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The markets opened downward this morning, but recovered quickly and just traded sideways most of the day. But someone pulled the switch around 2 pm ET and the markets headed south. SPX bounced off $1310 a few minutes before the close. SPX lost $8 to close at $1316. RUT closed at $754, down $7. SPX is caught in a tight trading range of about $1310 to $1325. My guess is that trading range will hold the balance of the week as traders wait for the Greek election results this weekend.
Trading volume was flat with 2.5 billion shares of the S&P 500 trading (fourth day in succession right at 2.5B). Trading on the NYSE was down 2% and trading volume was up 1% on NASDAQ.
The VIX jumped two points today and closed at 24.2% - it's going in the wrong direction!
My June iron condor on RUT stands at a net gain of +$1,840 with delta = +$12 and theta = +$271. Unless we get a $25 point decline tomorrow, I will allow these spreads to expire worthless this weekend. The July condor is up $1,380 with delta = -$1 and theta = +$65. So the recent market swings back and forth have left this position perfectly delta neutral. The 610/620 put spread is over two standard deviations OTM and it is tempting to roll it up, but there is just too much uncertainty in the market. It is comforting to know those spreads are that far OTM.
We'll see what tomorrow brings, but I doubt we will see any big moves until next week, after the Greek elections. The increasing VIX suggests traders are apprehensive about what next week will bring.
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The markets appeared to falter this morning, but then the bulls took charge and kept control through the close with markets closing near their highs for the day. SPX closed at $1324, up $15 after trading as low as $1307. RUT closed up $11 at $762. Trading volume was flat with 2.5 billion shares of the S&P 500. Volume on the NYSE was down 2% while trading volume on NASDAQ was up 7%. It appears that the resistance level to watch is around $1335 on SPX and the "falling out of bed" number is around $1275. For now, it isn't apparent which direction the market is headed. VIX dropped down almost two points to close at 22%, but that is still fairly high, suggesting a fair amount of tension in the markets at this point.
The main focus of traders appears to still be Europe and the developments there do not appear to be reaching any kind of definitive end. If traders are waiting for an "end" to the debt crisis in Europe, they will be waiting for quite a while. Will the next round of earnings announcements be a distraction? Or will the next earnings disappointment "pile on" to Europe and take the market south? Or will the Greek elections provide the catalyst for the big move downward?
My June iron condor is just about played out with a net gain of $1,840, delta = +$10 and theta = +$125. The maximum gain if both spreads expire worthless is $1,940 or 11% on the capital at risk. The July condor stands at +$1,660 with delta = -$18 and theta = +$56.
Perhaps the market is basically treading water until after the Greek election results? Should we close our positions this week? We should at least hedge any trades that are on the edge because next week could see some big moves.
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The markets opened up tentatively this morning, but slowly built strength as the day went on. SPX closed with a nice gain of $11 at $1326. RUT gained $9 to close at $769. On the other hand, VIX ran as high as 23% before closing at 21.2%, so it's too early to relax. Trading volume fell off significantly with 2.5 billion shares of the S&P 500 trading. Volume on the NYSE dropped off 19% and trading volume on NASDAQ was down 15%.
The big question going into next week is news out of Europe over the weekend regarding assistance for Spain's sovereign debt issues. But it seems unlikely that anything definitive will be settled by Monday. But the jobs report from last week is still hanging over the markets. It's one thing to worry about Europe's effect on the global economy; it's quite another to speculate about the U.S. economy slipping back into recession.
My June iron condor on RUT passed its two sigma test today with both spreads over two standard deviations OTM. So I am leaving both spreads open and likely to go into expiration and expire worthless. The June position is now up about 10% and could expire worthless at 11% next week. The July position stands at a P/L of +$1,180 with delta = -$21 and theta = +$69.
So enjoy your weekend and try to forget about this crazy market until Monday.
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The news that the EU leaders had struck a deal to infuse additional cash into Spain's banks rallied the S&P futures significantly. Early this morning, it looked like the markets were likely to rally very strongly with at least a 10 or 20 point day on the S&P 500. But markets opened upward and abruptly turned downward. And it got pretty ugly during the last two hours of trading. SPX closed near its low for the day at $1309, down $17. RUT closed down $18 at $751. Trading volume was flat to slightly higher with 2.5 billion shares of the S&P 500 trading. Trading on the NYSE was up 8% and volume increased 6% on NASDAQ.
The VIX jumped over two points and closed at 23.6%. You might say this is closer to the "bad neighborhood".
My June iron condor on RUT at 690/700 and 880/890 stands at a P/L of +$1,800 with delta = +$32 and theta = +$297. Even after the dramatic loss on RUT this afternoon, the 690/700 put spreads are over two standard deviations OTM. If this late afternoon sell-off continues, we may be forced to close the put spreads after all. I had assumed they would expire worthless, but that isn't as clear now. My July iron condor at 610/620 and 750/760 stands at a P/L of +$1,420 with delta = -$3 and theta = +$61.
This is an extremely difficult market to trade. The intraday volatility is unnerving. Trying to discern a direction and trade it is nearly impossible as the market turns on a dime. A former neighbor is a big game hunter and he says one of the most dangerous game is the wild boar in Missouri and Arkansas. Apparently the boars stalk the hunters. It feels like this market is hunting the traders. Non-directional trading looks more and more attractive, but that isn't a cake walk either.
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The markets were expecting good news from Bernanke as he testified before Congress this morning. The markets opened in positive territory and traded up as Bernanke testified. Interestingly, as this was going on, the VIX was also moving upward. That turned out to foretell the market's disappointment in Bernanke's remarks. Traders were expecting a promise of more quantitative easing, but Bernanke held his cards close and the markets retreated.
SPX traded as high as $1329 before retreating to close unchanged at $1315. RUT closed down $5 at $760. Trading volume also dropped off with 3.0 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE was off less than 1% but volume was down 7% on NASDAQ.
VIX closed the day down less than half of a point at 21.7% - still at anxious levels.
My June iron condor on RUT now stands at a net gain of about 9% with delta = +$26 and theta = +$104. Currently, the 690/700 put spreads are about two standard deviations OTM, so I may or may not close them tomorrow. The July RUT condor stands at a net gain of 7% with delta = -$14 and theta = +$66.
It appears we are on a cusp here: has the last couple of days been a brief short covering rally in an otherwise bearish trend downward? Or is the bullish trend resuming? It is too early to tell. Watch $1295 on SPX. If we close below there, watch out below.
