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The markets plunged today, but traders resumed buying at the close and slowed some of the bleeding. SPX broke through its 50 dma and closed at $2080, down $9. RUT actually booked a gain of $4, closing at $1219. This was accomplished by strong buying in the last hour or so of trading this afternoon. Trading volume was higher with 2.3 billion shares of the S&P 500 stocks trading. Trading was up 3% on the NYSE and was up 6% on NASDAQ. Volatility spiked up over 16% on the VIX, but settled down to 15.1% at the close.
RUT hit $1220 as its high in December, and the trading yesterday and today seem to reinforce that as a significant support level. While that looks encouraging, the fact that SPX easily sliced through its 50 dma is disconcerting. We may have more weakness ahead. The next support level to watch on SPX is $2065. Look at the chart in January; after correcting 4%, two rallies failed at $2065 before breaking out higher.
ADP's private employment data came in at +169k for April, down from March's +175k. FOMC chair Janet Yellen referred to the stock market's valuations as "quite high" at a financial conference today; those remarks coupled with the disappointing ADP data probably caused traders to take some gains off the table. Tomorrow's trading may be hesitant and choppy in advance of the jobs report on Friday, especially after the ADP report today. I always take a look at the S&P futures when I get up in the morning to get a sense of the day ahead. But several times lately, I have been surprised by positive futures numbers in advance of the opening, only to have a dismal day in the markets. One newsletter I read used a great phrase to describe this market, "Rotation Bewilderment".
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I am almost becoming accustomed to these sudden down days (almost). SPX peeled off $25 to close at $2089 while RUT lost $18, closing at $1215. Volatility rose about one and a half points on the VIX, closing at 14.3%. In my opinion, the most bearish aspects of today's trading were all of the major indexes closing near their lows for the day, and on higher volume across the board. Trading in the S&P 500 stocks hit 2.2 billion shares while trading volume on the NYSE rose 15%. Trading on NASDAQ increased 22%. RUT broke the support level at $1220 set in December and reaffirmed as support last Thursday. SPX closed right at the 50 dma - but will it hold tomorrow?
The ISM services index reported at 57.8 for April, up from 56.5.
I took this opportunity to close the remaining put spreads of my June iron condor on RUT. This closes June for a gain of $103 per contract or +12.8% and brings the year to date gains for the Flying With The Condor™ service to 21%.
I will be watching closely as the market opens tomorrow to see if the mayhem continues. Or will this be another "buy the dip"?
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The markets traded down today and actually hit the lows of the day before the FOMC announcement, and then recovered somewhat before the close. SPX lost $8, closing at $2107. RUT closed at its 50 dma, $1247, down $12. NASDAQ finally made its all-time high last Friday, but it seems like each time the NASDAQ composite makes a high, we trade downward thereafter. The previous NASDAQ peak was March 20th and the markets pulled back after that high as well.
Trading volume in the S&P 500 stocks popped up today with 2.4 billion shares and the NYSE trading volume increased by15%. But NASDAQ volume fell off by 8%.
First quarter GDP came out today at +0.2% - a huge miss! Economists were expecting +2.2%. Pending home sales also fell off with aa annualized growth rate of +1.1% for March, down from February's +3.6%. The big news of the day was the FOMC announcement, but it wasn't really news. It was fun to watch the financial news outlets trying to talk about the announcement and fill their time slots, but there was no news! Interest rates remain low and the Fed will increase rates when employment is strong and the inflation rate nears the targeted +2%. In other words, it was the same old story. But the mediocre economic data is starting to weigh on expectations for an interest rate hike. More and more analysts are seeing that event pushed into 2016.
So now we look forward to the jobs report Friday. Will it accentuate market weakness or boost optimism?
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SPX lost $21 yesterday and proceeded to gain $23 today, closing at $2108 and thus making up all of the lost ground. It would be nice if I could explain why this happened, but I can't. And I recommend skepticism toward whoever claims they understand this back and forth dance. This nervous whipsaw trading even affects the professionals. IBD moved from Confirmed Uptrend to Uptrend Under Pressure yesterday and, unless something changes, I expect they will be moving back to Confirmed Uptrend in short order. RUT traded back higher by $8 to close at $1228, not as strong a move as SPX. Volatility contracted with the VIX closing at 12.7%, down almost two points, a large move for one day. Trading volume fell off markedly today with 2.1 billion shares of the S&P 500 trading. Trading volume decreased 26% on the NYSE and dropped 18% on NASDAQ.
The ISM manufacturing index was flat for April at 51.5. Construction spending declined 0.6% in March, down from a slightly positive 0.1% in February. The University of Michigan consumer sentiment survey was unchanged at 95.9 for April - everyone's happy! I thought today was the day for the jobs report - the first Friday of the month, but I apparently didn't get the memo; the jobs report will be released next Friday, May 8th.
Have a nice weekend.
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After yesterday's surprising plunge, markets bounced back today with SPX tacking on $6 to close at $2115 and RUT gaining $7 to close at $1259. But trading volume fell off with 2.2 billion shares of the S&P 500 stocks trading. Trading volume increased 4% on the NYSE, but fell 6% on NASDAQ. The increase in VIX yesterday was recovered today as VIX fell about three quarters of a point to 12.4%.
The Case Schiller housing price survey gave us positive news today with a 5% increase in prices for February, up from January's 4.5% rise. The Conference Board's consumer confidence survey came in at 95.2 for April, down from March's 101.4, but this remains a very high level.
The market is treading water, waiting on the FOMC announcement tomorrow. We may see some volatility in prices tomorrow afternoon. Look at the candlesticks on SPX and RUT for the past week to ten days. There are many long upper and lower shadows on those candlesticks, denoting price extremes intraday that do not hold up into the close. In other words, the market is showing a lack of direction. Every time the bulls take charge and push prices higher, the bears pull it back, and vice versa. One could argue that this is a pretty accurate description for the market year to date. Many analysts were predicting a poor earnings season would tip this market over to the bears, but that hasn't happened. By and large, earnings are close to historical norms for the percentage of companies beating estimates so far. While the bulls appear to remain in control, the threat of the Fed increasing interest rates at some point seems to be holding traders in check. They are bullish, but nervous.
