- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1793
The markets traded modestly higher today on low trading volume, but a late sell-off in the last few minutes of trading erased most of the gains. SPX closed at $1260, up about $1. RUT gained less than a dollar to close at $790. Trading in the S&P 500 stocks actually declined from yesterday's already low levels to 1.5 billion shares. Trading dropped 7% on the NYSE and dropped 1% on NASDAQ.
My Jan SPX iron condor stands at -$1799 with delta = -$104 and theta = +$145. This position is beginning to be pressured on the call side with delta of the $1300 calls at 16. The Feb iron condor on RUT stands at a P/L of -$600 with delta = -$38 and theta = +88. This condor is well positioned so far with the $860 call delta at 12 and the delta of the $690 puts at 11.
The steady push upward by this market even during these low volume holiday weeks is remarkable. It certainly appears that next week may usher in a strong bull market to begin the new year. But the universal bullish attitude I am hearing and reading worries me from a contrarian perspective. However, this may be the classic, "Don't fight the Fed" situation. QE II does appear to be pushing this market higher. Whether you or I agree with the Fed's tactics is really irrelevant. I have a couple of stock condors and one bearish trade in my directional portfolios. I think I may close them this week before everyone comes back from the holidays and begin to push this market in earnest.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1721
The markets meandered sideways on very low volume today. Minimal economic news was reported. The Case Schiller Housing Price Index fell 0.8% in October. The Conference Board Consumer Confidence Index dropped to 52.5 in December from 54.3 in November. This surprised analysts who were looking for a value of 56.1. But none of this news seemed to have much effect on the markets. The SPX gained $1 to close at $1259 while RUT lost $3 to close at $789. Obviously, most traders are on vacation. My Jan SPX iron condor position is essentially unchanged at a P/L of -$1479 with delta = -$100 and theta = +$116. The Feb RUT iron condor stands at a P/L of -$600 with delta = -$29 and theta = +$80. Enjoy the relaxing week; presumably, the action returns next week.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1715
As everyone left the offices on Wall Street, trading volume collapsed and the markets largely traded sideways with minor losses. The SPX lost $2 to close at $1257 while RUT closed at $789, down $2. Only 1.9 billion shares of the S&P 500 stocks traded today, well below the 50 dma of 3.6 billion shares. Trading volume dropped 18% on the NYSE and was down 21% on NASDAQ. Economic news today was a mixed bag. Durable goods orders dropped 1.3% in November, but new home sales increased to 290k from last month's 275k. Initial unemployment claims dropped a bit to 420k from last week's 423k while continuing unemployment claims dropped by 103k to 4.064 million. The University of Michigan Consumer Sentiment survey increased a bit in December to 74.5 from 74.2. This collection of economic data was insufficient to stimulate any real action in the markets; everyone was already on their way out the door. My Jan iron condor on SPX continues to meander along at the edge of adjustment with delta = -$94 and theta = +$166. Earlier this week, I established a Feb RUT iron condor at 680/690 and 860/870 for a credit of $3300 on 20 contracts. The position delta = -$33 and theta = +$78. Both short strikes are standing at about 11-12 delta.
The markets are closed tomorrow, so all of our positions are just losing time value while you relax with the family. Whether that be our ITM debit spreads on GOOG and AAPL or our iron condors, time is on our side. Enjoy the holiday. At this time of the year, it is easy to think of the family members who are gone; remember to be thankful for the family we have with us.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1749
China raised interest rates to retard inflation and traders reacted negatively to this news because it raised concerns about the global economic recovery stalling. However, the markets slowly traded upward most of the day and all of the major indexes finished in positive territory except for the Dow. SPX closed up less than one dollar at $1258. RUT gained $3 to close at $792. Surprisingly, trading volume declined even further from Thursday's low pre-holiday volume. About 1.6 billion shares of the S&P 500 stocks traded. Trading declined 24% on the NYSE and dropped 14% on NASDAQ.
My Jan SPX iron condor stands at a P/L of -$1,979 with delta = -$91 and theta = +$137. The Feb RUT iron condor stands at a P/L of -$700 with delta = -$36 and theta = +$83. It has been surprising how the indexes continue to climb on such weak volume. Bullishness is common, which concerns me. The big institutional players do not appear to be "in the game", so the question remains as to which way they will push this market when they return in volume.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1732
Markets traded higher today on flat volume. The SPX closed at $1259, up $4 while RUT was unchanged at $791. Trading volume was essentially unchanged from yesterday. Traders were encouraged with a reported 2.6% increase in GDP for the third quarter and a 5.6% increase in existing home sales in November (4.68 million). Two questions are prominent in my thinking about this market: when the traders return to their desks in January and volume approaches "normal" levels, in which direction will the market trend? And what event will trip up this bull run? Every talking head I hear on CNBC is bullish; they just argue over how high the markets will go in 2011. When everyone is on one side of the boat, it worries me. Although I have many bullish trades ongoing, I have a hair trigger on to take them out. In the meantime, my Jan SPX iron condor continues to be underwater with delta = -$84 and theta = +$155. The theta/delta ratio is still good, but we are nearing the limits on the call side before we have to close or adjust. It seems like a flat, sideways trading day should be in the works; after all, hasn't everyone left the office?
