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Traders were encouraged by some acquisition activity this morning and the markets opened up in positive territory and were strong all morning. The broad markets hit their highs just before noon, but they held most of the gains into the close. SPX gained $8 to close at $1319, a new 52 week high. RUT closed at $808 with a gain of $8; today's close on RUT matched the highs made in mid-January. However, today's market gains were made on lower volume. 3.1 billion shares of the S&P 500 changed hands, down a bit from Friday and below the 50 dma at 3.4B shares. Trading volume was down 3% on the NYSE and down 11% on NASDAQ. AAPL marked up a new 52 week high and prompted many to chatter about it being over-priced.
My Mar iron condor on RUT stands at a P/L of +$380, delta = -$31 and theta = +$76.
One measure of this bull market will be whether the support level at $1300 on SPX can hold if we have a minor pull back in the next week or two. That nearly straight-upward price chart on SPX does give one pause; no wonder so many analysts are predicting a correction. But the market does seem to have the ability to prove the largest number of analysts wrong at any given point in time. Which is why it is easier to play what the market gives me than what I am predicting.
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The jobs report surprised and puzzled analysts this morning. The good news was an unexpected drop in unemployment from 9.4% to 9.0% - most analysts were expecting an increase to 9.5%. The bad news was a less than expected number of new jobs created of 36k - analysts were expecting 135k. Should we interpret this as good or bad news? Some analysts noted that the population estimates used in the unemployment rate calculations were revised this month and this accounted for the unexpected drop in the unemployment rate. The report also revised the last 12 months of jobs data to reduce the number of new jobs reported by 378 thousand. Judging from the choppy sideways day in the markets, most traders didn't take this jobs report as great news. SPX closed at $1311, up $4 while RUT gained a little over one dollar to close at $800. This is the fourth day SPX has managed a close above the support level of $1300, so that is positive for the bulls, but the market action has been anemic. Trading volume was flat to down with 3.0 billion shares of the S&P 500 stocks trading, down from 3.5 billion yesterday. Volume decreased 9% on the NYSE, while trading was up 1% on NASDAQ.
Those of you trading PCLN were given a shock today when they announced that earnings would be webcast on Feb. 23, an announcement previously scheduled for Feb. 17 before Feb options expiration. This caused the implied volatility (IV) in the Feb options to collapse and IV in March exploded. I had a Feb/Mar $420 call calendar that was doing well with a 32% gain until this morning when I closed it for a 127% gain! However, anyone holding long Feb options on PCLN is crying in their beer at this hour.
My Mar iron condor spread is doing well with a P/L of +$260, position delta of -$16 and position theta = +$77. The 875/885 calls are over one standard deviation OTM while the 690/700 put spreads are almost two standard deviations OTM.
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Futures were looking very positive before the bell this morning and the markets gapped up at the open and didn't look back; the major indexes closed at or near their session highs. Apparently Egypt is yesterday's news for traders. SPX closed up $21 at $1308, solidly breaking through resistance at $1300. RUT gained $18 to close at $799, still off of its high in mid-January. Trading volume was up with 3.8 billion shares of the S&P 500 changing hands; trading was basically flat to slightly down on the NYSE with a 2% drop and trading volume increased 19% on NASDAQ.
Today was a slow day for economic data; the ISM Manufacturing Index came in at 60.8 for January, which was a six year high; analysts had expected a value of 58.4. But construction spending dropped 2.5% in December.
My Feb iron condor on RUT stands at a P/L of +$2,440 with a position delta of -$13 and position theta of +$117 on 20 contracts. The Mar RUT condor stands at -$360, delta = -$16 and theta = +$78.
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The markets opened up this morning down a few points and just chopped sideways through the day on lower volume. SPX closed at $1304, down $4 while RUT closed at $796, down $3. Trading volume declined across the board with 3.2 billion shares of the S&P 500 stocks trading; volume declined 14% on the NYSE and declined 12% on NASDAQ. The volatility index (VIX) dropped to 17.3%, not quite back to the lows last Thursday around 16% (before the big down day Friday). The fact that SPX was able to hold its close above the previous resistance level (now support) of $1300 was a positive indicator for a continued bullish trend. The ADP payroll report was positive with a gain of 187k jobs in January while analysts expected 145k, but the markets didn't take notice.
I closed my AAPL Feb 310/320 call spread for a 30% gain today and I also closed the RUT Feb iron condor with $0.20 debits on each side for a gain of $2,500 or 15% on capital at risk (20 contracts). This was an unusual month for the condor trader; I never adjusted the Feb position. That only happened once in 2010. The RUT Mar condor stands at a P/L of -$300, delta = -$13 and theta = +$82.
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The markets opened up in positive territory and chopped sideways, but retained positive gains all day. It appeared that traders decided the crisis in Egypt was not the threat to global markets that was feared on Friday. The huge jump in the Chicago PMI probably was a factor as well. Its value for December came in at 68.8; this is the highest level for this index since 1988.
SPX closed at $1286, a rise of $10 and RUT gained $6 to close at $781. Trading volume was down from Friday; 3.5 billion shares of S&P stocks traded today; although this was down from Friday, it remains above the 50 dma. Trading volume on the NYSE dropped 16% and decreased 18% on NASDAQ. Today's gain on SPX confirmed a 2.3% increase for the month of January; this is the first positive gain for the month of January on SPX since 2007. Many analysts believe January's performance foretells the performance for the year; I'm not sure I believe that, but it does set a tone for traders at a minimum.
My Feb iron condor on RUT stands at a P/L of +$2,580 with delta = +$18 and theta = +$65. My Mar iron condor on RUT at 690/700 and 875/885 stands at a P/L of -$140 with delta = +$17 and theta = +$56.
