doesn't make sense either. The answer is somewhere in between.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1773
The S&P 500 spent almost the entire day in negative territory but rallied at the close to end the day basically flat. Trading volume was up today, so while it may not qualify as a strong bullish day, the end of the day recovery is encouraging. SPX closed unchanged at $1291 and RUT closed up less than a dollar at $780. Trading volume in the S&P 500 rose to 3.8 billion shares and increased 12% on the NYSE. Volume was up 2% on NASDAQ. The Consumer Confidence Index of the Conference Board hit an eight month high of 60.6 in January, up from 53.3 in December. The Case Schiller Housing Price Index dropped 1.6% in November after a 0.5% drop the previous month. The FOMC meeting started today; their statement will be released tomorrow afternoon but most analysts don't expect any substantive changes.
I was encouraged this morning as AAPL, IBM and GOOG all traded upward while the overall market was trading downward. That behavior, coupled with the late day recovery is encouraging, but it still pays to be cautious. Employ good risk management.
My Feb iron condor on RUT continues to be well positioned with a P/L of +$2,520, delta = +$7 and theta = +$61.
