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I speculated that support in the form of the 50 dma on SPX had held yesterday. Today's price action was certainly very convincing that the market has bounced off support and the bullish trend is very much alive. Should we"go all in" as the poker players say? I don't think so. I really am an optimist in my daily life. I'm not the pessimist that expects everyone I deal with to cheat me, and is pleasantly surprised when things turn out well. But one has to have his or her rose colored glasses firmly in place to ignore the serious economic issues facing this country and the world. So I may place some bullish trades (I did enter a Dec 660/690/720 call butterfly on AAPL yesterday), but I am still cautious and watching this market very closely. If nothing else, I think the high frequency trading crowd has given this market a higher level of volatility than ever seen historically - that alone gives me pause. SPX was hot today, rising $15 to close at $1455 and RUT followed right along, closing up $7 at $835. VIX traded down early, but ended the day unchanged at 15.2%.
One likes to see increased volume to reinforce the observed trend direction. And trading volume inched up today with 2.6 billion shares of the S&P 500 trading. Trading on the NYSE increased 6% and volume moved up 10% on NASDAQ.
The CPI was released with a rise of 0.6% for September. Industrial production turned positive at 0.4% up in September - a big change from the previous month's 1.4% decrease. And capacity utilization edged up to 78.3% for September from 78.0% last month.
My Nov iron condor on RUT is nearly delta neutral with a net gain of $1,660 with position delta = +$22 and position theta = +$61. We are up almost 10% with 30 days to go until expiration. That's a pleasant change from the struggles managing my condors in September and October.
One cannot deny the bullish trend of the current market, but pick your positions carefully and manage the stops conservatively. This market will react badly to the next negative news item coming out of Europe.
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After the mildly positive jobs report about ten days ago, SPX tried to break through resistance at $1465 to new highs, but could not hold those levels. Ever since then, the market has been slowly deteriorating. But SPX has been testing support at $1430 over the past four sessions and it has held. Today, SPX opened at $1429, traded as high as $1441 and closed near that high at $1440. RUT ran up $5 to close at $828. And this occurred on higher volume with 2.6 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE was up 9% and trading on NASDAQ was up 2%. VIX dropped almost a full percentage point to 15.3%.
Retail sales for September came in with an increase of 1.1%. The Empire Manufacturing Survey reported a drop of 6.2, but that was better than the previous month's -10.4. At this point, I'll take "less bad" as an improvement.
My Nov iron condor on RUT stands at a P/L of +$1,480 with delta = +$28 and theta = +$60.
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The market traded higher this morning on the back of improved unemployment claims numbers, but it didn't last. After trading as high as $1444, SPX closed at its opening price, $1433, unchanged for the day. RUT fared a little better, closing at $830, up $3. Trading volume was mixed with 2.8 billion shares of the S&P 500 stocks, above the 50 dma of 2.4B, but trading volume was down 11% on NASDAQ and up 7% on the NYSE. The VIX declined almost one percentage point to 15.6%.
Today's trading action was not bullish by far, but perhaps not bearish either. After all the bulls managed to push SPX to $1444, but they could not hold those gains; on the other hand, the bears could not break support at $1430.
The report of new unemployment claims came in at 339k, down from last week's 369k and continuing claims are 3.27 million, down 20 thousand. Maybe traders read the fine print later in the day and found out that California's numbers were not included in the report - oops! We will have to wait until next week to see if unemployment claims really declined. That may have contributed to the market taking back this morning's gains.
My Oct iron condor stands at a P/L of +$260 with delta = +$75 and theta = +$138. I will apply the two sigma rule tomorrow; it doesn't look like the 790/800 put spreads will survive that test. The Nov position stands at a P/L of +$1,260 with delta = +$27 and theta = +$58.
As long as VIX holds steady or declines (as it did today), and support holds on SPX, perhaps this market will muddle through this earnings season. But it is hard to predict what kind of bad news could pop up from Europe or if a slew of poor earnings forecasts start to take their toll.
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SPX popped up at the open today, but couldn't hold those levels. By noon it had broken support at $1430 and repeatedly tested that level all afternoon, closing at $1429, down $4. RUT was even weaker, losing $7 to close at $823. Trading volume dropped with 2.5 billion shares of the S&P 500 trading today. Trading volume on the NYSE dropped 11% and trading decreased 3% on NASDAQ. VIX increased about one half of a percentage point to close at 16.1%.
SPX closed today right at support and the 50 day moving average. The market has dropped enough at this point that one either has to say the upward trend line since June has been broken or significantly redraw that trend line. If SPX breaks support at $1430, the next support at $1420 looks pretty weak; the next solid support is around $1400. So if we can't hold $1430, we may see $1400 in short order.
The University of Michigan consumer sentiment numbers came in very upbeat at 83.1, a big jump from last month's 78.3. The PPI increased 1.1% which was lower than last month's 1.7% rise, so that was reassuring to analysts watching for signs of inflation.
I closed the 790/800 puts in my Oct condor today. This leaves the Oct 900/910 call spreads to expire worthless next weekend. Assuming those spreads expire worthless, my October iron condor will post a loss of $320 or 2% on 20 contracts. The Nov condor stands at a P/L of +$1,100 with delta = +$37 and theta = +$56.
Have a great weekend.
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There wasn't much economic news today, but that didn't stop the market from sliding further down. SPX lost $9 to close at $1433 while RUT closed down $1 at $827. Trading volume was largely unchanged with 2.4 billion shares of the S&P 500 trading. Trading volume increased 1% on the NYSE and increased 9% on NASDAQ. RUT traded down to touch its 50 dma at $825 but then bounced. SPX is nearing its 50 dma at $1426, but held support at $1430 today. Interestingly, the VIX closed unchanged on the day at 16.3%. Does that suggest the downward trend of the past three sessions is bottoming out? At a minimum, it indicates the big players are not buying a lot of protection.
The FOMC's Beige Book came out in the afternoon, but it didn't move the markets - no surprises: The economy is slowly recovering; some areas are better and some are worse, blah, blah, blah.
My October iron condor stands at a P/L of -$320 with delta = +$103 and theta = +$161. The November position is up $1,100 with delta = +$35 and theta = +$52.
