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Traders took a break today from worrying about Greece, Spain and the European Union. SPX gained $15 to close at $1332, while RUT gapped up at the open and gained $11 to close at $777. Trading volume jumped up with 2.4 billion shares of the S&P 500 stocks trading; trading on the NYSE increased 19% and volume rose 28% on NASDAQ. However, much of that increase is explained by the low trading volume last Friday before the long holiday weekend. Trading in the S&P 500 remains well below its 50 dma.
The VIX was sounding a cautionary note with only a small drop to 21.1% - traders remain on guard.
A few positive signs have been seen in the real estate market the past few weeks, but the Case Schiller housing price index fell 2.6% in March - a smaller decrease than the previous month, but still the wrong direction. The Conference Board released their consumer confidence figures for May today; they dropped from 68.7 to 64.9 - not a good sign. Many analysts track this number since consumer spending is such a powerful factor in the economy.
Today's strong move upward for RUT pushed my June iron condor at 690/700 and 880/890 close to its maximum gain of $2,640 or 15% with about two weeks to go to expiration.
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But then, that is what the optimist was heard to say as he passed the 10th floor after falling off the 80 story building! Markets traded largely sideways today until about 2 pm ET when the bears staged a raid. SPX fought back a bit but ended the day off $3 and closing at $1318. RUT closed down less than a dollar at $766. Trading volume fell off sharply - I guess everyone left early for the long holiday weekend. Trading in the S&P 500 fell to 2 billion shares and volume on the NYSE decreased 23%. Trading volume on NASDAQ dropped 27%. The VIX was basically unchanged at 21.8%.
The University of Michigan consumer sentiment survey came out at 79.3 for April; this is up a bit from March's 76.4 and is the highest level for this survey since October, 2007. But the market is focused on Europe so this data point was ignored.
The S&P 500 index has held pretty steady above support around $1305 - $1310 the past several days. If it were to break down through support, I would be watching the 200 dma at $1282 for the next possible support level. We have a long weekend with the possibility of market-moving news coming out of Europe some time before Tuesday morning's open. I left my hedges in place for any positions that were the least bit tight on the downside. My June iron condor on RUT at 690/700 and 880/890 is not hedged at this point; it stands at a net gain of $940 with delta = +$52 and theta = +$88 with 20 days left to go.
Enjoy your long weekend. Don't forget the true meaning of this holiday.
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The futures were looking pretty bleak last evening, but the markets opened only slightly down this morning. However, the bears started pulling the major market indexes lower until around mid-day when buying pulled the markets up to recover most, if not all, of the earlier losses. SPX traded as low as $1297 before recovering to close at $1319, up $2 on the day. RUT closed $6 higher at $765. It appears like SPX is trying to establish support around $1290 to $1295 over the past four trading sessions. Trading volume bumped up modestly with 3.2 billion shares of the S&P 500 stocks changing hands. Volume on the NYSE was up 1% and trading on NASDAQ was up 4%.
New home sales for April came in at 343k, a gain of eleven thousand over March. The FHFA Housing Price Index increased 1.8% in March. It doesn't seem like we have had positive news in housing for some time. To be sure, these reports aren't worthy of fireworks, but the data does give us hope. Real estate fuels a large portion of this economy.
My June iron condor on RUT at 690/700 and 890/900 stands at a P/L of +$700 with delta = +$51 and theta = +$83. Is it safe to get back in the water? I would be very cautious. Bad news continues to flow out of Europe; future news reports could push us over the edge, searching for support down around $1265. If you are trading non-directionally, be careful to follow your rules and hedge yourself appropriately. If you are trading directionally, trade small and carefully.
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The S&P 500 Index started the day in positive territory but then moved into the red around noon and stayed there most of the afternoon. Then it scrambled out of the hole in the last thirty minutes and managed to close with a gain of $2 at $1321. RUT gained $1 to close at $767. All of this choppy trading occurred on lower trading volume with 2.9 billion shares of the S&P 500 trading (the 50 dma = 2.8B). Trading volume declined 11% on the NYSE and dropped 10% on NASDAQ. The last two trading sessions in SPX have seen long lower shadows on the candlesticks with closes near the session highs; in and of itself, this suggests some building of support. But this is still a precarious market; any news or even rumors out of Europe could send it tumbling.
The VIX dropped to 21.5% today, down from recent highs, but still at an elevated level. Take heed; be cautious.
Initial unemployment claims came in at 370k, down two thousand from last week. Continuing claims dropped 29k to 3.26 million. Durable orders increased 0.2% in April, an improvement from last month's 3.7% drop. So hard economic data for the states continues to muddle along - not terrible, but not great either. Traders are primarily focused on the events unfolding in Europe: will Greece leave the EU? What effects will that have on the global economy? Who is next after Greece? At best, Europe is in for some hard times; will that drag down the global economy? So far, institutional traders appear to be adopting the posture of "shoot first" and try to ascertain the facts later. That makes for a lot of volatility. Thus far, we aren't seeing the extremes of price volatility we saw last August, but who knows what tomorrow may bring?
My June iron condor position on RUT stands at a P/L of +$1,040 with position delta = +$43 and position theta = +$87.
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The markets opened up positively this morning, but afternoon trading took its toll. SPX rose as high as $1328, but pulled back to close at $1317, up $1. RUT lost $5 to close at $760. Trading volume was pretty flat with 2.9 billion shares of the S&P 500 trading today; Trading on the NYSE was up 9% but trading was flat on the NASDAQ.
Some cited existing home sales as the basis of today's strong open, but those came in at 4.62M for April, up modestly from March's 4.47M. Analysts expected 4.65M. The VIX dropped as low as 20%, but jumped back up in the afternoon to close at 22.5%.
My June iron condor on RUT stands at +$240 with position delta = +$57 and position theta = +$85. Are we bouncing back after this market correction, or is this just a pause before the next negative news flash comes from across the pond? I don't think the sovereign debt situation in Europe is anywhere near being resolved. So I am inclined to anticipate further declines at some point. Use caution.
