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We only had a half day of trading today before the Fourth of July holiday tomorrow. SPX gained $1 to close at $1615 and RUT gained $2 to close at $991. In several recent trading sessions, SPX has tried to break through the 50 dma to the upside, but has failed. But today it didn't even try, reaching an intraday high of $1619 with the 50 dma at $1625. VIX declined two tenths of a point to 16.2%.
The ADP private employment number came in at +188k, causing many analysts to look for more favorable jobs report numbers on Friday. Initial unemployment claims remain about flat at 343 thousand. The ISM services survey came in at 52.2, down from 53.7. The markets will reopen on Friday, but most likely with low trading volume since so many people are taking a long weekend.
My July iron condor on RUT at 870/880 and 1060/1070 is essentially at full profit with a net gain of $3,060 or +18%. This is unusual for a position that still has two weeks to go to expiration.
Enjoy the Fourth of July activities.
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Today's trading pattern was very similar to yesterday with a bullish start and acceleration up to or just beyond the 50 day moving average (dma), but then a pullback to the close. The 50 dma is beginning to appear to be a substantial resistance level. Last Thursday marked another day where the 50 dma pushed the bulls back before the close of trading. SPX closed down $1 at $1614 and RUT closed unchanged at $989. Volatility remains unchanged at 16.4%. Trading volume rose modestly from yesterday with 2.3 billion shares of the S&P 500 trading today. Trading volume rose 6% on the NYSE and increased 7% on NASDAQ. The exchanges will be closed Thursday and will close early tomorrow, so I would expect volume to fall off markedly tomorrow. If not for the jobs report Friday morning, I would expect a very low volume trading day, assuming most traders will be out of the office. But an surprising jobs report might trigger some volatility on Friday.
The S&P 500 remains trapped between support at $1600 and the 50 dma at $1624. But I would prefer to see SPX break through $1640 before I would feel very confident about a return to the bullish trend that characterized trading this year until May 22nd. That era of unbridled enthusiasm appears to have ended. But I've been wrong before.
My July iron condor on RUT at 870/880 and 1060/1070 stands at a net gain of $2,840 or +17% with position delta = +$5 and position theta = +$41 (20 contracts). This position is remarkably delta neutral as we approach the two week mark until July expiration. What has happened to this year? I just became accustomed to writing 2013 on various documents and the year is half gone!
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SPX opened lower this morning and then sunk even farther after a disappointing Chicago PMI report. Then SPX strengthened and traded sideways roughly at no change most of the day, but then sold off at the close. SPX lost $7 to close at $1606 while RUT closed at $977, down $2 on the day. VIX ended the day unchanged at 16.9% after moving as high as 17.7% this morning. Trading volume was up with 2.9 billion shares of the S&P 500 stocks trading. Trading volume on the NYSE was up 32% and volume increased 49% on NASDAQ.
The Chicago PMI came in at 51.6 for June, down from last month's 58.7. But the University of Michigan consumer sentiment survey reported 84.1, up from 82.7. The Chicago PMI is closely watched by traders and probably set a negative tone for trading today.
SPX traded up and bounced off resistance at the 50 dma yesterday. This morning SPX traded down and bounced off support at $1600. So those are the "lines in the sand" to watch. A break out above the 50 dma at $1622 would be bullish and a break below $1600 would be a bearish sign. But this market remains very volatile; it is exceedingly difficult to determine a trend. The least little thing seems to push it either way and then it reverses course the next day. But support at $1600 and resistance at $1622 are at least the first signals of a break one way or the other.
My July iron condor stands at a net gain of $2,100 or +12% with position delta = +$24 and position theta = +$86.
Enjoy your weekend.
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Markets traded higher today, but couldn't hold those highs. SPX closed at $1615 for a gain of $9 after trading as high as $1627. RUT closed up $12 at $990. Trading volume was off significantly with only 2.1 billion shares of the S&P 500 stocks trading. Trading on the NYSE dropped 26% and trading volume on NASDAQ decreased 38%. I guess traders are taking off early for the holiday.
I was impressed with the strength of SPX this morning as SPX broke through the 50 dma at $1623, but it couldn't hold. Traders took their profits and pulled it back to $1615. The extremely low trading volume makes drawing conclusions difficult. Intraday volatility remains a common characteristic of this market. The sell-off this afternoon may suggest a larger number of traders who are concerned about losing their gains in this strong market. This will be an unusual week with a holiday Thursday and then the jobs report Friday morning. I'm not sure what to expect.
My July condor on RUT stands at a net gain of $2,660 or +16% with delta = -$10 and theta = +$67.
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SPX actually gapped open to the upside today and closed above resistance at $1600 with a gain of $15, closing at $1603. Next stop is the 50 dma at $1619. RUT gained $3 to close at $964. RUT's chart didn't look as bullish with a run up to $969, but then it pulled back to close at $964. Volatility trimmed back 1.3 points with VIX closing at 17.2%.
First quarter GDP was revised downward once again to a +1.8% annualized growth rate. It makes you wonder about the process that the initial report is always high and then keeps being trimmed back. Some analysts believe this poor showing for GDP actually helped boost the market in a "bad news is good news" effect, making traders think it more likely that the Fed's stimulus will last longer. One has to wonder when the markets will decide that Fed stimulus is actually having some ill effects on the economy. I don't claim to know where this is going, but I am skeptical that the Fed pumping this much into the markets for so long doesn't have some unanticipated consequences.
My July condor position on RUT now stands at a net gain of $2,000 or +12% with delta = +$31 and theta = +$69.
Be careful out there. I closed many positions last week and on Monday, but I'm not convinced it is safe to go back in the water. Maybe I have become gun-shy (for you city folk, it is a term used for hunting dogs that can't get accustomed to the loud noise of the shotguns).
