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The jobs report came in this morning well under analyst estimates with 160 thousand jobs, down from last month's 208k. The markets opened lower, but recovered to post gains for the day.
SPX gained $7 to close at $2057, while RUT closed up $7 at $1115. Even more encouraging for the bulls was a drop in volatility with the VIX closing at 14.7%, down 1.2 points. SPX dipped down to touch support at $2040, but then bounced to close seventeen points higher. SPX also closed above the 50 dma at $2045, which often acts as support. Some analysts interpreted the market's strength in light of the weak jobs report as traders presuming that the Fed will delay raising interest rates as a result of the weak employment numbers.
Trading volume was flat to weak with 2.2 billion shares of the S&P 500 trading, well below the 50 dma at 2.4B. Trading volume fell 2% on the NYSE, but rose 2% on NASDAQ.
I conclude that the stalemate between the bulls and the bears is likely to continue.
Have a great weekend. If you are going to the Money Show in Las Vegas next week, let me know so we can get together.
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Markets continued lower today, but trading volume declined. SPX closed at $2051, down $12 and RUT lost $9 to close at $1113. The VIX increased a half point to 16.1%. This decline seems to be slowing as though it will settle into support at $2040, where the market hesitated in the first couple of weeks of April, before moving higher. The 50 dma is also at $2041. In three of the last four trading days, SPX has traded down to lows for the day and then recovered into the close. Closes at the lows for the day are the scary signs of a pull back that may turn into a correction.
Trading volume fell off today with 2.3 billion shares of the S&P 500 stocks trading. Trading volume was flat on the NYSE and declined 3% on NASDAQ.
ADP's private payrolls report came out at 156 thousand jobs for April, down from March's 194k. If that is a sign of a weak jobs report Friday, this recent market decline could get worse. Factory orders were up 1.1% for March, a big improvement over February's 1.9% decline. The ISM Services survey increased slightly to 55.7 for April, up from 54.5.
I closed the SPX May condor in the Flying With The Condor™ service for a nice gain of 16%. The June condor is positioned delta neutral in the Russell 2000 Index and is up 5%.
Today's trading volume decline may carry into tomorrow as traders look to the jobs report on Friday.
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Yesterday’s positive, but also rather weak, response to the FOMC announcement was interesting. On the one hand, you could take it as evidence that the bulls were still in control. But, it was definitely contained enthusiasm. As I mentioned in yesterday’s blog, it often takes the markets a day or two to fully digest the FOMC announcement. So, maybe today’s pull back was the “on further thought” reaction. And today's weak GDP report didn’t help.
SPX lost $19 to close at $2076. RUT closed down $14 to $1140. Trading volume rose again today with 2.7 billion shares of the S&P 500 stocks trading. Trading volume rose 3% on the NYSE and rose 12% on NASDAQ.
The first estimate of first quarter GDP growth came in at a meager +0.5%, positive, but certainly causing many to wonder about prospects of recession. Initial unemployment claims rose to 257k from 248k, but this remains in line with the flat trend of the past several months. Continuing unemployment claims dropped five thousand to 2.130 million.
I continue to believe this market will remain range bound for the immediate future, perhaps until after the election. Economic data simply don’t support a bullish path forward, even with the Fed supporting the market. But I don’t see the evidence for a new recession either (although today’s GDP data are a concern). We’ll see.
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This market keeps traders on edge. I am starting to think that day traders may be better off than long term investors. At least, they may sleep better.
After Thursday and Friday's declines, Monday's rally was welcome. But then we gave it back today. SPX closed down $18 to $2063 and RUT lost $19 to close at $1122. The common denominator between Friday and today's trading was the late recovery. SPX dipped to $2055 today, but then recovered somewhat to close at $2063. That suggests that the bulls are still in the game; they haven't panicked and headed for the exits just yet. Maybe this is just a sideways consolidation market with high levels of price volatility. Many of us have been remarking on the exceptional price volatility for a couple of years now. Maybe it's time to admit this is part of the new world. Blame it on high speed computer algorithms or whatever, but it is what it is. If we are going to play this game, we have to accept the basic nature of the market.
The decline in implied volatility as measured by the VIX yesterday was given back today with VIX closing at 15.6%. Trading volume increased today with 2.5 billion shares of the S&P 500 companies trading. Trading increased 4% on the NYSE and increased 6% on NASDAQ.
We didn't have any significant U.S. economic news today. Tomorrow brings the ADP private payrolls number that many view as a precursor to the jobs report Friday. Sleep well...
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The FOMC passed on this opportunity to raise interest rates. The announcement stated that while the U.S. economy is growing only moderately, the risk from global turmoil has been reduced. Most Fed observers seem to be expecting the next rate hike to come toward the end of the year. The news was taken weakly favorably by the markets with SPX gaining $3 to $2095. RUT rose $3 to $1154. Volatility continued to contract with the VIX dropping to 13.8%. Trading volume spiked up above the 50 dma today with 2.6 billion shares of the S&P 500 trading. Trading was higher by 15% on the NYSE and rose 5% on NASDAQ.
SPX is nearing the "fish or cut bait" stage. November's high at $2110 and the all-time high at $2131 are nearby and support has formed over the past couple of weeks around $2075 to $2080. The price trend seems to have slowed as SPX approached these previous highs. Today's Fed announcement didn't supply the energy to drive the market strongly higher. However, it is true that market reaction to FOMC announcements often take 24 hours to "gel", so we will see what tomorrow brings.
