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Traders watched the market basically chop sideways most of the day but then the market traded stronger into the close to set another all-time high for SPX, closing up $4 at $1924. RUT gained $6 to close at $1135. Volatility was essentially unchanged with the VIX at 11.4%. Trading volume spiked up today with 1.9 billion shares of the S&P 500 stocks trading, but volume remains under the 50 dma at 2.1B.Volume rose 17% on the NYSE and increased 8% on NASDAQ.
The Chicago PMI came in at 65.5 for May, up from last month's 63.0. The University of Michigan's consumer sentiment survey came in flat at 81.9.
This market strength in the face of mediocre economic data is somewhat perplexing. I suppose it is the classic "climbing the wall of worry". When I look at the last seven days of trading on SPX, I am impressed. Everyone I hear or read seems to be bearish - I suppose that is why the market continues higher.
I am staying in the Trump Tower in Chicago this weekend and it is very nice. I am sure I will enjoy my weekend; I hope you do as well.
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These bulls refuse to be stopped. First quarter GDP came in at a negative 1%. Most economists define a recession as two negative growth GDP quarters in succession. But that didn't faze this market. SPX traded up $10 to close at a new all-time high of $1920 and over half of those gains occurred after 2 pm ET. The bulls enthusiastically traded the market higher into the close. RUT was positive, but not quite as strong with a $3 gain to close at $1140. Volatility remains pretty flat at 11.6%, down a tenth of a point on the day. Today's bullish rampage occurred on reduced trading volume with only 1.6 billion shares of the S&P 500 stocks trading today; the 50 dma is at 2.1B. Trading volume declined 7% on the NYSE and dropped 4% on NASDAQ.
Initial unemployment claims came in at 300k, down from last week's 327k; the four week moving average is flat at 312k. Continuing claims decreased 17 thousand to 2.6 million.
Today's strong bullish performance in the face of the GDP report is a little disconcerting. This is the kind of excessive bullishness that leads to crashes. On the other hand, this bullish run has occurred pretty consistently on low trading volume. I may be wrong, but it seems like we are pushing the envelope. We'll see. In the meantime, I'm glad my short put spreads are far OTM. But the call spreads are being squeezed.
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Traders returned from the long weekend in an optimistic mood. Trading volume remains relatively low, but all of the major market indexes rose. SPX closed up $11 to a new all-time high of $1912. RUT wasn't to be out-done, rising $16 to close at $1142; this close may be significant in that it is above the 50 dma at $1140; RUT broke down through the 50 dma on March 26th. RUT has been trading weakly for a long time. Volatility was roughly unchanged with the VIX increasing less than two tenths of a point to 11.5%. Both SPX and RUT gapped open higher this morning, a very bullish sign. Trading volume naturally increased from Friday's light holiday trading volume with a 16% increase on the NYSE and an 18% increase on NASDAQ. The S&P 500 stocks traded 1.8 billion shares today, an increase from Friday, but well below the 50 dma of 2.2 billion shares. So we are continuing to see a bullish market on low volume. But NASDAQ composite and RUT appear to have turned the corner and are now recovering. NASDAQ gapped open this morning and rose $51 to close at $4237. Unlike RUT, NASDAQ has left its 50 dma in the dust ($4017).
Durable goods orders increased 0.8% in April, but the March numbers were revised upward significantly, so analysts were encouraged that business appears to be investing in capital goods like manufacturing equipment. The Conference Board's consumer sentiment survey increased to 83.0 for May from 81.7 in April. Case-Schiller's housing price survey came in at an annualized rate of 12.4% for March.
The market's exuberance contributed to my SNDK diagonal spread needing to be closed today for a 22% gain; the stock price was running through my window of profitability, but a 22% gain in one week isn't too bad. My June iron condor position on RUT is now up 23% - very nice.
We'll see if this strong bullish move can continue. It doesn't seem likely to me, but maybe that assures us that the move will continue.
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The markets slowed a bit today after a solid four days of trading significantly higher. SPX lost $2 to close at $1910 and RUT closed down $6 at $1137. Trading volume remains weak with 1.7 billion shares of the S&P 500 stocks trading today, slightly lower than yesterday. Volume rose 1% on the NYSE and declined 3% on NASDAQ.
Volatility rose about two tenths of a point today with the VIX closing at 11.7%. I wouldn't bet the farm on this, but I find the VIX chart over the past three days interesting. It is only three days, but one could easily draw a slightly rising trend line for VIX, while SPX is also rising - a potential divergence in the making? I have seen this happen before, preceding a pull back on SPX. But I am not in the "sky is falling" camp. I think Fed support and solid corporate earnings will hold this market in at a least a sideways trend. However, after such strong trading for the past few days, a little pull back lower wouldn't be surprising.
GDP growth for the first quarter and unemployment claims will be reported tomorrow. The risk for the market would be a negative GDP number - that might spook some traders.
In the meantime, my RUT June condor at 1040/1050 and 1220/1230 stands at a net gain of $3,540 on 20 contracts or +23% with position delta = +$11 and position theta = +$100. We have a nearly perfectly delta neutral position with about 3 weeks until expiration. I have an internal debate at a point like this between closing early for a large percentage of the gains or allowing the trade to appreciate even further. As long as the trade remains delta neutral, I am inclined to let it run; a large one day move in either direction will cause me to push the exit button.
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SPX closed at a new all-time high, $1901, up $8. RUT finally broke out above the 200 dma at $1118, closing at $1126 for a gain of $12. That underscores the huge differences in SPX and RUT recently. SPX makes a new all-time high and RUT finally breaks out above the 200 dma - wow! As one might expect, the VIX dropped almost one percentage point to close the day at 11.4%, the lowest reading for 2014. Trading fell off to 1.4 billion shares of the S&P 500 stocks changing hands today, not too surprising before the long holiday weekend. Trading volume decreased 12% on the NYSE and dropped 16% on NASDAQ.
The only economic news for today was the report of new home sales for April, an annualized rate of 433 thousand, up from last month's 407k.
Now the question is whether the markets can hold these new highs next week. I am doubtful, but we'll see. I am not in the "sky is falling" camp, but I don't think we have sufficient economic recovery to justify a sky-high market either.
BTW, that SNDK spread I recommended on Monday is up 20% this week. You would have paid for your annual membership in The No Hype Zone in one week...
Enjoy the holiday, but remember its true meaning. Thank a veteran this weekend.
