Dr. Duke's Blog

The major market indexes didn't tack on more gains today - how about that? But the averages didn't drop much either; this bullish trend is still very much alive. SPX dropped back $6 to close at $1627 while RUT lost $4 to close at $966. The VIX added a half point to close at 13.1%, still relatively low. Trading volume was relatively flat with 2.3 billion shares of the S&P 500 stocks trading. Trading on the NYSE was down 3% while trading volume on NASDAQ was up 5%.

The unemployment claims came in this morning at 323k, down four thousand from last week. Continuing claims dropped 27k, but these decreases are small percentage changes; the data trend lines are basically flat, so the market didn't celebrate.

The new support level for SPX is now $1600, so it would take a pretty significant drop to really get traders' attention. The comparable support level for RUT is much closer at $955. Many market analysts feel a correction of some kind is overdue, but so far that has been a futile waiting game. I think three main factors are driving this market: 1) The Fed's QE policies, 2) Reasonable corporate earnings growth, and 3) A search for income in dividend paying stocks for traders leaving the bond market.

My May iron condor on RUT stands at a net gain of $1,560 or +9% with position delta = -$37 and position theta = +$125. I will apply my Two Sigma Rule tomorrow to this position. Unless the market opens down quite a bit tomorrow, I will probably be closing the 1010/1020 May call spreads; those spreads are just inside of two standard deviations today. So the bull market game continues. As soon as the last of the bears are vanquished, the correction will begin!