Today was certainly not the way anyone would like to start the new year. China's stock market collapsed overnight and the dominos fell across the globe. SPX closed at $2013, down $31 and RUT lost $27 to close at $1109. SPX had traded down to $1990 by about 11 am ET and wandered sideways from there. But a surge in the last thirty minutes of trading brought SPX back to $2013. This keeps the index within the sideways range it has been trading within since the recovery from the August flash crash. RUT has been trading weaker than SPX for many months and today's close is near the August flash crash lows, whereas SPX remains about 140 points above the flash crash low. Trading volume jumped markedly after the low holiday trading with 2.8 billion shares of the S&P 500 stocks trading. Volume popped up 55% on the NYSE and was up 52% on NASDAQ. Volatility popped up over two points with the VIX closing at 20.7%. The only somewhat reassuring sign in the markets today was the recovery in the last few minutes of trading.
The price volatility of this market continues to whip traders back and forth. Investors Business Daily's market indicator moved to Confirmed Uptrend on 12/30/15 but whipped back to Market in Correction today. IBD's market indicator normally allows investors to be on the right side of longer term market trends, but that hasn't been the case for the past year or more, as prices whip back and forth almost daily.
The market was primarily reacting to China's market collapse, but U.S. economic data didn't help. The ISM manufacturing index came in at 48.2 for December, down from 48.6. Values in this index less than 50 denote contraction as opposed to expansion. Construction spending decreased 0.4% for November, going negative after the small, but positive, 0.3% increase in October.
I closed our January iron condor for the Flying With The Condor™ service on January 31st for a 13% gain. The February position is up 4% so 2016 is off to a good start. The Flying With The Condor™ service ended 2015 with a net gain of 40%, as compared to a -0.7% loss in the S&P 500 Index.
So much for the Santa Claus rally...