- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1638
SPX broke out to new all time highs today with a spurt of $14 to close at $1782. RUT ran up $11 to close at $1112, but RUT's all time high remains quite a bit higher at $1123. Trading volume in the S&P 500 stocks bumped up to the 50 dma at 2.1 billion shares. Trading on the NYSE increased 9% and trading volume on NASDAQ increased 2%. The VIX dropped back down to 12.5%.
Most of the talking heads attributed today's big rally to Macy's excellent earnings announcement causing analysts to think holiday sales will be strong. But that announcement occurred before the market opened this morning and SPX opened down at the open. It was only after noon that the markets began to trade upward. SPX appeared to be trading in a tight consolidation range from about $1745 to $1772 until today's break out. Does today's move mark a new leg in the bull rally? Or will we see the market sell off tomorrow? Hard to say, but I would want to see an open tomorrow above today's close at $1782 to start playing the all out bullish trades.
The earnings parade continues with CSCO this evening and WMT tomorrow after the close.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1581
The Standard and Poors 500 Index (SPX) is what I principally watch as a measure of the broad stock market. Everyone talks about the Dow, but that is only 30 stocks. The 500 stocks in SPX give us a better overall view of the market. SPX opened downward this morning and tried to bounce but instead slid downward until later in the afternoon when it recovered somewhat but still closed down $4 at $1768. RUT closed unchanged at $1101. Volatility moved up about one third of a point to 12.8%, so we seem to be in a relatively complacent sideways market that is just treading water for now. One wonders when the next shoe drops and we see a spurt one way or the other. But it is nice to see some calm seas for a change.
There were no economic reports of any consequence today. Trading volume increased a bit from yesterday with 2.0 billion shares of the S&P 500 stocks trading, but this remains below the 50 dma at 2.1B. Trading increased 17% on the NYSE and volume increased 10% on NASDAQ.
This is a good time to be trading non-directionally and just watch time decay work for you. But stay alert. I don't think the era of high price volatility is over.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1610
The S&P 500 gave up $23 yesterday, closing at $1727. Today, SPX rose $23 to
close at $1771. RUT behaved similarly, closing up $21 at $1100.
SPX essentially made a rather large round trip in just two days - wow!
What does that tell us? The trading gods are toying with us.
Yesterday we had an excellent GDP report
with annualized growth in the third quarter of 2.8%. And the market
traded down. The standard explanation was either 1) the correction we
have expected has begun, or 2) this means the Fed will begin to reduce
their stimulus programs. This morning we were surprised by a good jobs
report of 204 thousand new jobs. Unemployment ticked up a bit to 7.3%,
and most of the new jobs were minimum wage jobs, but it was still
refreshingly good. And the markets regained everything that was lost
yesterday! So good news was bad news yesterday, but good news was
treated as great news today. I can't explain it. I think it merely
reinforces what we have been subjected to all year. The markets have
repeatedly traded scared and then reversed on a dime. Very
few fund managers have reported consistently good results this year. It
has been a maddening market. I think it is a combination of traders
trying to predict the effects of the Fed supporting the market and the
increasing amount of automated trading that swings huge volumes back and
forth in very short periods of time.
Trading volume dropped back
a bit from yesterday with 2.4 billion shares of the S&P 500
trading. Trading on the NYSE declined 8% while trading volume on NASDAQ
dropped 13%. Volatility decreased by a full percentage point with the
VIX coming in at 12.9%.
I think yesterday's price action, at a
minimum, serves as a warning about this market. Traders are nervous and
the rush for the exits can easily be triggered by rather benign events.
I
closed my Nov SPX 1800/1810 call spreads today. This locks in a 6.4%
loss for November, assuming the 1650/1660 put spreads expire worthless. But my December positions are already up about 3%.
This was certainly an interesting week in the markets. Relax and enjoy your weekend.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1529
Many traders must have taken Veteran's Day off. Trading was very slow. SPX traded up $1 to close at $1772 and RUT rose $2 to close at $1102. The VIX fell almost a half point to 12.5%. Trading volume fell off dramatically with 1.6 billion shares of the S&P 500 stocks trading (2.4B traded Friday). Trading fell 35% on the NYSE and volume dropped 19% on NASDAQ.
No economic news was released today.
Unless you own PriceLine, it was a slow day. PCLN is trying to break through $1100 per share. It managed it this morning but then it pulled back.
My thanks to all of you veterans. We owe you big time.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1610
Today's markets were reasonably positive, if you didn't look too closely. And the talking heads struggled to explain why. The two most common reasons given were a report from Germany of improved industrial orders and a report that Microsoft is narrowing their search for a CEO. Really?
SPX gained $8 to close at $1770, but RUT didn't follow suit. It fell $5 to close at $1099. So, once again, as we have seen several times recently, SPX and the Dow are running higher on their own and the small caps and mid-caps are showing weakness. This isn't a sign of strength. And the root cause isn't German industrial orders. This market is running out of steam. A sideways consolidation will be the most gentle correction. Investor's Intelligence reported its weekly survey of investors' bullish and bearish expectations. We are near record highs with over 55% of the investors surveyed saying they are bullish. This survey often predicts the tops and bottoms of the market based on these excesses of sentiment in one direction or the other.
Trading volume was mixed, with the S&P 500 stocks increasing to 2.1 billion shares and volume dropping 4% on the NYSE. But trading volume rose 5% on NASDAQ.
My November condor continues to limp along. I will most likely close the call spreads Friday and that will effectively close the trade.
