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Is it me or does it seem like this market just can't be happy? Many of us felt that worries about Greece were overblown, but the market traded off anyway. Then the market rebounded and now the market is concerned about global economic softness, especially China. I wrote in my newsletter last week that it looked like a good time to short the market as it started to flirt with previous highs. I was right. I wish I had taken that trade. I didn't because I was looking for a rational case one way or the other. Silly me.
SPX closed down $22 at $2080. RUT lost $19 to close at $1226. Volatility popped up a little more than a point with the VIX closing at 13.8%. Trading volume was essentially flat across the board with 2.4 billion shares of the S&P stocks trading today, same as yesterday. Trading volume rose 3% on the NYSE but was unchanged on NASDAQ. So the market slid a fair amount but it doesn't seem like traders are taking it very seriously so far.
SPX closed right at support at $2080. This level has played support several times since early April. SPX landed on the 50 dma yesterday, but opened there this morning and never looked back. The 200 dma is at $2064. If that breaks, the last correction ended at $2045.
The first estimate for second quarter GDP growth is due on July 30. A weak number could push this market lower given the current bleak mood. Sometimes it seems like no amount of bad news can slow down the bulls, but this isn't that market. Weak GDP data could really derail this market.
New home sales came in at 482k for June, down from last month's 517k (both annualized figures).
My September iron condor is doing well, up 17%. It is close to delta neutral, but today's drop pushed us a few dollars below the perfectly delta neutral spot.
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SPX declined another $5 to close at $2114, but RUT reversed its recent declines and traded higher by $4 to $1258. Is Russell now leading the markets higher? Or is the correct conclusion simply that we remain within the trading range? I think it's the latter. Neither the bulls or the bears have sufficient strength to dominate the trend.
It was interesting to watch the VIX today. When the markets opened lower, VIX rose as one might expect. But as the initial decline moved into a choppy sideways pattern, VIX actually closed slightly lower at 12.1%. That is bullish.
Trading volume rose with 2.5 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE rose 9% and increased 17% on NASDAQ. Presumably this volume push was based on all of the stocks announcing earnings today and tomorrow.
I closed my August iron condor yesterday for a gain of 14.8%. This brings the year to date gains for the Flying With The Condor™ service to +32%. If I count the current gains of the open September position, it boosts our year to date results to +38%.
Check out my free webinar tomorrow. See the Coming Events page on this web site. Consider coming with me to New York City for the All Stars of Options Trading in September and/or the Traders Expo in Las Vegas in October. I would enjoy meeting with you in person.
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A more cautious tone took over the markets today as traders contemplated the possibility of China dragging the world into recession and Greeks rioted in the streets outside the parliament. Maybe the Greeks are headed out of the Euro after all. But does it matter? However, the economy of China does matter. Repercussions of a recession in China will be felt globally.
SPX dropped back by two dollars to $2107 and RUT declined $9 to close at $1265. Volatility was essentially flat with the VIX at 13.2%. Trading volume rose with 2.1 billion shares of the S&P 500 stocks trading. Volume on the NYSE rose 12% but trading volume on NASDAQ was essentially unchanged (down 0.3%).
It seems as though earnings announcements thus far have been neutral to encouraging, but we are early in the cycle. Intel and Netflix traded higher this evening after their announcements.
My August iron condor on RUT at 1100/1110 and 1360/1370 is almost perfectly delta neutral and up 12%. The September RUT iron condor at 1090/1100 and 1350/1360 stands at a net gain of 11%.
The results of the vote in the Greek parliament should be out this evening, so we will see what the futures look like in the morning.
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Many years ago, my mother would read me a children's book about a little train engine who kept saying, "I think I can. I think I can". This market reminded me of that little engine trying to climb the hill. SPX closed two dollars higher at $2128, and once again fell short of breaking out to new all-time highs. RUT fell back $7 to close at $1260. But NDX continued to make new highs, probably due to the internet stock boom started by Google.
Volatility, as measured by the VIX, rose slightly to close at 12.2%, but this remains a relatively low level. Trading volume declined across all major markets with two billion shares of the S&P 500 stocks trading. Volume on the NYSE dropped off by 10%, but only declined 2% on NASDAQ.
Earnings announcements make up most of the market news this week. IBM took it on the chin once again this evening. AAPL, CMG, GPRO, ISRG, MSFT and YHOO report after the close tomorrow. Many traders are watching AMZN (reports Thursday amc) after Google and Netflix blew out earnings last week.
The longer SPX bumps up against that previous high and retreats, the more likely we will see at least a minor pull back into the trading range. But NDX is motoring higher. Can it pull the blue chips along?
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From watching the markets trade today, one would think all is well with the world. Whatever was ailing China's market last week is all gone? This may be easier when the government can simply tell traders not to sell stocks, but has the basic economic picture changed? The Greek debt crisis is thought to be over, but the Greek parliament has to agree to a tougher deal than what was offered before Tsipras backed out of negotiations and called for the referendum. So is this the last we hear of Greek debt? Notably, the yield on Greek treasuries is higher now than before the deal. Hmmm. My point is simple: remain cautious.
SPX gained $23 to close at $2100 while RUT gained $13, closing at $1265. The VIX shed almost three points, closing at 14.1%. SPX closed right at its 50 dma - quite a turnaround for an index that was trading below its 200 dma at the open Friday. Significantly, trading volume was light with 1.8 billion shares of the S&P 500 trading. Trading on the NYSE was up 1% and trading on NASDAQ increased 5%. Rather than declaring that the bulls are back in charge, I think it safer to say we are firmly back within the trading range.
We have several important earnings announcements this week that will influence traders' moods. JP Morgan Chase reports in the morning and Wells Fargo reports tomorrow evening; Goldman Sachs will report Thursday morning. And, of course, we have several earnings announcements that always draw a lot of speculation and trading: Netflix, Google, and Yahoo.
