Today marked the first time this year that I have seen some encouraging signs in the market. Although, "encouraging" may be too strong. The market opened higher, but, just as we have seen before, it turned and traded lower. But today proved different. SPX rallied strongly during the last 30 minutes today. That was refreshing. SPX closed at $1924, up $2. RUT closed down $4 at $1042. Volatility contracted with the VIX losing almost three points to 24.3%. Trading volume remains high with 3.1 billion shares of the S&P 500 trading. Trading volume on the NYSE rose 0.4% and volume rose 7% on NASDAQ.
The unofficial beginning of the earnings season is always marked by Alcoa, and the market liked what they heard after the close today; trading in AA rose after hours.
The positive signs I observed were:
1. SPX traded as low as $1901, but then recovered $23 to close.
2. RUT closed right at the correction low of October 2014 yesterday. RUT opened and traded down another fifteen points today, but then recovered ten points into the close.
3. AA missed analyst estimates for revenues, but beat earnings estimates by two cents. In spite of this, AA shares traded higher after hours. AA's business is always viewed as a good measure of the industrial economy.
4. Volatility contracted.
I don't want to read too much into it, but these signs appear to be a bit more positive that what we saw last week. Perhaps we are nearing the bottom.
The ultimate answer will be revealed later this week.