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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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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.
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The markets opened upward a bit this morning, but immediately hit technical resistance and traded sideways and down the rest of the day. SPX hit $1299 right after the open, but never got close to $1300 again all day, closing down $5 at $1294. RUT closed at $809, down $4 on the day. Trading volume was very low with only 2.8 billion shares of the S&P 500 stocks trading today; this is the lowest trading volume in the S&P 500 this year. Similarly, trading on the NYSE was down 17% and trading volume was down 6% on NASDAQ. Traders continue to be focused on the unrest in the Middle East and Libya; oil traded above $105 today. The good news is that the markets have not broken down to test recent lows, but the bad news is that the bulls have not regained control of the markets. Based on today's volume, it appears most traders are on the sidelines watching and waiting.
My April iron condor on RUT at 700/710 and 900/910 is in excellent shape with both spreads about two standard deviations OTM. The current P/L is +$1,300 with a position delta of +$14 and a position theta = +$93.
So we continue to watch for signs of a renewed bullish trend or a continued correction. Or do we muddle sideways for a while?
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The markets traded downward until late morning and then began a gradual climb upward for the balance of the day. The SPX bounced up against resistance at $1300 right before the close and pulled back to close at $1298, up $4. RUT gained $3 to close at $811. A weak home sales report set a negative mood at the outset this morning. New home sales for February dropped 17% to 250k, down from January's 301k. Analysts were expecting 288k. News that Portugal's parliament had rejected the austerity plans also weighed on the afternoon's trading.Traders continue to be concerned about the global economy slowing due to higher oil costs. I think traders are also somewhat reluctant to "go all in" as we anticipate the Fed ending its quantitative easing program. In summary, there are many headwinds for this market that make the likelihood of resuming the strong upward trend less probable. On the other hand, the market has held up rather well in spite of Middle East unrest, a Libyan revolution, natural disasters and fears of a nuclear mishap. This leads me to expect the markets to continue to trade sideways or slightly upward.
My April iron condor on RUT is benefiting from this trading range; it now stands at a P/L of +$1,660, delta = +$14 and theta = +$68. So we will just continue to play what the market gives us. Don't fall asleep.
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The markets gapped up at the open this morning but then largely traded sideways all day. SPX hit resistance at $1300, but held up pretty well, closing at $1298, up $19. RUT traded up more strongly, breaking through resistance at $807 to close at $813, up $18. Traders were calmed by improving news from efforts to bring the nuclear reactors in Japan under control and the UN's efforts in Libya. Oil prices remain high, but that didn't weigh on the market today. Trading volume dropped from Friday with 3.7 billion shares of the S&P 500 changing hands, but this is still above the 50 dma. Trading on the NYSE dropped 36% and trading volume dropped 32% on NASDAQ. It isn't clear as yet, from a technical standpoint, that this market correction is over. I would like to see follow through tomorrow with an open above $1300 on the SPX. The only economic data reported today was existing home sales for February at 4.88 million, down from January's 5.40 million, but traders didn't seem to take notice.
An excellent example of the irresponsible media hype was a headline on an article that read "Radioactivity Discovered in Foods", relating to tests of vegetables from areas of Japan near the stricken nuclear plants. But upon further reading, one finds that the level of radioactivity measured was equivalent to less than a quarter of the exposure of a single x-ray in your doctor's or dentist's office. Journalists once held their lack of bias as a measure of their integrity, but more and more, journalists pride themselves on pushing their own agenda as they write their stories.
VIX dropped to 21% today and this helped my Apr iron condor on RUT at 700/710 and 900/910. It now stands at a P/L of +$1,820 with delta = +$26 and theta = +$25. Theta for our position is rather low at this point because the call spreads are almost worthless. If RUT continues to trade higher, we will be able to close this condor early for most of our 14% profit potential. Delta of the short puts is at 6 whereas the delta of the $900 call is less than one.
