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The major market averages all tacked on a few more points today as this bullish run continues. SPX closed at $1696, up $3 and RUT gained $3 to close at $1053. The VIX dropped a quarter of a point to 12.3%. Trading volume declined, although part of that is misleading since trading volume on this past Friday was unusually high, as it always is on expiration Friday. Trading volume in the S&P 500 dropped to 1.9 billion shares and trading on the NYSE dropped 16%. Trading on NASDAQ declined 15%.
Existing home sales for June came in at 5.08 million (annualized); this was down from the previous month's 5.14 million and lower than analyst predictions at 5.28 million. Several analysts I read claim the drop was primarily in the category of distressed sales, and therefore wasn't significant.
SPX gapped open this morning, but ended the day with a candlestick similar to a doji, representative of a trading day where neither the bulls or the bears were in strong control. The question on traders' minds is: Where should this market trade in the absence of Fed stimulus? The FOMC meeting is coming up next week. It should be interesting to see what they say and how the market responds.
This is a light week for economic data, so we may continue to see this slightly bullish slow climb higher continue this week.
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Bernanke completed his two days before Congress today and apparently succeeded in not spooking Wall Street. SPX gained $8 to close at $1689 and RUT closed at $1050 for a gain of $8 on the day. Volatility was unchanged with the VIX at 13.8%. Trading volume in the S&P 500 jumped up to the 50 dma at 2.4 billion shares. Trading volume on the NYSE was unchanged, but was up 10% on NASDAQ.
Today's economic news was reasonably positive with initial unemployment claims dropping 24 thousand to 334k. Continuing unemployment claims declined 63 thousand to 2.96 million. The Philadelphia Fed survey moved to 19.8 for July, up significantly from June's 12.5.
So it appears that the formulas of mediocre economic growth coupled with Fed stimulus continue to push this market higher. It doesn't seem like the current level of economic recovery is sufficiently robust to drive a bullish market as strong as what we have witnessed, but it has...
We don't have any major economic data being reported tomorrow and presumably we won't hear from Bernanke for a while. So will Friday be a dull nowhere trading day? Or will the bulls continue their buying spree? Or will Google cast a shadow on the market? (They missed earnings after the bell today.)
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The markets slowed a bit today, but not much. SPX opened higher this morning and then pulled back into negative territory; but by late morning, it had moved into positive gains and stayed there the rest of the day. SPX gained $2 to close at $1683. RUT continues to lead the markets and today was no exception. RUT gapped open this morning and gained $7 to close at $1043 for a new all-time high. Trading volume fell off from Friday with only 1.8 billion shares of the S&P 500 trading today. Trading volume declined 11% on the NYSE and also declined 7% on NASDAQ.
We heard some positive economic news today and that may have helped push markets higher. Retail sales for June increased 0.4% and the Empire manufacturing survey increased to 9.5 from the previous month's 7.8. The FOMC Beige Book comes out on Wednesday and Bernanke testifies before Congress Wednesday and Thursday, so we might expect some market volatility around those events.
I chose to allow some more time decay to assist my July 1060/1070 call spreads and held them open over the weekend, but I will close those spreads soon. The July condor position on RUT stands at a gain of +6% with position delta = -$221 and position theta is a whopping +$801. IBM announces earnings Wednesday after the close; that announcement will be watched carefully as an indicator of the economy's health.
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Bernanke will be testifying before Congress Wednesday and Thursday. It appears as though traders were taking some of their profits off the table just in case his comments spark another rout like we had in May and June. On the other hand, his comments could spark an incredible rally like we saw last week after his speech in Cambridge. One thing is clear: it is impossible to predict the market's reaction.
SPX closed at $1676, down $6 and RUT lost $5 to close at $1039. Volatility rose almost a full percentage point to 14.4%.
The economic data that were reported today didn't help the markets. Industrial production increased 0.3% (better than last month's zero, but still poor). Capacity utilization was flat at 77.8% and the CPI rose 0.5%. Increasing inflation could put a serious cramp in Bernanke's efforts to shore up this economy. That wouldn't be fun for anyone, whether you are a Bernanke fan or not.
When the RUT opened up weakly this morning, I took that opportunity to close my July 1060/1070 call spreads. For those of you with more patience, you would have received a much better price later in the trading day. Assuming the Jul 870/880 puts expire worthless this weekend, this results a gain of 10.7% for July and pushes the year to date results for Flying With The Condor™to +5.2%. Normally, I pride myself on beating the S&P 500 index performance, but I still lag far behind this year. Hopefully, I will continue to close the gap in the coming months.
Grab your popcorn and let's watch the Bernanke games...
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The markets basically slogged slowly sideways on low volume as traders waited to read the FOMC minutes. I listened to several of the talking heads on CNBC complain about the lack of a "clear timetable" - really? How can Bernanke deliver a clear timetable when Fed actions have been clearly communicated as dependent on economic data to assure the committee that the economy is strong enough to stand on its own? Do we expect him to predict that unemployment will decline to 6.5% in September and then he will reduce the bond purchases by 15% each month, etc.? Really?
This is the reward Bernanke receives for his attempts to better communicate FOMC reasoning and decisions. Perhaps this is just more evidence of why the FOMC had no business doing QE in the first place.
SPX closed the day flat at $1653 while RUT gained $2 to close at $1020. VIX was essentially unchanged at 14.2%. Trading volume was flat with 2.1 billion shares of the S&P 500 trading. Trading volume declined 5% on the NYSE and volume declined 4% on NASDAQ.
My July condor position stands at a net gain of 15% with position delta = -$34 and theta = +$222. The 1050/1060 call spreads are far OTM (delta of the 1050 call = 4), but I will most likely close them this week unless the market pulls back from these levels.
Bernanke will deliver the Humphrey-Hawkins report to Congress next week, so the Fed watching craziness is far from over.
