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Even as the offices begin to thin out for the holidays, the markets hit new 2010 highs today. SPX climbed $8 to close at a new high for the year of $1255. In fact, this level has not been seen on SPX since September of 2008. RUT gained $8 to close at $791, also a new 2010 high. RUT has traded much stronger than the blue chips this year and the current price level matches prices of December 2007. Volume continues to drop off with 2.8 billion shares of the S&P 500 stocks trading; this is about one billion shares below the 50 dma. Trading on the NYSE dropped 5% and trading on NASDAQ dropped 2%. Today was a slow day for economic data. Several positive earnings reports buoyed the market sufficiently for traders to overlook concerns about credit downgrades of the sovereign debt of Portugal and Greece. It appears traders vacillate between two states of mind: 1) The US is part of a global economic system and European sovereign debt does affect us, and the 2) The US economy is recovering and remains one of the strongest economic engines in the world - just look at those earnings reports.
Many technical indicators have been flashing overbought for some time but the market keeps grinding out steady gains. The gains this week have surprised me; I expected the markets to largely trade sideways as the holidays get into full swing and the offices empty. My Jan SPX condor remains underwater with delta = -$85 and theta = +$106; the delta of the 1300 calls = 16. I keep expecting this market to slow its steady upward climb, but it keeps on chugging along. But we just trade what the market gives us, not what we expect.
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The market opened in positive territory and chopped sideways most of the day, but preserved modest gains into the close. Trading volume dropped significantly from expiration Friday. The holidays have clearly begun, but market gains continued. SPX closed at $1247, up $3 on the day. RUT also closed up $3 at $782. Only 2.9 billion shares of the S&P 500 stocks traded today; the 50 dma is 3.7 billion shares. Trading on the NYSE dropped 45% and volume dropped 30% on NASDAQ. No significant economic news was reported today. Housing stocks are trading higher, anticipating the home sales report on Wednesday. Energy stocks also did well today, based on stronger oil and gas commodity prices.
My Jan SPX iron condor at 1150/1160 and 1300/1310 stands at a P/L of -$1499 with position delta = -$52 and position theta = +$98. This condor is well positioned with the deltas of the short options at 11 to 12 each and a theta/delta ratio of about two to one.
If you are looking for directional trading ideas, consider Dr. Duke's Trading Group. If you had a $5,000 account and traded just one contract of each of Dr. Duke's recommendations since this service began, you would have a 43% gain to date. Check it out!
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The markets opened in the red this morning based on weak unemployment and housing numbers, but a surprise from the Philadelphia Fed turned the markets around. And, surprisingly, there wasn't any last hour sell-off. SPX closed up $8 at $1243 and RUT also gained $8 to close at $777. Trading volume was flat with the S&P 500 stocks trading at the 50 dma; trading on the NYSE dropped 5% and trading volume dropped 7% on NASDAQ. Initial unemployment claims were essentially flat at 420k (423k last week) and continuing unemployment claims rose by 22k to 4.1 million. Housing starts were reported at 555k, up from last month's 534k, but building permits dropped to 530k from 552k. This data wasn't very encouraging but the Philadelphia Fed's Business Outlook Survey surprised analysts and buoyed the street. The December survey came in at 24.3, up from 22.5.
I was unable to get the price I wanted to establish my new Jan SPX put spreads so my Jan SPX condor remains unbalanced with only the 1300/1310 call spreads. Have the markets entered "holiday mode" yet? Largely sideways trading, low trading volume, and low volatility are the characteristics to watch for. The bigger question may be whether 2011 will be as bullish as many are predicting.
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Today was "quadruple witching", meaning stock index options, stock index futures, stock options, and single stock futures all expired today (technically, tomorrow, but...). Traditionally this results in a large volume spike but today's volume appeared to be even larger than normal. Trading in the S&P 500 stocks spiked up to 4.8 billion shares, way above the 50 dma at 3.7 billion shares. Trading volume on the NYSE jumped 53% and increased 40% on NASDAQ. But the markets ended the day largely unchanged with SPX at $1244, up $1 and RUT closing at $780, up $3.
Other than earnings reports from RIMM and Oracle, there wasn't much economic news today. The leading indicators for November came in at +1.1% and this was a favorable surprise to analysts, but it couldn't really get the markets moving. Index option settlement prices were determined this morning; RUT settled at $777.11 and SPX settled at $1242.35. So my 660/670 puts from the Dec condor expired worthless, completing my Dec iron condor trade. I was able to get my Jan SPX 1150/1160 put spreads on for $0.75 this morning; this was less credit than I wanted, but I decided not to move up to the 1160/1170 strikes and accept more risk in the event this market backs up. The adjustments I made this week improved the Greeks of the Jan condor considerably with a position delta of -$25 and theta = +$68.
So now we move into what presumably will be a slow couple of weeks in the market as traders focus on the holidays and their families. It should be a good time to have your delta neutral trades working.
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The markets opened up this morning but gradually weakened as the day wore on. The SPX lost $6 to close at $1235 while RUT closed at $768, down $3. Trading volume was flat with the S&P 500 stocks trading right at the 50 dma of 3.5 billion shares. Trading on the NYSE was up 9% but volume was down 1% on the NASDAQ. The VIX rose to 18% on the day of bearish trading action.
I closed the 1060/1070 put spreads of my Jan SPX iron condor today for $0.25, but was unable to get my new put spreads established at a favorable price. I will work on that tomorrow. This places the Jan condor roughly at break-even and the new put spreads will position the trade for a reasonable potential gain. I also closed my Dec AAPL 290/300 call spreads for a 24% gain.
