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The markets gapped open and steadily gained until early afternoon; but very little of that gain was lost in the sideways afternoon trading. Trading volume was up a bit from yesterday, but still below the moving averages. SPX closed up $9 at $1328 and RUT gained $11 to close at $840. SPX has yet to regain the $1343 peak it hit in mid-February before this correction started. In contrast, RUT closed above the pre-correction close of $838. So RUT is once again leading the charge as it did through most of last year. About 2.9 billion shares of the S&P 500 traded today, up a bit from yesterday but well below the 50 dma. Trading volume was up 10% on the NYSE and up 12% on NASDAQ.
ADP reported an increase of 201 thousand private payroll jobs in March; analysts had expected 210k. ADP's report may indicate a favorable jobs report on Friday. If so, that will further fuel this bullish market.
My April iron condor on RUT at 700/710 and 900/910 stands at a P/L of +$1,700 with delta = -$7 and theta = +$123. I adjusted my May iron condor on RUT this morning and improved the Greeks considerably; this position now stands at a P/L of -$1,500 with delta = -$12 and +$58. Subscribers to Flying With The Condor™receive those adjustment trade alerts in real time during market hours.
It fascinates me how quickly the markets can change. It seems like yesterday that traders were concerned about Middle East unrest, the civil war in Libya, the earthquake and the possible nuclear disaster in Japan. Now the bulls are running the show. The lessons for us: trade what the market gives you; don't remain wed to your predictions; adjust or get run over.
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The sell-off that ended yesterday's trading appeared to continue at the open of trading this morning, but the bulls quickly took control and all of the market indexes steadily climbed throughout the day. SPX closed at $1319 for a gain of $9 while RUT gained $8 to close at $829. SPX appeared to bounce off its 50 dma at $1307 before climbing to its close at $1319. Shortly after this correction began February 22, SPX fought its way back to $1330 before falling to even lower lows in mid-March. So a close above $1330 might signal the end of this correction. A similar "line in the sand" for RUT is $830. And RUT has been flirting with $830 the past three trading sessions, but has been unable to break through thus far. Trading volume was flat to low today with 2.6 billion shares of the S&P 500 trading; that was slightly better than yesterday, but still well below the 50 dma at 3.5 billion shares. Trading was down 3% on both the NYSE and NASDAQ. Low trading volume this near the end of the quarter is a little surprising. Usually one sees a flurry of institutional activity, positioning portfolios for quarterly reporting.
My condors are essentially unchanged from yesterday. The April condor stands at a P/L of +$1900, delta = +$5 and theta = +$77. The May condor stands at a P/L of -$760, delta = -$66 and theta = +$98. While April just continues to grind out the remaining potential profit, the May position flirts with adjustment on the call spread side. The delta of the $890 call = 16. This market continues to tease us, unwilling to commit to an end of the market correction, but not really trading lower either. Reminds me of Greek mythology, with the Gods toying with us humans.
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Traders ignored the continuing unrest in the Middle East and Libya, the European debt crisis, and Japan's continuing woes and continued their buying spree this morning. The major market averages traded up until about noon and then slowly declined through the afternoon. But the day ended with gains across the board for all of the market indexes. SPX closed up $4 at $1314 and RUT closed at $824, a $7 increase. But all of these gains occurred on lower volume. 2.8 billion shares of the S&P 500 traded; this is not only down from yesterday but well below the 50 day moving average at 3.6B. Trading volume on the NYSE dropped 6% and trading decreased 8% on NASDAQ. Volatility declined slightly with the VIX closing at 17.9%. RUT rose intraday to hit $832 before pulling back to close at $824. RUT hit a temporary high of $830 in early March before dropping to a new low of $776 on March 15. Watching for a close above $830 in RUT would be one signal of a resuming bullish trend. Some analysts see today's strength in RUT as evidence of defensive moves into mid-cap stocks that tend to be primarily domestic companies with minimal global exposure.
My Apr condor on RUT is now positioned perfectly delta neutral with a P/L of +$1,840 and position delta = -$2 and position theta = +$66.
Have a pleasant and relaxing weekend.
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It looked like another modest, but upward trending day, but the bears showed up to play during the last few minutes of the trading session, pushing the major indexes to modest losses. SPX closed at $1310, down $4 while RUT lost $2 to close at $822. Trading volume dropped again today with only 2.5 billion shares of the S&P 500 stocks trading. Trading dropped 5% on the NYSE and dropped 10% on NASDAQ. The markets have been surprisingly bullish over the past few sessions given the number of worrisome
global events and the apparent inability of the US government to address
the spending/deficit issues. The equity markets are being propped up by
the Fed. The questions surround how this play ends. The FOMC has
announced that QE II will end by the end of the second quarter.
Increasing oil and food prices are causing more Fed committee members and Fed watchers to
begin to talk about tightening measures. In the meantime, the bulls
appear to be in charge, although trading volumes have been anemic,
suggesting many traders are wary.
My April iron condor on RUT is just churning out profits in this lackluster market. It now stands at a net gain of $1,900 with delta = +$16 and theta = +$61. My May RUT iron condor at 680/690 and 890/900 stands near break-even with a P/L of -$600, delta = -$55 and theta = +$88.The maximum possible gain on the April condor is $2,400. Some traders make it their practice to close credit spreads when they can confirm a majority of the gains. I have adopted the rule of closing spreads on the Friday before expiration if the spread is less than two standard deviations OTM. Otherwise, I allow the spreads to expire worthless. I prefer not to give away the $20 to $40 per contract plus the trading commissions unless I have to for safety's sake. In my experience, two standard deviations is a very safe margin. If you are trading many contracts, we are talking about several hundred dollars. That may not be much compared to the overall gains, but it is still one or two nice dinners at one of my favorite restaurants, like Picasso's in Las Vegas, or Wildfire in Chicago.
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The markets traded down at the open this morning but then revived and steadily traded upward throughout the balance of the day. The SPX gained $12 to close at $1312, above the resistance level at $1300 that had proven a barrier the last couple of sessions. RUT gained $6 to close at $817. Trading volume was slightly up from yesterday with 3.1 billion shares of the S&P 500 changing hands; this is still well below the 50 dma at 3.6B. Trading volume was up 1% on the NYSE and up 14% on NASDAQ. The VIX dropped down to 18%, the lowest level this month.
Orders of durable goods dropped 0.9% in February, down from a 3.6% gain in January. Analysts had expected a gain of 1.1%. Unemployment claims are basically flat from last week with a 5k decrease in initial claims at 382k and a 2k decrease in continuing claims at 3.7 million. This economic data coupled with European debt issues and the usual problems in the Middle East and Libya appeared to be ignored by traders today - a little surprising, to me at least.
My April iron condor on RUT at 700/710 and 900/910 stands at a P/L of +$1,500 and delta = +$17 and theta = +$92. I will be watching to see if SPX can hold above $1300 tomorrow and give us more confidence that the bullish trend has resumed.
