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The markets did a little stutter step out of the gate this morning, but then slowly gained throughout the balance of the day. SPX closed up $11 at $2108 (still being held by resistance at $2110) and RUT tacked on only a dollar to close at $1265. Volatility took another step lower today with the VIX closing at 12.7%, down about one half of a point. Trading volume was mixed, flat with the S&P 500 stocks, up 7% on the NYSE and down 2% on NASDAQ.
The only economic data today was the report of existing home sales for March, up from 4.89 million to 5.19 million (annualized).
My RUT condor trades continue moving along well with May up 18% and June up 11%.
Tomorrow is a big earnings day with Amazon, Microsoft, Starbucks and Google after the market close.
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Let's recap: the market inexplicably takes it on the chin on Friday and then recovers virtually all of that loss on Monday. Today SPX tried to move higher, but hit resistance at $2110, the high from mid-March and pulled back to close at $2097 for a small loss of three dollars. Does this make any sense to anybody? The only constant in all of this back and forth is the continuing strength of the bulls to quickly recover from any loss. Maybe we are caught in this dance until a clear consensus appears out of the earnings announcements. RUT behaved similarly, closing down one dollar at $1264. In line with this sideways dance was an unchanged volatility index (VIX) at 13.3%. Trading volume rose modestly with two billion shares of the S&P 500 trading. Trading volume rose 4% on the NYSE and rose 5% on NASDAQ.
The remaining 1110/1120 put spreads in my May iron condor on RUT continue to slowly decay toward a maximum return of 18%. I will probably close them later this week. The June condor on RUT at 1100/1110 and 1350/1360 stands at a net gain of 10%.
Today's earnings announcements included a big disappointment for Chipotle, down $37 after hours, and a miss on both sales and earnings for Yahoo; apparently even a former Google superstar can't rescue Yahoo. Amazon and Google report Thursday; they often bring some stock-moving fireworks with their announcements. For those of you following my earnings announcement trades, I stand at an 89% win/loss ratio after nine trades this season. Tune into our next trading group meeting on May 7th for the details.
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NASDAQ and RUT gapped open lower this morning and set the tone for the day. SPX lost $24 to close at $2081, breaking through its 50 dma at $2085. RUT closed at $1252, down $21, but still well above its 50 dma at $1239. We expect trading volume on option Friday, but one would especially expect higher trading volume on a sell-off like today. Trading volume jumped to 2.4 billion shares in the S&P 500 stocks. Trading on the NYSE was up 13% and trading volume on NASDAQ increased 18%. The VIX wasn't up as far as one might expect on a day like this, closing at 13.9%, up 1.3 points.
The conventional wisdom on the street was to blame the market's concerns on Greece and China changing some of their trading regulations. But noting that we have a nervous market that sells off at any twitch has been said before. We'll see if there is much follow through next week. I follow IBD's Big Picture market indicator; they have been on "Uptrend Under Pressure" since March 9th and I have been surprised it has not shifted to "Confirmed Uptrend", but today's market action proved them correct.
Forget about today's market and enjoy your weekend. Dote on your kids, grandkids, other kids and your friends. That will recharge your batteries for Monday.
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The market dips are occurring so fast that it is hard to buy the dip; if you blinked, you missed this buying opportunity. After opening Friday at $2103, and giving up $24, SPX opened higher this morning and nearly made it all back, closing up $19 at $2100. RUT bounced back by $13 to $1265. The VIX declined about six tenths of a point to 13.3%. Trading volume changes today don't mean much because Friday was options expiration and therefore was a high trading volume day.
No significant economic news was released today; in fact, there won't be much economic data all week. The big news this week will be earnings announcements. Whether those announcements start to form a pattern that moves the market is the question. Many analysts were bearish about this earnings season, but that doesn't appear to be materializing so far; but the week is young.
I closed my RUT May 1330/1340 call spreads today for $0.17. Our May position stands at a gain of 16% and the June iron condor on RUT is now up 11%.
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SPX ran up $11 to close at $2108, threatening the old record high. RUT did set a new all time high, closing at $1275, up $10. The NASDAQ composite is above $5,000 again, but remains below the all-time high set back in the dot-com boom. The last time NASDAQ was above $5,000 in mid-March, it was a good time to sell. Hmmm.
Volatility closed down almost one point at 12.8%. Trading volume finally perked up with 2.2 billion shares of the S&P 500 stocks trading today. Trading on the NYSE rose 27% and trading volume on NASDAQ increased 14% over yesterday.
The boost in the markets appeared to be on the back of higher oil prices. It certainly wasn't today's dose of economic data. The New York Fed's Empire manufacturing survey fell out of bed with a reading of -1.2 for April, down from +6.9. Industrial production for March dropped off 0.6%, a big change from February's small, but positive, +0.1%. Capacity utilization was nearly unchanged at 78.4% for March, down from 79.0%.
Tomorrow brings housing starts and the weekly unemployment claims, but I don't know if economic data matter to the bulls. This is the Fed's bull market... until it isn't. And I think that is what worries many market observers.
