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SPX backed off a bit today, trading down $7 to close at $2102. RUT was essentially flat, down one dollar at $1190. I was surprised to see volatility bump up a full point today with the VIX at 15.5%. Trading volume was flat with 2.4 billion shares of the S&P 500 stocks trading today. Trading on the NYSE was down 1% and trading volume increased 4% on NASDAQ.
The NASDAQ Composite is now at the high set in June and about one percent off of the all-time high set in July. SPX is about thirty points off of its all-time high set in June and then reaffirmed in July. RUT has been the laggard. RUT has not even made it back up to the 200 dma. Ever since the correction low was retested in late September, SPX has been on an incredible run, up $228, or 12% in about a month! Even more surprising, this run has occurred in the midst of almost nonstop news of China's slowdown, evidence that we can't trust China's numbers, and the global economic slowdown that is bound to follow China's decline. Apparently, the Fed's support is a more powerful tonic for the markets.
This strong recovery off of the correction books one more V-bottom, a phenomenon that once would have been considered unusual, but no more. SPX is now running along the upper edge of its Bollinger band, so we may be starting to see some moderation in the upward push of the past month.
The ISM services index reported 59.1 for October, up from September's 56.9. ADP reported private employment today at +182 thousand, down a bit from last month's 190k. The Non-Farm Payrolls Report, aka the jobs report, will be issued Friday morning before the market open.
Our Dec iron condor on SPX at 1870/1880 and 2160/2170 is being squeezed; I have hedged the trade with Jan 2140 calls. We'll see if that is enough to hold off the bulls.
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The markets continue their climb higher, seemingly without an sign of slowing. It is hard to see the economic drivers; everyday, we have mediocre economic data being reported and more evidence of a global economic slowdown. Don't get me wrong. I am not preaching recession, but this isn't a booming economic recovery either. SPX tacked on another six dollars to close at $2110. RUT closed up $5 at $1192. Volatility rose a touch with the VIX closing at 14.5%.
RUT finally has traded above its mid-September high. It has lagged behind SPX but seems to be working to catch up now.
Both RUT and SPX are running right along or even outside the upper edge of the Bollinger bands. So we are stretching the probabilities here. But the market can do what I don't consider rational for much longer than I think probable. But it sure seems as though we are overdue for a little bit of a pause.
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The markets opened this morning in positive territory, but slowly weakened as the day wore on. SPX closed down $12 at $2019 and RUT lost $18 to close at $1145. Trading volume increased a bit with 2.4 billion shares of the S&P 500 trading, but this is still below the 50 dma at 2.5B. Trading increased 12% on the NYSE and increased 13% on NASDAQ. The VIX volatility index increased about 0.7 points to close at 16.5%.
No significant economic data was reported today.
All in all, it was a slow day in the markets, but the weakening as the day progressed is a little worrisome. Could we possibly retest the correction lows once again? I will be watching $1997 on SPX as the "line in the sand". A break down through that price would be a concern.
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Markets opened this morning, gapping higher after yesterday's strong performance. SPX closed up $23 at $2075 and RUT closed at $1166, up $12. Volatility remained flat with the VIX unchanged at 14.5%. Trading volume remained above average but dropped from yesterday's highs with 2.8 billion shares of the S&P 500 stocks trading. Trading volume dropped 5% on the NYSE and was unchanged on NASDAQ.
There is no question that the bulls are firmly in charge of this market. The question in my mind is this: Are we returning to a strong bull market as we saw in 2013? Or is this more like earlier this year where the bulls aggressively bought every dip, but couldn't achieve a string of higher highs?
Evidence for a more constrained market posture comes from the Russell 2000 Index, made up of classic small cap stocks. These stocks lead bull markets higher and also are the first to be sold as the markets turn downward. RUT's chart is much weaker than SPX. When the markets bounced from the August 25 lows, they hit a high in mid-September before turning lower to retest support. SPX blew past those levels on October 7th, but RUT has yet to get back to those mid-September highs. Hmm...
Enjoy your weekend.
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The markets seem to be slogging through molasses with small price moves, low trading volume, and declining implied volatility. SPX closed down $3 to $2031 while RUT lost one dollar to close at $1163. Volatility remains relatively low at 15.8%. Trading volume is sluggish with 2.1 billion shares of the S&P 500 trading today (flat with yesterday and below the 50 dma). Trading volume declined 1% on the NYSE and rose 6% on NASDAQ.
Housing starts for September came in at 1206 thousand, up from August's 1132 thousand. Building permits were on the opposite side with August's 1161 thousand declining to September's 1103 thousand. But the good news is that these data remain fairly positive for the real estate market with new housing construction running around a million units for 2015.
Earnings announcements continue to elicit strong responses with CMG down about $50 and ISRG up $35 in after hours trading. Playing these announcements is not for the faint of heart. For those of you who love the thrill ride, AMZN announces Thursday after the close.
The bulls appear to be in control of this market now; we are seeing the classic higher highs and higher lows. But trading volume is low and the price moves are limited in either direction. Are we returning to the sideways trend we saw earlier this year? Many of the large institutions have predicted a strong rally for the balance of this year, but we are starting to run out of time.
