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All eyes were on the Fed statement this afternoon, but there wasn't much of anything new for analysts to digest. The FOMC noted an improved job market, but are looking for higher inflation numbers and also feel business investment remains too soft. SPX traded up on the FOMC statement, closing at $2109, up $15. RUT gained $5 to close at $1230. SPX is now solidly above its 50 dma, but RUT remains well below the 50 dma. SPX has returned to the middle of the trading range, but RUT is lagging behind.
Volatility continued its pull back with the VIX closing at 12.6%, down almost one point. Trading volume declined in the S&P 500 stocks with 2.3 billion shares trading today. Volume declined 4% on the NYSE and trading volume declined 7% on NASDAQ. So the market was up today, but the enthusiasm was subdued.
Pending home sales were released today with a decline of 1.8% for June, down from May's +0.6%.
The first estimate of GDP growth for the second quarter will be released in the morning. Hopefully, it won't be negative, following a negative first quarter GDP. That could be a problem for this fragile market.
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SPX and RUT both found support at the 200 dma yesterday, and when the
overnight futures were positive, it made me wonder: another V bottom?
Would buying the dip pay off once again? Well, so far, so good. SPX
tacked on 26 points to close at $2093, recovering most of the losses for
the past two trading sessions. RUT ran up $10 to close at $1225. The
big institutional players must have relaxed; the VIX lost two points to
close at 13.4% - quite a turnaround from the peak at 16.3% yesterday.
Trading volume remains above average and steady with 2.5 billion shares
of the S&P 500 stocks trading today. Volume rose 1% on the NYSE and
5% on NASDAQ.
The Case Schiller housing price index reported an
annualized price increase of 4.9% for May, down a touch from April's
5.0%. The Conference Board's consumer sentiment survey came in at 90.9
for July, down from 99.8.
Probably the most significant overnight event for our markets was China's markets appearing to stabilize.
My September condor on RUT at 1090/1100 and 1350/1360 closed today up 17.4%. If we had closed this position today, the Flying With The Condor™ service would be up 38% year to date.
The
FOMC meeting began today. Everyone will be watching the announcement
tomorrow afternoon closely. It fascinates me how the guests and hosts on
CNBC are so confident that they know when the Fed will increase interest
rates. Confidence sells.
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SPX declined another $5 to close at $2114, but RUT reversed its recent declines and traded higher by $4 to $1258. Is Russell now leading the markets higher? Or is the correct conclusion simply that we remain within the trading range? I think it's the latter. Neither the bulls or the bears have sufficient strength to dominate the trend.
It was interesting to watch the VIX today. When the markets opened lower, VIX rose as one might expect. But as the initial decline moved into a choppy sideways pattern, VIX actually closed slightly lower at 12.1%. That is bullish.
Trading volume rose with 2.5 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE rose 9% and increased 17% on NASDAQ. Presumably this volume push was based on all of the stocks announcing earnings today and tomorrow.
I closed my August iron condor yesterday for a gain of 14.8%. This brings the year to date gains for the Flying With The Condor™ service to +32%. If I count the current gains of the open September position, it boosts our year to date results to +38%.
Check out my free webinar tomorrow. See the Coming Events page on this web site. Consider coming with me to New York City for the All Stars of Options Trading in September and/or the Traders Expo in Las Vegas in October. I would enjoy meeting with you in person.
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Is it me or does it seem like this market just can't be happy? Many of us felt that worries about Greece were overblown, but the market traded off anyway. Then the market rebounded and now the market is concerned about global economic softness, especially China. I wrote in my newsletter last week that it looked like a good time to short the market as it started to flirt with previous highs. I was right. I wish I had taken that trade. I didn't because I was looking for a rational case one way or the other. Silly me.
SPX closed down $22 at $2080. RUT lost $19 to close at $1226. Volatility popped up a little more than a point with the VIX closing at 13.8%. Trading volume was essentially flat across the board with 2.4 billion shares of the S&P stocks trading today, same as yesterday. Trading volume rose 3% on the NYSE but was unchanged on NASDAQ. So the market slid a fair amount but it doesn't seem like traders are taking it very seriously so far.
SPX closed right at support at $2080. This level has played support several times since early April. SPX landed on the 50 dma yesterday, but opened there this morning and never looked back. The 200 dma is at $2064. If that breaks, the last correction ended at $2045.
The first estimate for second quarter GDP growth is due on July 30. A weak number could push this market lower given the current bleak mood. Sometimes it seems like no amount of bad news can slow down the bulls, but this isn't that market. Weak GDP data could really derail this market.
New home sales came in at 482k for June, down from last month's 517k (both annualized figures).
My September iron condor is doing well, up 17%. It is close to delta neutral, but today's drop pushed us a few dollars below the perfectly delta neutral spot.
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Many years ago, my mother would read me a children's book about a little train engine who kept saying, "I think I can. I think I can". This market reminded me of that little engine trying to climb the hill. SPX closed two dollars higher at $2128, and once again fell short of breaking out to new all-time highs. RUT fell back $7 to close at $1260. But NDX continued to make new highs, probably due to the internet stock boom started by Google.
Volatility, as measured by the VIX, rose slightly to close at 12.2%, but this remains a relatively low level. Trading volume declined across all major markets with two billion shares of the S&P 500 stocks trading. Volume on the NYSE dropped off by 10%, but only declined 2% on NASDAQ.
Earnings announcements make up most of the market news this week. IBM took it on the chin once again this evening. AAPL, CMG, GPRO, ISRG, MSFT and YHOO report after the close tomorrow. Many traders are watching AMZN (reports Thursday amc) after Google and Netflix blew out earnings last week.
The longer SPX bumps up against that previous high and retreats, the more likely we will see at least a minor pull back into the trading range. But NDX is motoring higher. Can it pull the blue chips along?
