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NASDAQ and RUT gapped open lower this morning and set the tone for the day. SPX lost $24 to close at $2081, breaking through its 50 dma at $2085. RUT closed at $1252, down $21, but still well above its 50 dma at $1239. We expect trading volume on option Friday, but one would especially expect higher trading volume on a sell-off like today. Trading volume jumped to 2.4 billion shares in the S&P 500 stocks. Trading on the NYSE was up 13% and trading volume on NASDAQ increased 18%. The VIX wasn't up as far as one might expect on a day like this, closing at 13.9%, up 1.3 points.
The conventional wisdom on the street was to blame the market's concerns on Greece and China changing some of their trading regulations. But noting that we have a nervous market that sells off at any twitch has been said before. We'll see if there is much follow through next week. I follow IBD's Big Picture market indicator; they have been on "Uptrend Under Pressure" since March 9th and I have been surprised it has not shifted to "Confirmed Uptrend", but today's market action proved them correct.
Forget about today's market and enjoy your weekend. Dote on your kids, grandkids, other kids and your friends. That will recharge your batteries for Monday.
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SPX ran up $11 to close at $2108, threatening the old record high. RUT did set a new all time high, closing at $1275, up $10. The NASDAQ composite is above $5,000 again, but remains below the all-time high set back in the dot-com boom. The last time NASDAQ was above $5,000 in mid-March, it was a good time to sell. Hmmm.
Volatility closed down almost one point at 12.8%. Trading volume finally perked up with 2.2 billion shares of the S&P 500 stocks trading today. Trading on the NYSE rose 27% and trading volume on NASDAQ increased 14% over yesterday.
The boost in the markets appeared to be on the back of higher oil prices. It certainly wasn't today's dose of economic data. The New York Fed's Empire manufacturing survey fell out of bed with a reading of -1.2 for April, down from +6.9. Industrial production for March dropped off 0.6%, a big change from February's small, but positive, +0.1%. Capacity utilization was nearly unchanged at 78.4% for March, down from 79.0%.
Tomorrow brings housing starts and the weekly unemployment claims, but I don't know if economic data matter to the bulls. This is the Fed's bull market... until it isn't. And I think that is what worries many market observers.
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The bulls were still in charge this morning as the market opened, but they lost their "mojo" around 10 am ET, and the market just steadily traded off the rest of the day. The end result was to give back essentially all of Friday's gains. SPX closed at $2092, down $10; this is right at the $2090 support level, but really just in the middle of the larger trading range from $2040, the low from mid-March, and $2120, the high set in late February. But RUT was a somewhat different story; it traded off its intraday high at $2172, but managed to close up one dollar at $1266. Volatility was quick to react, with the VIX gaining 1.4 points, closing at 14.0%.
There was some weak economic data out of China, suggesting a slowing of that economy, but no significant U.S. economic data was reported today.
Trading volume fell off today with 1.8 billion shares of the S&P 500 trading. Trading volume declined 6% on the NYSE, and only rose 2% on NASDAQ. Perhaps traders are awaiting the earnings announcements from J.P. Morgan and Wells Fargo tomorrow morning. So much news has been made about the ill effects of the strong dollar, that one is tempted to predict it was overkill, but we'll see. One of the problems with contemporary journalism is that original thought is rare.
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Buoyed by favorable earnings from JPM before the open and better than expected retail sales, SPX opened higher, but then fell out of bed, trading down to $2083 before recovering late in the morning. SPX managed to hang onto a modest gain of $3 into the close at $2096. RUT traded flat, closing at $1265, down about twenty cents. The VIX fell back only about 0.2 points to close at13.8%. Trading volume in the S&P 500 was unchanged at 1.8 billion shares. But trading volume was up 7% on the NYSE and was also up on NASDAQ, but only marginally at +2%.
Retail sales came in at a gain of 0.9% for March, a big improvement over February's 0.5% decline. The Producers Price Index (PPI) rose 0.2% in March, up from last month's 0.5% drop.
This market wandering is doing wonders for my condors; the May position is up 13% and the June position is already up 5% even though we still have 65 days until expiration. We were able to open the June position early because we closed April early and freed up capital.
Get your black arm bands ready for tomorrow...
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SPX made short work of the resistance at $2090 by closing for the second day above that resistance set back in December but reaffirmed several times over the past couple of weeks. SPX closed up $11 at $2102 and RUT followed suit with a close at $1265, up $6. Volatility continued to contract with the VIX dropping another half point to 12.6%. In mid-March, SPX broke out above $2090 but was stymied around $2110, so that is the next resistance to be broken before tackling new all-time highs above $2117.
Trading volume was pretty flat today with 2.0 billion shares of the S&P 500 trading; that is slightly higher than yesterday but remains below the 50 dma at 2.2B. Trading volume was down on both the NYSE (-7%) and NASDAQ (-12%).
As I explained yesterday, traders may be in a "wait and see" mode for now. Below average trading volumes seem to support that thesis.
My May iron condor on RUT stands at a net
gain of 12% today and my June iron condor on RUT is up 5%.
I'm off to start my weekend of working out in the yard for the first time this year. Unlike some of you, we are just starting to see some green sprouts. I wish you all a pleasant weekend.
