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The Standard and Poors Index broke out of its trading range to new highs this morning and held those highs into the close. But before you get too excited, note that this break-out occurred with a big decrease in volume.
SPX closed up $9 at $1518 and RUT gained $6 to close at $914. Trading volume fell off to 2.2 billion shares of the S&P 500 stocks; the 50 dma stands at 2.5B. Trading volume fell 15% on the NYSE and dropped 7% on NASDAQ. As one might expect in the midst of all of this euphoria, the VIX dropped a half point to 13.1%. Apparently, traders don't think the threat of sequestration and treasury bond downgrades are anything to be concerned about. But as Clint Eastwood said on CNBC this morning, if the politicians in Washington don't think this is a problem, why should we?
There wasn't any significant economic news today, but it appeared that the Linked In and AOL earnings announcements encouraged traders. I must admit that I don't get it.
My Feb condor continues to wander along near break-even with a gain of $339 (+2%) with position delta = -$190 and position theta = +$176. I plan to take my best friend of 45 years to dinner at our favorite place, sip a glass of wine, and try to put the market and politics behind me. Enjoy your weekend.
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The markets opened in the red this morning, traded back into the black and then traded back down until about 2 pm ET when a rally developed and ran steadily into the close. SPX closed up $1 at $1512 while RUT gained $3 to close at $911. VIX dropped about a third of a a point to 13.4%. Trading volume dropped back down today, with 2.6 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE decreased 2% and volume on NASDAQ declined 7%.
As I watch CNBC, it seems that everyone is now talking about a pullback or correction. Hmm... The market usually does its best to confound the majority opinion. Maybe this bull still has legs (whether it makes sense or not).
My Feb iron condor on RUT remains roughly at break-even with delta = -$169 and theta = +$260. I find it interesting that we are not being subjected to the incessant "sky is falling" chant in the media. As the fiscal cliff was approaching, one would conclude the end of the world was upon us. But the country's debt continues to spiral out of control, the President denies we have a spending problem, the economy continues to sputter, and we can't even muster enough responsibility to pass a budget.
But some of you connoisseurs of fine literature may recall Alfred E. Neuman's wise words, "What - me worry?"
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The markets opened lower this morning, following the lead of European markets, based on political problems in Spain and Italy. The instability in Greece continues to worsen. SPX closed down $17 at $1496 and RUT closed at $899, down $12. SPX gave up a few more points in the last few minutes of trading, closing at its low for the day. As one might expect, VIX moved up to 14.7%. Trading volume fell from last week with 2.5 billion shares of the S&P 500 stocks. This is right at the 50 dma. Trading volume fell 14% on the NYSE and declined 7% on NASDAQ.
Tomorrow's open will be critical to answer the question of how severe or modest the correction might be. If SPX opens at $1495 and holds that level, then we could trade sideways for a bit and allow this over heated market to stabilize. If it falls through $1495, the next support level is $1470. In that case, the correction could be more severe. But we may all be surprised and see this strong bull reassert itself, as it has been doing for several weeks against all reason.
My Feb condor stands at a 2% gain with delta = -$68 and theta = +$194. So we wait and see what tomorrow brings.
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The Standard and Poors 500 Index opened this morning right at yesterday's close and ran upward all day, nearly closing at yesterday's open. SPX closed up $16 at $1511; RUT gained $9 to close at $908. VIX decreased about one point to 13.7%. Trading volume popped up with 2.8 billion shares of the S&P 500 stocks trading today; trading volume was up 7% on the NYSE and up 15% on NASDAQ.
So what can we say about this market? What changed from yesterday to today? And today's bullish move was on a reasonably strong increase in volume - all very bullish signs. On days like this, the talking heads on CNBC amaze me. It seems like it doesn't matter what the market does, they act like this is all very rational and can be easily explained. I don't think so.
The only economic news today was the ISM Services Index, reporting at 55.2 for January, slightly down from the previous reading of 55.7. The market's enthusiasm today certainly wasn't based on this report. It seems like all of the economic indicators are flat or "slowly recovering". But the market roars ahead.
My Feb iron condor stands at break-even with delta = -$145 and theta = +$235. Delta of the short 930 calls is at 12, so this position is in pretty good shape and time is starting to run short. Theta is starting to pump money into the position. But what happens tomorrow? That is exceedingly difficult to predict. Non-directional trading is looking better and better.
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The markets delivered a mixed message today with the S&P 500 declining a bit, but the small cap Russell 2000 regained a bit of yesterday's loss. SPX dropped $4 to $1498 while RUT gained $5 to close at $902. In the meantime, VIX was unchanged at 14.3%. Trading volume bumped up with 2.8 billion shares of the S&P 500 stocks trading; trading increased 7% on the NYSE and increased 8% on NASDAQ.
Economic news was mixed with initial unemployment claims coming in at 368k, up 38k from last week and continuing unemployment claims also increasing by 23k. On the other hand, the Chicago PMI increased to 55.6 for January from last month's 50.0.
Looking to the SPX chart, yesterday's harami candlestick was followed by a decline today, suggesting a reversal in the recent trend, or at least a breather. And a breather at this point after a historic run higher would certainly not be a surprise.
My Feb condor stands roughly at break-even with delta = -$113 and theta = +$193. This weekend's time decay should be helpful.
