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The bulls continued the strong push that began yesterday and tacked on $25 on SPX to close at $2105. RUT gained $17 to close at $1267. And the VIX pulled back a full point, closing at 13.5%. Trading volume was up with 2.0 billion shares of the S&P 500 stocks trading today. But to be fair, that only pushed volume back up to the 50 dma. Trading volume rose 6% on the NYSE and increased 1% on NASDAQ.
RUT's close is near the highs around $1268 back in late March and within striking distance of the all-time high at $1275. SPX is digging itself out of a deeper hole, having just managed today to break above its 50 dma at $2102.
There wasn't much in economic data reported today. We get unemployment claims and retail sales tomorrow.
The talking heads gave credit for today's bullish market to the prospects of a compromise on Greek debt, but this run started yesterday. Look back at the SPX chart for several months and note the candlesticks with long lower shadows. Many times they signal a bullish move. That was what prompted my bullish trade on AAPL yesterday for our trading group. That position is up 10% after just one day - a nice way to start the trade.
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The markets opened weakly again today, but then surprised traders by rebounding. Are we nearing the bottom of this most recent pull back? SPX traded as low as $2072 before bouncing back to close a dollar higher at $2080. RUT traded down to $1242 but couldn't erase all of its losses, closing at $1250 for a loss of $4. But RUT has not traded as weakly as SPX during this pull back; RUT is trading very close to its 50 dma at $1251, whereas SPX is well below its 50 dma at $2101. In line with the rebounds, volatility contracted a bit with the VIX closing at 14.7%, down six tenths of a point. Trading volume was modestly higher with 1.9 billion shares of the S&P 500 trading. Volume was up 3% on the NYSE and also up 3% on NASDAQ.
Each day it appears more and more likely that the Greece debt crisis is destined to self-destruct. Greece's political leaders are behaving like children who assume the Euro Zone owes them something. The question for us is whether Greece's flame out will impact U.S. markets. Greece serves as a warning of what happens when the entitlement mentality spreads in a country.
The only significant economic data reported today was the JOLTS job openings of 5.367 million for April as compared to March's 5.109 million.
I have positioned the put spreads for my condors well OTM to be safe, and both positions are doing well. The July iron condor on RUT stands at a net gain of 14% and the August position is up 8%. Our Flying With The Condor™ service is up 28% year to date.
Was the "Sell in May" crowd correct?
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I am traveling this afternoon, so I am posting my blog before the markets volume data is available. The jobs report came in this morning moderately better. Of course, the analysis is always skewed by the eyes of the beholder. For example, one article on Yahoo Finance referred to the report as having an "unexpected surge in U.S. job gains in May" and enthusiastically wrote, "Payrolls increased by 280,000, the biggest gain this year". Technically that is true, but is the author ignorant of recent jobs data? What about December's 329k or February's 266k? When you look at a chart of the last 12 months of jobs reports, you would conclude the trend is sideways or trending lower. Initially, the futures traded lower and then the markets opened lower, but the major indexes recovered significantly as the day wore on. SPX closed at $2093, down $3, and RUT gained $10 to close at $1261. I think the market concluded that an accelerated schedule for the Fed to raise interest rates isn't obvious from the jobs data - not too hot and not too cold.
Have a great weekend.
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Markets opened weakly this morning and it didn't get any better as the day wore on. SPX lost $14 to close at $2079. RUT dropped $7 to $1254. And volatility moved up a point with the VIX at 15.3%. Trading volume fell off across the board with 1.8 billion shares of the S&P 500 companies trading. Trading volume dropped 10% on the NYSE and decreased 8% on NASDAQ.
So we have a lot of red ink, but with decreased trading volume. I would argue this is just evidence of a continued lack of enthusiasm. The bulls can't get a breakout going, but even the little pull backs don't show the volume one would expect if traders were really taking significant amounts of capital off the table. So it appears we remain stuck in the trading channel of the past two to three months. Conservative traders are watching for signs of support on the major indexes. If you are aggressive, this may be a buying opportunity for your favorite stocks.
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It seems like we have been describing a sideways, consolidating market trend for too long; it's getting old. SPX dipped down to test the 50 dma, but bounced back to close nearly unchanged at $2110, down $2 on the day. RUT gained a couple of dollars to close at $1252. Volatility rose slightly with the VIX increasing three tenths of a point to 14.3%. Trading volume fell off with 1.9 billion shares of the S&P 500 stocks trading. Trading volume rose 4% on the NYSE but dropped 10% on NASDAQ.
Today was a light day for economic data. But the one report brought more bad news. Factory orders for April decreased 0.4%, down from the positive 2.2% growth in March. My unofficial, subjective assessment of the financial news and commentary is that it has been gradually but steadily growing more negative. I think that negative growth first quarter GDP number made an impression.
Tomorrow brings the ADP private payrolls number and the Fed's Beige Book. That will increase the chatter leading up to Friday's jobs report.
