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SPX jumped upward at the open today but quickly lost steam and basically traded sideways. SPX closed up $4 at $1413 while RUT gained $3 to close at $817. Trading volume was mixed with the volume of the S&P 500 stocks essentially flat at 2.6 billion shares. Trading on the NYSE was up 7% but trading on NASDAQ was down 4%. VIX ended the day without much change at 18.1% - a dicey area, but not too bad.
Initial unemployment claims came in lower at 369k and continuing claims
were essentially flat. Durable orders showed a gain of 9.9% for
September and pending home sales rose a bit at 0.3%. But this didn't seem to affect the market much one way or the other.
SPX is holding support at $1410 rather well. For most of August, SPX traded between $1400 and $1420, so this is a pretty solid support area. The 200 dma is down at $1377; that could be a logical stopping point if we break support here.
My Nov condor position stands at a gain of 9%; I am looking for a stronger market to re-establish my call spreads. The 750/760 put spreads are pretty safe with a short strike delta of 12. Both AAPL and AMZN disappointed analysts with their earnings announcements, but neither stock is down very much in after hours trading. If that holds, maybe these results won't drive a bearish response in the overall market tomorrow.
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The markets basically traded sideways today; the Fed announcement had almost no effect on the markets. I suppose that makes sense; what else can the Fed say? Interest rates have been promised to stay low and the last announcement said they would do everything necessary to support the economy. SPX dropped $4 to close at $1409 and RUT lost $3 to close at $814. Trading volume dropped a bit to 2.6 billion shares of the S&P 500. Trading volume on the NYSE was down 3%, but was up 8% on NASDAQ (Facebook effect?). VIX lost a half point to close at 18.3%.
It is interesting to note that the SPX hit the same intraday low at $1407 that it hit yesterday. Breaking through $1400 would be very bearish. RUT has not really kept up with SPX since June; the trend line has not been as well defined; it took much longer to set new 2012 highs, etc. Now, you can draw a very nice downward trend on RUT and we are sitting on the bottom edge of that trend - not a good sign.
My November iron condor on RUT sits at a net gain of $1,180 or 7%. The 760 put is about one and a half standard deviations OTM with a delta = 14. Now we wait to see if earnings announcements from AMZN and AAPL perk up or depress this tenuous market.
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It was only one week ago that we noted that SPX had bounced off support at the 50 dma; then SPX headed back up and challenged earlier highs around $1465. But that challenge failed and led to the huge decline Friday, closing at the 50 dma. Then SPX traded down as low as $1422 today before clawing its way back to close near the 50 dma at $1434. It was a quick round trip. SPX closed at $1434, up $1 and RUT closed at $821 down less than a dollar. If you look at the one minute chart, you will see that the last hour of trading saved the day for SPX. It appears we are trading in the $1430 to $1465 range in roughly one week cycles back and forth. Perhaps this is the pre-election dance?
Trading volume dropped off dramatically with 2.4 billion shares of the S&P 500 trading; trading on the NYSE declined 30% and volume dropped 26% on NASDAQ.
My Nov iron condor stands at a P/L of +$1,500 with position delta = +$48 and position theta = +$60. It will be interesting to watch AAPL this week through both a new product launch and an earnings announcement. After hitting that low at $610 Friday, AAPL was up over $24 today. And analysts wonder why individual investors are hiding under the bed?
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For several weeks now, companies have been warning about disappointing earnings and now we have seen several weak reports from the likes of FedEx, IBM, Intel, and 3M. More importantly, many of the companies reporting thus far have painted bleak pictures for the upcoming quarter. It appears that this morning's report from DuPont was the last straw and the selling began in earnest. SPX had closed right at support at $1430 last evening and it quickly sliced through that support level and traded as low as $1408 before rebounding a bit to close at $1413, down $21. RUT dropped $4 to close at $816. The SPX chart shows a lot of congestion in the range of $1400 - $1410 from late August, so I would expect this broad level of support to hold, but if it doesn't, look out below! It is hard to believe that Bernanke was promising more quantitative easing just a few weeks ago; today's drop takes us back to pre-Bernanke announcement levels.
Trading volume jumped up a bit to 2.8 billion shares of the S&P 500 (50 dma = 2.5B). Trading on the NYSE was up 7% and was up 9% on NASDAQ.
VIX spiked up to 19.7% earlier today, but settled at $18.8%, up 2.2 points. This is the neighborhood where VIX was just before the Draghi press conference in early September when the focus was on Europe - this is a dangerous neighborhood. I will be looking closely at the futures tomorrow morning to see if the slide is likely to continue.
I took today's market weakness as an opportunity to close the 910/920 call spreads on my November iron condor on RUT. It now stands at a net gain of $1,280 or 7.5%. Tomorrow brings the FOMC report and press conference; will it matter?
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GOOG inadvertently released its earnings announcement during the trading
session today and spooked the markets. Trading opened a little weak
this morning based on weak unemployment claims data (388k vs. last
week's 342k), but had rebounded until about 12:30 pm ET when the GOOG
earnings announcement surprised the market. GOOG tumbled and then
trading in GOOG was halted, but the market averages tumbled with GOOG
and then continued for a couple of hours before recovering some of their
losses before the close. SPX closed down $4 at $1457 and RUT lost $5
before closing at $837. Trading volume bumped up a bit with 2.9 billion
shares of the S&P 500 (GOOG alone traded 12 million shares). Trading
on the NYSE increased 5% and trading volume on NASDAQ increased 15%.
Despite all of the excitement surrounding Google, volatility remained calm with the VIX at 15%.
My
Nov iron condor on RUT stands at a net gain of $1,800 with position
delta = +$13 and position theta = +$64. It will be interesting to see if
the GOOG debacle and Microsoft's earnings disappointment pull this
market back down tomorrow, or if it rebounds after today's GOOG shock.
