SPX closed higher again today at 2850. The all-time high from January 26th is 2873. SPX is now well above the 50 dma at 2774. July was a strong bullish month for the S&P 500, and now August is off to a strong start. Are we overdue for at least some sideways action? One concern of mine derives from the trading volume. The last three trading sessions have been very bullish and yet the trading volume has been consistently below the 50 dma and falling each day. Declining volume is not the sign of a strong bullish market.
The mid to small cap stocks, as measured by the Russell 2000 index (RUT), have been trading less bullishly. RUT has been trapped in a sideways trading range from about 1640 to 1710 for the past two months. RUT closed at 1684, just above the 50 dma and the middle of that trading range.
I closed the put spreads in our August iron condor on SPX, resulting in an 11% gain. This will free up capital to enter the November position. In the meantime, our September iron condor on RUT stands at an 11% gain, but due to rolling the puts higher sometime ago, we have a 22% potential gain on this position, so we will probably hold this position for a while longer.
An interesting tidbit: 413 of the S&P 500 companies have now reported earnings in this cycle. 79% of those companies have beat the analysts estimates. Over the past four quarters, an average of 72% of the S&P 500 beat analyst estimates.
Record corporate earnings are providing the foundation for this strong bullish market. As long as trade tariff negotiations appear to be moving positively, the S&P 500 may have a shot at breaking its January all-time high.
We start our Conservative Income Strategies course this evening at 8:00 pm CT. You may attend this first class free of charge and decide whether this course would be useful for you. Register for the private webinar here. Students in previous courses this year paid for their tuition several times over during the course just by following Dr. Duke's trades.