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Thank you for a great, comprehensive set of classes. My intentions are to paper trade and utilise the skill that I have learnt from you. Could you send through the details of the trading platform that was used in your examples. Again, thank you.
Mike
Phoenix, AZ
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Markets have to take pauses from time to time, and after Friday's huge move higher, a breather or pause should be expected. SPX closed at $2104, down $4. RUT dropped $2 to close at $1265. Volatility increased slightly with the VIX increasing about a third of a point to 13.4%. Trading volume spiked up Friday even more than would be normally expected for an expiration Friday. Hence, lower trading volume was to be expected today with 1.9 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE declined 49% and volume dropped off 40% on NASDAQ.
Existing home sales were reported at an annualized rate of 4.88 million in February, up slightly from January's 4.82M.
My April iron condor on RUT at 1110/1120 and 1310/1320 closed today up 9.5% with position delta = -$73 and position theta = $81. Delta of the 1310 call is just under 9, so the pressure on the call spreads remains minimal.
By all measures, we are in a strong bullish market. However, the pattern of frequent "V-bottoms" is not likely to disappear, so keep your stops tight. Several of the stops on my directional trades are being hit as the market whipsaws, but there's not much you can do about that - whipsaws and V-bottoms are simply characteristic of this market.
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The Fed dropped the word, "patient", from their commentary about when interest rates will rise, and the market clearly liked what it heard. SPX ran upward $25 to close at $2100. RUT traded even higher to set a new all-time record at $1252, up $10. Accordingly, volatility contracted with the VIX dropping almost two points to a touch under 14%. Trading volume spiked higher with 2.6 billion shares of the S&P 500 stocks trading. Trading volume rose 30% on the NYSE and was up 15% on NASDAQ.
I was surprised at the market's intense reaction to the FOMC announcement today. Removing the "patient' adjective would seem to suggest higher interest rates coming sooner, but traders didn't take it that way. The announcement included a downgraded assessment of the strength of the economy and projections of year end interest rates that were lowered from the last announcement. It now seems very strange that just a couple of weeks ago, the markets pulled back because of a fear that the jobs report was so favorable that the Fed would raise interest rates sooner. Trying to put the market on a rational basis that enables some predictability appears to be a difficult, if not impossible, task.
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The markets traded up strongly today. SPX closed at $2108, up $19. Both RUT and NASDAQ gapped open higher, with RUT closing at $1266, up $11 and the NASDAQ closing up $34 at $5026. RUT set another all-time high today, and NASDAQ is nearing its all-time high at $5049. Trading volume on this expiration Friday would have been higher anyway, but I think the bulls stampeding increased it even more so. Trading in the S&P 500 stocks hit 3.4 billion shares; trading volume on the NYSE rose 87% and trading ran up 55% on NASDAQ.
There wasn't any significant economic data reported today, so I guess we are still riding the FOMC announcement euphoria. One of my newsletters headlined with something to the effect that the Fed has written a blank check - here is how you cash in. The IBD Big Picture technical indicator had not yet posted as I write this, but I suspect their "Uptrend Under Pressure" will shift to "Confirmed Uptrend" tonight.
SPX settled at $2099.02, up $9.60 from yesterday's close. The average move for 2014 was $8.74. RUT had not yet posted its settlement value at the time of writing and I can't hang around; I'm taking my honey out to dinner (yes, I am referring to my wife).
Enjoy your weekend.
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Ho hum. I expected a slow day on the street today and I wasn't disappointed. SPX lost $7 to close at $2074, but RUT gained $2, closing at $1242. Volatility was unchanged with the VIX closing at 15.7%. Trading volume was anemic with 1.9 billion shares of the S&P 500 stocks trading. Trading volume was down 5% on the NYSE and up 1% on NASDAQ.
The only economic news for the day wasn't reassuring. Housing starts fell markedly in February, down to an annualized rate of 987k, down from 1081k. You might think this was weather related, but that was only part of the story; the decline was present across the country. Building permits held steady with 1092k in February, up a bit from last month's 1060k.
Tomorrow may be a volatile day in the markets with so much attention focused on the FOMC and the prospect of increasing interest rates. This topic has taken on "bogeyman qualities", with traders and institutions behaving as though the Fed will move interest rates from zero to 10% overnight and crash the economy. If you don't believe me, tune in to CNBC tomorrow afternoon and listen to the breathless commentary surrounding whether the word, "patient", is present in the announcement.
My April iron condor on RUT at 1110/1120 and 1310/1320 is delta neutral with delta = $1.50 per contract, and stands at a net gain of 7.3% with 30 days to expiration. We closed the March position last week, locking in a 9.5% gain.
Get your popcorn ready, tomorrow afternoon should be interesting. Or maybe it turns out to be a non-event. The market likes to fool us.
