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SPX fell out of bed this afternoon and closed at $1995, down $26 and near its low for the day. RUT also dropped, closing at $1165, down $25. Volatility spiked upward with the VIX gaining two points to close at 21%. Trading volume was strong with 3.0 billion shares of the S&P 500 trading. Trading volume rose 10% on the NYSE and rose 6% on NASDAQ.
The first estimate of GDP growth for the 4th quarter issued today at +2.6%, down to almost half of third quarter growth. The Chicago PMI for January came in at 59.4, up from 58.8. The University of Michigan consumer sentiment survey for January reported 98.1, roughly flat with December. This data doesn't seem to explain the severe sell-off today.
SPX is still holding support, but is certainly looking weak. Based on the commentary from CNBC guests, it appears as though more and more analysts are throwing in the towel. If you draw the upper and lower trend lines on the SPX price chart, you get a classic wedge, and today's close is sitting on that lower trend line. This chart pattern can go either way, bullish or bearish, with a break-out through one of the trend lines. Monday's open will be interesting.
The January Barometer of the Stock Trader's Almanac is officially complete with a bearish prediction for 2015. SPX opened January at $2059 closed at $1995 today. It isn't a pretty picture. My Feb and Mar iron condors on RUT are both in the black, so that was a comfort as I watched this market tank today.
Forget this market ugliness and enjoy your weekend.
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The markets continue to wander aimlessly. SPX opened this morning and traded down to $1989 before bouncing around 1 pm ET and rising steadily into the close at $2021, up $19. RUT also rose $15 to close at $1190. Volatility backed off a bit with VIX closing down 1.4 points to 19.0%. Trading volume flattened out after yesterday's spurt higher, with 2.6 billion shares of the S&P 500 company stocks. Trading volumes both on the NYSE and NASDAQ declined 1% today.
Initial unemployment claims were reported this morning at 265k, down from 308k. Continuing unemployment claims also declined from 2.46 million to 2.39 million. One might have thought this was good news, but the markets didn't seem to be impressed, as the market opened and traded down all morning. I'm not sure what changed this afternoon, but this degree of intraday price volatility has become routine.
We are in the midst of earnings season, and thus far, about 70% of reporting companies have beat estimates. If that continues, perhaps the market will strengthen. The stronger dollar has many analysts expecting poor earnings results from multi-nationals due to currency exchange losses.
Today's price action on RUT broke out above the 50 dma, but SPX remains about 25 points below the 50 dma at $2046. Both my Feb and Mar condor positions on RUT remain in the black. It is looking like the January Barometer of the Stock Traders Almanac is going to turn in a bearish indicator unless something dramatic happens tomorrow.
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Weak guidance comments in the earnings announcements of CAT and MSFT, plus a larger decline in durable goods orders spooked traders this morning. SPX opened down about $10 and within an hour or so, the losses had widened to about $35. SPX traded as low as $2020 before beginning to recover, closing at $2030, down $28. RUT closed at $1195, down $6. Volatility bounced up a bit, but not as much as I would have predicted, with the VIX closing up two points at $17.9%. Suddenly everyone is a bear.
The durable goods orders report for December dropped 3.4%, worse than the 2.1% decline in November. But other reports today were more positive. The Case Schiller housing price survey came in at +4.3% for November, down a bit from the previous reading of +4.5%. Similar to the University of Michigan numbers, the Conference Board's consumer sentiment survey hit a high note of 102.9 for January, the highest report since August of 2007. The annualized rates of new home sales for December came in at 481 thousand, up from the previous 431k.
AAPL and YHOO were both trading higher in after hours markets after their earnings announcements; maybe that will improve the moods on the street tomorrow.
My Feb iron condor on RUT continues in the black with a net P/L of +13%. We sold the AAPL 97/102 and 120/125 iron condor on AAPL in our trading group today as a play on the earnings announcement. So far, so good...
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The markets were chopping sideways today, but the Fed announcement sent stocks lower. SPX traded off strongly in the last hour of trading today, losing $27 to close at $2002. RUT also traded off $20, closing at $1175. Volatility jumped in that last hour, with VIX closing the day at 20.4%, up over three points.
Trading volume spiked higher with 2.7 billion shares of the S&P 500 trading today. Trading volume rose 22% on the NYSE and rose 10% on NASDAQ.
Oil traded lower and the dollar continued to strengthen. This is fueling some concerns about currency effects on multi-nationals in coming weeks. But those effects didn't seem to hold back AAPL's performance. Did you see those iPhone sales numbers? It made me wonder what's wrong with me since I still have my iPhone 4s. Apparently everyone is trading up and I am two upgrade cycles behind.
It seemed as though the FOMC announcement spooked the markets, but it isn't obvious to me if that was really cause and effect. The Fed continues to emphasize that it will remain patient about raising interest rates, and the Fed's latest announcement appeared to strengthen their assessment of the economy. It seems that traders remain wary of a global slowdown and its effects on this economy. One thing's for sure - this is a dicey market to trade.
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The markets calmed a bit after yesterday's exuberance. SPX pulled back $11 to close at $2052, while RUT stayed pretty flat, losing one dollar to close at $1189. Volatility was up just a tad at 16.7%. Trading volume fell off from yesterday with 2.2 billion shares of the S&P stocks trading; this is right at the 50 dma. Trading declined 8% on the NYSE and declined 16% on NASDAQ.
The last pull back began as SPX opened at $2063 on January 9th and then proceeded to drop to $1993 on January 15th. SPX closed yesterday right at that opening on January 9th as the pull back began, so I was interested to see if we could break out above that level, but it wasn't to be... At least it didn't happen today. Perhaps the bull trend is on hold for a bit as the market consolidates and chops sideways.
Existing home sales came in at 4.93 million for 2014, representing a 3.1% decline year over year. This was the first annual decline in four years.
Our February condor position on RUT closed at a net gain of 11% today. Delta for this position is less than a dollar per contract, so we are very well positioned at 27 days from expiration. Next week brings some closely watched earnings announcements with AAPL, AMZN, GOOGL, and FB.
Have a great weekend.
