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SPX lost $21 yesterday and proceeded to gain $23 today, closing at $2108 and thus making up all of the lost ground. It would be nice if I could explain why this happened, but I can't. And I recommend skepticism toward whoever claims they understand this back and forth dance. This nervous whipsaw trading even affects the professionals. IBD moved from Confirmed Uptrend to Uptrend Under Pressure yesterday and, unless something changes, I expect they will be moving back to Confirmed Uptrend in short order. RUT traded back higher by $8 to close at $1228, not as strong a move as SPX. Volatility contracted with the VIX closing at 12.7%, down almost two points, a large move for one day. Trading volume fell off markedly today with 2.1 billion shares of the S&P 500 trading. Trading volume decreased 26% on the NYSE and dropped 18% on NASDAQ.
The ISM manufacturing index was flat for April at 51.5. Construction spending declined 0.6% in March, down from a slightly positive 0.1% in February. The University of Michigan consumer sentiment survey was unchanged at 95.9 for April - everyone's happy! I thought today was the day for the jobs report - the first Friday of the month, but I apparently didn't get the memo; the jobs report will be released next Friday, May 8th.
Have a nice weekend.
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The markets traded down today and actually hit the lows of the day before the FOMC announcement, and then recovered somewhat before the close. SPX lost $8, closing at $2107. RUT closed at its 50 dma, $1247, down $12. NASDAQ finally made its all-time high last Friday, but it seems like each time the NASDAQ composite makes a high, we trade downward thereafter. The previous NASDAQ peak was March 20th and the markets pulled back after that high as well.
Trading volume in the S&P 500 stocks popped up today with 2.4 billion shares and the NYSE trading volume increased by15%. But NASDAQ volume fell off by 8%.
First quarter GDP came out today at +0.2% - a huge miss! Economists were expecting +2.2%. Pending home sales also fell off with aa annualized growth rate of +1.1% for March, down from February's +3.6%. The big news of the day was the FOMC announcement, but it wasn't really news. It was fun to watch the financial news outlets trying to talk about the announcement and fill their time slots, but there was no news! Interest rates remain low and the Fed will increase rates when employment is strong and the inflation rate nears the targeted +2%. In other words, it was the same old story. But the mediocre economic data is starting to weigh on expectations for an interest rate hike. More and more analysts are seeing that event pushed into 2016.
So now we look forward to the jobs report Friday. Will it accentuate market weakness or boost optimism?
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The markets opened in positive territory this morning and SPX ran up to $2126 by 10 am ET, but then started a steady slide lower to close down $9 at $2109. RUT was much weaker with a decline of $15 to $1253. Volatility increased almost a full point to 13.1% on VIX. Trading volume increased with 2.4 billion shares of the S&P 500 stocks trading today. Volume increased 1% on the NYSE and increased 13% on NASDAQ (Apple frenzy?).
There was no significant economic news but there was a sell-off in biotech stocks, although no one seemed to understand why. Maybe that spooked the market. I had expected the markets to largely trade sideways until the FOMC announcement on Wednesday afternoon.
All of the financial news and CNBC coverage seemed to focus on Apple and the earnings announcement after the market closed. The financials were nothing short of spectacular and after hours trading had Apple only up a couple of dollars. That seemed surprising. Amazon doesn't even make a profit and its stock shot up $49 or 13% after its announcement last week. Go figure.
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After yesterday's surprising plunge, markets bounced back today with SPX tacking on $6 to close at $2115 and RUT gaining $7 to close at $1259. But trading volume fell off with 2.2 billion shares of the S&P 500 stocks trading. Trading volume increased 4% on the NYSE, but fell 6% on NASDAQ. The increase in VIX yesterday was recovered today as VIX fell about three quarters of a point to 12.4%.
The Case Schiller housing price survey gave us positive news today with a 5% increase in prices for February, up from January's 4.5% rise. The Conference Board's consumer confidence survey came in at 95.2 for April, down from March's 101.4, but this remains a very high level.
The market is treading water, waiting on the FOMC announcement tomorrow. We may see some volatility in prices tomorrow afternoon. Look at the candlesticks on SPX and RUT for the past week to ten days. There are many long upper and lower shadows on those candlesticks, denoting price extremes intraday that do not hold up into the close. In other words, the market is showing a lack of direction. Every time the bulls take charge and push prices higher, the bears pull it back, and vice versa. One could argue that this is a pretty accurate description for the market year to date. Many analysts were predicting a poor earnings season would tip this market over to the bears, but that hasn't happened. By and large, earnings are close to historical norms for the percentage of companies beating estimates so far. While the bulls appear to remain in control, the threat of the Fed increasing interest rates at some point seems to be holding traders in check. They are bullish, but nervous.
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The markets traded lazily this morning, but the bulls regained their strength around noon and pushed higher, with SPX briefly touching the all-time high at $2120, but it couldn't hold it, pulling back to close at $2113, up $5. RUT traded higher by $6 to $1272, but RUT didn't make it back to the highs it set last week. Volatility continues to contract with the VIX closing down 0.3 points to 12.4%. Trading volume popped up today with 2.3 billion shares of the S&P 500 stocks trading today. Trading volume rose 6% on the NYSE and increased 11% on NASDAQ.
Initial unemployment claims came in at 295k, flat with last week's 294k. Continuing unemployment claims increased by 50k to 2.33 million. New home sales dropped off from last month's annualized 543M to 481M for March.
I closed the May 1110/1120 put spreads in my May iron condor on RUT today for $0.08. That locked in a nice 17.6% gain for May and brings the Flying With The Condor™'s gains for the year to +17.1%. The June condor on RUT at 1100/1110 and 1350/1360 stood at a net gain of 11% at the close today.
I haven't seen a summary of all of the earnings announcements to date, but my perception is that the news has been better than expected. Maybe the bulls are encouraged and starting to jump back in this market.
