- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1271
The Standard and Poors 500 index (SPX) closed today at 5,815, up 35 points or +0.6%. SPX opened the week at 5,738, gaining 1.3% for the week. Trading volume slowly declined this week.
VIX, the volatility index for the S&P 500 options, declined slightly this week, opening Monday at 20.8% and closing today at 20.5%. This level of volatility seems high for a rising market. Is the market apprehensive of the upcoming election?
I track the Russell 2000 index with the IWM ETF, which closed today at 221.3, up four points or +2% on the day, and up +1.2% for the week. The strong rise in IWM today is a bullish signal.
The NASDAQ Composite index closed today at 18,343, up 61 points or
+0.3%. NASDAQ opened the week at 18,080, setting up a strong weekly gain of +1.5%. NASDAQ’s trading volume was flat this week.
One would think that the announcement of a 50-basis point rate reduction by the FOMC three weeks ago would have effectively ended all of that Fed noise. But it appears the market is obsessed. One example this week: the CPI posted another lower number and the annual rate of change for CPI is now +2.4%. I wasn’t long ago that it was over 3%. But the market slumped after the CPI announcement because the monthly change of 0.2% was "above forecasts". It was one more example of this market being very difficult to please. Maybe the uncertainty of the election is bubbling up. That may explain why we have a 20% VIX while the market is trading higher.
The most positive news this week was the Russell 2000 index finally waking up with a strong day, rising over two percent. These are the classic high beta stocks that the institutions and hedge funds use to boost their results in bull markets.
The S&P 500 set a new all-time high today but NASDAQ remains below its
all-time high from July 10th. IBD’s market assessment stands at its most bullish level, with stock exposure of 80-100%. The Stock Traders Almanac has triggered its seasonal buy signal.
I’m unsure why I am uneasy.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1350
The Standard and Poors 500 index (SPX) closed today at 5,730, down 11 points or -0.2%. SPX opened the week at 5,615, gaining 2.0% for the week. Trading volume spiked today for triple witching expiration.
VIX, the volatility index for the S&P 500 options, opened today at 16.3% and closed at 16.2%.
I track the Russell 2000 index with the IWM ETF, which closed today at 222, down two points on the day, but up +1.8% for the week.
The NASDAQ Composite index closed today at 17,948, down 66 points or
-0.4%. NASDAQ opened the week at 17,574, setting up a strong weekly gain of 2.1%. NASDAQ’s trading volume spiked today due to triple witching expiration.
This week’s trading was all about the FOMC. Monday through Wednesday at 2:00 pm ET was roughly a sideways market, waiting on the Fed. The announcement of a 50-basis point rate reduction appeared to be just what the market wanted, but the market traded down after the announcement.
Yesterday was an altogether new story. It was as though sleeping on the rate reduction convinced the market that all was well. SPX gapped open by over 85 points and then tacked on another eleven points.
However, the market woke up with a hangover this morning and decided Thursday’s party was a bit excessive. The market opened lower and traded down significantly. SPX tried to get back to its opening late in the day but couldn’t make it happen. SPX closed for an eleven-point loss.
The positive summary is that the S&P 500 set a new all-time high on Thursday and didn’t trade down too badly today, closing roughly at Thursday’s open.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1268
The Standard and Poors 500 index (SPX) closed today at 5,408, down 95 points or -1.7%. SPX opened the week at 5,624, closing down 3.8% for the week. Trading volume was above the 50-day moving average (dma) Tuesday and Friday but below average on Wednesday and Thursday.
VIX, the volatility index for the S&P 500 options, closed today at 22.4%, up 2.5 points. VIX opened Tuesday at 15.8% and spiked up over 20% and stayed in that neighborhood the balance of the week.
I track the Russell 2000 index with the IWM ETF, which closed today at 208, down four points or -1.9%. IWM was down almost five percent this week.
The NASDAQ Composite index closed today at 16,691, down 437 points or
-2.6%. NASDAQ opened the week at 17,585, setting up a weekly loss of 5%. NASDAQ’s trading volume remained at or below the 50 dma all week.
I often make the mistake of looking for rational explanations for the market moves. When SPX dropped significantly earlier this week, the explanation by the talking heads was that the ADP private payrolls number at 99k was “below expectations”. Today’s explanation was that the jobs report at 142k jobs, up from last month’s 89k was “weak”. Last month was weak; this month was up.
Last week, I relayed the Stock Trader’s Almanac citation to you that September is historically the weakest month of the year for the stock market. Maybe I should have paid attention.
Today’s market decline seemed extreme to me. In particular, if one watched the SPX one minute chart today, it was uniformly down all day. That is unusual; normally, there is an ongoing tug of war with several ups and downs.
Based on my assumption of an extreme in trading today, I held several positions. We’ll see if that was a mistake.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1251
The Standard and Poors 500 index (SPX) closed today at 5,626, up 30 points or +0.5%. SPX opened the week at 5,442, gaining 3.4% for the week, about the same magnitude as its loss last week. Trading volume declined over the last three trading sessions this week.
VIX, the volatility index for the S&P 500 options, steadily declined this week, opening the week at 21.3% and closing today at 16.6%. I would normally consider this to be moderately high volatility but after the August correction, this feels low.
I track the Russell 2000 index with the IWM ETF, which closed today at 217, up five points or +2.5%. IWM gapped open higher twice this week, posting a gain of 4.3%.
The NASDAQ Composite index closed today at 17,684, up 114 points or
+0.7%. NASDAQ opened the week at 16,836, setting up a strong weekly gain of 5%. NASDAQ’s trading volume remained at or below the 50 dma all week.
This week’s trading was almost the exact opposite of last week. The S&P 500 gained 3.4%, but NASDAQ and the Russell 2000 were hot at +5.0% and +4.3%, respectively.
I believe the market has presumed a rate reduction from the Fed next week. As I see interviews and reports on the financial networks, the argument I hear is not whether they will announce a rate reduction, but whether it will be a reduction of 25 or 50 basis points. The year over year CPI numbers now stand at +2.5%. While that is moving in the right direction, Jerome Powell has been very firm about a target of 2%. If the Fed holds pat next week, it could be ugly.
I closed my September SPY condors for +12.2% and the September SPX iron condors for +16.7% today, but I will wait until after the Fed announcement to open the November positions for those services. On the other hand, if the FOMC reduces rates by 50 basis points next Wednesday, we may see new market highs.
I will close our QQQ iron condor before the announcement next week. Be cautious; take risk off the table where you can. We could have some rough seas.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1514
The Standard and Poors 500 index (SPX) closed today at 5,648, up 56 points or 1%. SPX opened the week at 5,640, closing almost flat for the week at +0.1%. Trading volume remained below the 50-day moving average (dma) all week, but spiked up above the average today.
VIX, the volatility index for the S&P 500 options, opened on Monday at 16.3%, and steadily declined to today’s close at 15.0%. That level for VIX remains a couple of points higher than before the correction.
I track the Russell 2000 index with the IWM ETF, which closed today at 220, up 1.3 points or +0.6%. IWM was down almost one percent this week.
The NASDAQ Composite index closed today at 17,714, up 197 points or 1.1%. NASDAQ opened the week at 17,868, setting up a weekly loss of 0.9%. NASDAQ’s trading volume remained at or below the 50 dma most of the week and fell even further today, probably a pre-holiday decline.
It seemed like the general expectation for the FOMC last week was for a rate cut at the September meeting. However, that consensus shifted a bit this week and that cooled the attitude of the bulls, holding increases to a minimum.
The Stock Trader’s Almanac cites September as historically the weakest month of the year for the stock market. Maybe this flat week is just the beginning. The FOMC meeting will probably set the pace for September.
Our QQQ iron condor is doing well, as one might expect for a sideways market. I gave it plenty of room so we can tolerate moderate moves in either direction. So far, that position is up 18%.
It pays to be selective and cautious in this market.
