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SPX closed at $2129, up $6 and establishing a new all-time high for the S&P 500 Index. RUT is still lagging behind, but it did accelerate today, breaking through its 50 dma (finally), and closing at $1258, up $14. Volatility closed up a fraction of a point with the VIX closing at 12.7%. Trading volume fell off with 1.7 billion shares of the S&P 500 stocks trading. Decreased trading volume after option expiration this past weekend is normal, but 1.7B remains a low volume number. Trading volume contracted 15% on the NYSE and 3% on NASDAQ.
In short, we are still in this odd space of "sorta bullish". The blue chips are trading higher, but on reduced volume. The small caps are trading higher but only broke out above their 50 dma today.
My July iron condor position on RUT at 1120/1130 and 1360/1370 is up $82 per contract or +10% on capital at risk. This brings our year to date performance in the Flying With The Condor™ service to +25%.
The market trend is bullish, but be sure to have stops in place for all of your bullish trades. It remains a nervous market.
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The markets almost appear to be teasing us once again. The more I trade, the more the market seems like a living, breathing malevolent beast. I need professional help. But I digress. SPX closed at a new high yesterday and I was watching the open this morning for a clue as to the future direction - break-out or not? SPX opened this morning at $2122, one dollar higher, but then dropped back a bit to $2117 and then recovered to close at $2123, up $2 for the day. In short, it was a boring day in the markets with an open and close very close to each other. RUT behaved similarly, declining $1 to close at $1244. Volatility continued to decrease with the VIX closing at 12.4%. But this leaves us with the question of whether or not the bulls are going to finally break out to new highs or pull back into the trading range.
Industrial production reported at a decline of 0.3% for April, equal to the decline in March. Capacity utilization for April declined slightly to 78.2% from March's 78.6%. The University of Michigan's consumer sentiment survey reported out at 88.6% for May, down from April's 95.9. Maybe the lower gas price euphoria has dissipated.
So we will wait until Monday to see if the bulls can push this market out of the consolidation range. In the meantime, enjoy your weekend.
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The markets opened higher this morning, but had given up most of those gains by late morning. Then we wandered sideways and slightly lower into the close. SPX lost one dollar to close at $2098. RUT also lost a dollar, closing at $1232. Volatility was unchanged with the VIX closing at 13.8%. Trading volume was slightly higher in the S&P 500 stocks with two billion shares, just below the 50 dma at 2.1B. Trading increased 2% on the NYSE and decreased 2% on NASDAQ.
Retail sales were flat in April (zero change), after a 1.1% growth rate in March.
The markets feel like old champagne (very flat). The longer this persists, the more likely the move higher or lower will be strong. The coiled spring analogy is historically accurate.
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The bulls looked pretty strong today, making large advances across the board - but on relatively weak trading volume. SPX gained $23 to close at a new closing high of $2121. RUT is still much lower relatively on its price chart. RUT gained $13 to close at $1245, but it hasn't even broken its 50 dma yet. The VIX contracted by another full point to close at 12.7%. Trading volume was down modestly with the S&P 500 stocks trading for 1.9 billion shares. Trading on the NYSE was down 1%, but trading was up 4% on NASDAQ. This amounts to pretty modest trading volume for a break-out. The bulls are making a run to break out of this sideways consolidation trading range; can they do it this time? Tomorrow's open on SPX will be a key indicator. Will traders take profits and hide, or confidently buy?
Initial unemployment claims came in at 264k, almost exactly as last week at 265k. And the number of continuing unemployment claims came in precisely at last week's number, 2.229 million. The Producers Price Index (PPI) came in with a 0.4% decrease for April, a change in the wrong direction from last month's +0.2%.
I will be watching the opening tomorrow of both SPX and RUT. If RUT doesn't jump on this bullish bandwagon, it throws doubt on the prospects for a bullish break-out. Historically, small caps lead the bullish markets.
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One of the newsletters I read had a great headline recently: Rotation Bewilderment. In the best of times, the talking heads on CNBC and their guests appear to have two note cards. One is the explanation if the market is up today, the other is the explanation for the market trading lower. Deliver these explanations with an air of confidence and everyone is reassured, “He understands!”. But more and more analysts are throwing in the towel. It is hard to fathom this market’s moves. The futures were looking pretty ugly this morning, and the market did open down. But then it recovered almost all of those losses. Rotation bewilderment indeed.
SPX closed down $6 at $2099 after hitting a low of $2086. RUT behaved similarly, trading down to $1218 before recovering to close at $1233, down just three dollars. Volatility was unchanged with the VIX closing at 13.9%. Trading volume was roughly flat with 1.8 billion shares of the S&P 500 stocks trading. Trading was up 6% on the NYSE, but was down 1% on NASDAQ.
Looking at the economic data for answers wasn’t helpful. The only significant news today was the JOLTS job opening report with 4.99 million openings for March, down from February’s 5.14 million. Market movement would suggest that this slightly negative report was revised higher later in the morning, but it wasn't. The economic news of late has generally been mediocre; analysts predicted doom and gloom for this earnings season, but it was a surprisingly normal earnings cycle. Perhaps that is the basis for this market, just wandering sideways, much as the overall economy. Couple that with the price volatility resulting from the high frequency algos and you have this market.
Tomorrow brings retail sales data, but will that make a difference?
