- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1764
Traders were disappointed with the jobs report Friday and stewed all weekend. The major market averages all fell today. SPX lost $16 to close at $1382 and RUT also lost $16 to close at $803. But trading volume was low. Trading in the S&P 500 came in at 2.3 billion shares, well below the 50 dma. Trading on the NYSE was down 4% and volume on NASDAQ was down 12%. The VIX popped up to 19% this morning, pulled back to 18%, but then increased into the close to 18.8% - not a good sign.
My Apr iron condor on RUT is up $2,460 with delta = +$5 and theta = +$100. My May condor stands at breakeven with delta = +$37 and theta = +$67. The bulls attempted to take back control late in the day, as they have so many times this year. But this time, the bears repelled them. Is this a changing of the guard? Many of the world markets were closed today and minimal economic data were reported, so today's weakness shouldn't be taken too seriously. But it still pays to be cautious and watch carefully tomorrow.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1734
Yesterday's market weakness after such a strong performance the previous day wasn't too surprising. But today's selling became serious. SPX traded down $14 to close at $1399 and RUT closed down $14 to close at $820. SPX dropped right after the market opened and traded sideways most of the day; some buying during the last hour recovered some, but not much, of the loss. Trading volume was basically flat with 2.8 billion shares of the S&P 500 trading. Volume on the NYSE was up 3% and trading was up 1% on NASDAQ. Most analysts attributed today's market losses to traders reading the FOMC minutes and concluding no further stimulus was imminent from the Fed. Are we that addicted to hand-outs in this country?
The ADP payrolls report cited 209k additional jobs in March, down a bit from last month's 230k. But this still wasn't a bad report. In a similar vein, the ISM Services Index came in at 56.0 for March, down a bit from the previous month's 57.3. Once again, the economic data wasn't signaling an economic boom, but we have certainly seen much worse data in the last couple of years. This week's jobs report on Friday will be somewhat unique in that the exchanges will be closed, so we may be seeing some risk aversion in today's selling in advance of that report; if so, we may see more selling or at least a flat market tomorrow.
Not too surprising, VIX rose on today's sell-off and rose as high as 17.4% this morning, but steadily pulled back after about 1:30 pm ET, closing at 16.4%.
SPX has set up a strong support level at about $1390 over the past five to six weeks, but we only traded down as low as $1394 today before bouncing back up a bit. So far, SPX has held support, but if we break $1390, this could get ugly.
My April iron condor on RUT stands at a P/L of +$2,620 with delta = +$7 and theta = +$30. Both spreads are over two standard deviations OTM at this point with 16 days to go to expiration. We'll see what tomorrow brings; the drop in VIX toward the end of the day was encouraging, but that could change overnight.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1595
The markets opened weakly this morning, but recovered quickly. SPX gained $5 to close at $1408 while RUT lost $2 to close at $830. Trading volume was weak with 2.7 billion shares of the S&P 500 stocks trading; volume was up 2% on both the NYSE and NASDAQ. The VIX calmed down today, closing at 15.5% after being up as high as 17% yesterday. Yesterday afternoon's bullish recovery from the lows earlier in the day and today's slight rise underscores the basic bullish nature of this market. RUT continues to trade in the sideways channel established in early February.
The University of Michigan Consumer Sentiment survey came in at 76.2 for March, up from 74.3 in February. However, the March value of the Chicago PMI dropped to 62.2 from the previous month's 64.0. All in all, today's economic data was basically neutral and not really market moving.
My April iron condor on RUT stands at a P/L of +$2,340 with position delta = -$3 and position theta = +$58 (20 contracts).
My working premise from earlier in the week appears to remain valid, viz., that this market's strong bullish run is basically working itself off via slow sideways trading, replacing the need for a significant correction.
Enjoy your weekend. Focus on the family and forget about the markets for a couple of days.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1741
Today's market action was a bit unenthusiastic after yesterday's strong push that opened the new quarter. Stocks traded steadily downward all day, but bounced a bit in the last hour of trading to recover some of the losses. SPX closed down $6 at $1413 and RUT closed at $835, down $6. Trading volume was up slightly from yesterday with 2.8 billion shares of the S&P 500 stocks trading today. Trading volume on the NYSE was up 5% and trading on NASDAQ was up 1%. The VIX closed at 15.7%, so it remains in the channel of about 14-17% of the past couple of weeks. We appear to be firmly in a bullish market, but the enthusiasm is waning. The good news is that as long as we basically trade sideways, the likelihood of a severe market correction becomes much smaller.
Traders were sitting on the sidelines much of today, waiting on the FOMC minutes to be released. Markets dropped after that release at 2 pm this afternoon, probably because there did not appear to be much discussion of another round of quantitative easing happening anytime soon. But after further reflection, traders moved in and pushed the major indexes back to close the day near where they were before the release of the minutes. Tomorrow will see the ADP payroll report and the ISM Services Index.
My April iron condor on RUT stands at a P/L of $2,500 with delta = -$5 and theta = +$51. The put spreads are far OTM and the call spreads are nearly two standard deviations OTM, so this position is sitting pretty at this point (a technical term). It has been an unusual month in that no adjustments have been required thus far. But the month isn't over yet.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1675
The markets looked pretty weak this morning as SPX dropped as low as $1392, but then the bulls rode in to the rescue and pulled the major index averages back and nearly recovered all of the losses. SPX closed at $1403, down $2 and RUT closed at $832, down $2. Trading volume was basically flat with 2.8 billion shares of the S&P 500 stocks trading today. Trading volume on both the NYSE and NASDAQ were down less than one percent. One has to be impressed by the strength of this market; everyone keeps talking about a correction, but even when the market looks pretty weak, as it did this morning, the bulls return to the table. So far, the "correction" consists of slowing down and trading largely sideways for a time, giving all of the indicators time to catch up. Of course, it may fool me and go over the cliff tomorrow. I am always suspicious of those who confidently predict the future of the market.
GDP growth for the fourth quarter was revised to a 3.0% growth level which didn't surprise analysts one way or the other. Initial unemployment claims came down again at 359k but analysts were expecting a bigger decline. Continuing unemployment claims dropped 41k to 3.34 million. So we are slowly climbing out of the hole, but this has been the slowest recovery from a recession ever recorded.
My April iron condor on RUT stands at a net gain of $2,280 with delta = -$4 and theta = +$59 on 20 contracts.
The next area of risk for this market is the upcoming earnings season; if traders start seeing corporate weakness in those numbers, we could see the correction everyone has been predicting.
