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The markets continue to amaze me. I recognize that the economy has been showing improvement, but we still have record unemployment and corporate earnings are being held up only because those companies dumped so many people when the financial crisis started. But the markets continue to march higher and they aren't moving slowly. SPX tacked on another $12 today to close at $1652 while RUT set another all time high at $1018, up $9. Trading volume declined significantly today with 2.1 billion shares of the S&P 500 stocks trading; trading volume declined 7% on the NYSE but increased 7% on NASDAQ. The VIX declined to 14.4%, bringing it back to the levels in late May just after the markets started this most recent decline.
SPX broke support at $1650 today. SPX has gapped upward at the opening bell for the past three sessions, as has RUT. In addition, RUT has set new all-time highs for three days in succession. What can I say? This is exceptional behavior.
The FOMC minutes will be released tomorrow at 2 pm ET, so watch the markets as that happens. I don't expect anything new from those minutes, but don't forget how the market reacted to Bernanke in late May - the market doesn't have to be rational. Bernanke also has a speech scheduled tomorrow, but it will occur after the market closes. That could affect Thursday's open, but again, I doubt it.
My July condor position stands at a net gain of $2,860 or +17% with delta =-$28 and theta = +$55. Unless the market slows, the 1050/1060 call spreads will probably flunk the Two Sigma test this Friday. So I look forward to my recent early morning routine: as soon as I climb out of bed, I check the S&P futures and say, "good grief - positive again". I long to go back to my normal routine where I at least get a cup of coffee before checking the news, overnight markets, and then the futures.
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Friday's jobs numbers stimulated some bullish trading, and I was surprised to see the market indexes gap open and continue that upward trend today. SPX traded up $9 and closed at $1640. RUT closed at $1009, up $4. This makes the second day SPX has closed above the 50 day moving average, so I think we can safely say that that resistance level has been broken. SPX had bounced off that resistance several times, but now seems to be well on its way higher. Trading volume in the S&P 500 jumped up above the 50 dma to 2.6 billion shares. Trading volume was up 15% on the NYSE and increased 20% on NASDAQ, but those increases were off very low numbers on Friday. The VIX actually increased this morning, but then settled back down to 14.8%, up one tenth of a point on the day.
The FOMC minutes will be released Wednesday. Alcoa started the earnings announcement parade this evening and the early market response appears positive. It is possible that some comments in those Fed minutes or some earnings surprises later this week might derail this bullish recovery, but this market is looking pretty solid at this point.
My July iron condor position stands at a net gain of $2,900 or +17% with position delta on 20 contracts = -$21 and position theta = +$51.
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We only had a half day of trading today before the Fourth of July holiday tomorrow. SPX gained $1 to close at $1615 and RUT gained $2 to close at $991. In several recent trading sessions, SPX has tried to break through the 50 dma to the upside, but has failed. But today it didn't even try, reaching an intraday high of $1619 with the 50 dma at $1625. VIX declined two tenths of a point to 16.2%.
The ADP private employment number came in at +188k, causing many analysts to look for more favorable jobs report numbers on Friday. Initial unemployment claims remain about flat at 343 thousand. The ISM services survey came in at 52.2, down from 53.7. The markets will reopen on Friday, but most likely with low trading volume since so many people are taking a long weekend.
My July iron condor on RUT at 870/880 and 1060/1070 is essentially at full profit with a net gain of $3,060 or +18%. This is unusual for a position that still has two weeks to go to expiration.
Enjoy the Fourth of July activities.
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Today's trading session was a sort of "lame duck" session - most traders were on vacation and many left early on Wednesday since trading closed at 1 pm ET. So it wasn't too surprising to watch the market open with bullish enthusiasm, fail to reach new highs, fall back significantly, and then rally into the close. Extreme price volatility is much easier in the midst of low trading volumes. SPX opened and quickly traded up to the 50 dma at $1626 and then retreated back to $1615. As the day wore on, the bulls regained their strength and SPX broke through the 50 dma to close at $1632, up $16. RUT closed up $14 at $1005, a new all-time high. Trading volume figures didn't mean much today with comparison to a half day of trading and with low volumes both Wednesday and today (only 1.6 billion shares of the S&P 500 traded today).
The Labor Department reported 195k new jobs in the non-farm payroll report, which was a pretty good number and was on the high side of estimates, but unemployment remains at 7.6%. I think the market pull back earlier today was a result of traders thinking this will guarantee the Fed will begin to curtail their stimulus programs. The key question will be whether these new highs can be held next week.
Enjoy your weekend.
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Today's trading pattern was very similar to yesterday with a bullish start and acceleration up to or just beyond the 50 day moving average (dma), but then a pullback to the close. The 50 dma is beginning to appear to be a substantial resistance level. Last Thursday marked another day where the 50 dma pushed the bulls back before the close of trading. SPX closed down $1 at $1614 and RUT closed unchanged at $989. Volatility remains unchanged at 16.4%. Trading volume rose modestly from yesterday with 2.3 billion shares of the S&P 500 trading today. Trading volume rose 6% on the NYSE and increased 7% on NASDAQ. The exchanges will be closed Thursday and will close early tomorrow, so I would expect volume to fall off markedly tomorrow. If not for the jobs report Friday morning, I would expect a very low volume trading day, assuming most traders will be out of the office. But an surprising jobs report might trigger some volatility on Friday.
The S&P 500 remains trapped between support at $1600 and the 50 dma at $1624. But I would prefer to see SPX break through $1640 before I would feel very confident about a return to the bullish trend that characterized trading this year until May 22nd. That era of unbridled enthusiasm appears to have ended. But I've been wrong before.
My July iron condor on RUT at 870/880 and 1060/1070 stands at a net gain of $2,840 or +17% with position delta = +$5 and position theta = +$41 (20 contracts). This position is remarkably delta neutral as we approach the two week mark until July expiration. What has happened to this year? I just became accustomed to writing 2013 on various documents and the year is half gone!
