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The rumor mill and sound bites continue to be the principal drivers for this market, to the chagrin of anyone trying to trade. SPX closed at $1416, up $6 and RUT traded up to $823 for a gain of $10. VIX closed today down about a half point at 15.1%. Trading volume was flat with 2.4 billion shares of the S&P 500 stocks trading. Trading volume was down 3% on the NYSE and up 3% on NASDAQ.
Economic news continues to be flat to modestly positive; this recovery is taking forever to get us back out of the woods. I fear we may hit another recession before we have fully recovered from the last one. Initial unemployment claims remain essentially flat at 393k and continuing unemployment claims were reported at 3.3 million. Third quarter GDP growth was revised upward to an annualized rate of 2.7%, a pleasant surprise. And pending home sales grew 5.2% in October, continuing the glimmer of hope for real estate.
SPX has been flirting with resistance at $1410 for the past several sessions and closed right at resistance yesterday. Today SPX opened there and never looked back, closing at $1416. During today's trading, SPX almost reached the 50 dma at $1422 (it traded as high as $1420). But this market is extremely volatile. SPX almost traded down to the 200 dma yesterday; in two days of trading, we almost spanned the distance between the 200 dma and the 50 dma. Every news article quoting someone in D.C. is moving the market. And to think we have about thirty days of this craziness to endure!
My Dec iron condor on RUT stands at a net loss of $4240 or 20% with position delta = -$144 and theta = +$98. Even if the current spreads expire worthless, I am looking at an 8% loss for December. This month's trading has been characterized by whip saws back and forth - the minute I hedge, the market turns; then when I remove the hedge, the market turns again. I angered the trading gods somehow...
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The markets traded down this morning, but reversed course later in the day and made a significant push upward in the last hour of trading. SPX closed at $1410, up $11 while RUT closed up $6 at $814. Trading volume of the S&P 500 stocks remained beneath the 50 dma and was essentially unchanged from yesterday at 2.4 billion shares. Trading on the NYSE was up 4% and trading volume was down 2% on NASDAQ. The VIX traded up as high as 17% this morning, but settled to 15.5% by the close.
New home sales came in flat for October at 368k. Tomorrow brings unemployment claims and a second estimate of third quarter GDP.
SPX closed at resistance at $1410, where it closed last Friday and where it opened Monday. This was a strong support level in late October before the market broke through support and traded down strongly. Do the bulls have the momentum to break through resistance here? Unfortunately, this market is being jerked back and forth by whatever sound bites come out of D.C., so it is exceedingly difficult to predict the short term trend. One could even argue that an agreement to avoid the fiscal cliff is priced into the $60 rise of the past couple of weeks.
My Dec iron condor on RUT is feeling the pressure with a P/L of -$2,560 with delta = -$202 and theta = +$137. I may have to close and roll my call spreads tomorrow. We'll see.
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The market bullishness of Friday didn't continue into today's trading, but it certainly didn't sell off either. SPX opened at $1409 and traded as low as $1398, but recovered much of that loss to close at $1406, down $3. RUT gained $2 to close at $809. The VIX stands roughly unchanged at 15.5%.
SPX has been trading upward for the last several sessions, although we
appear to be bumping up against resistance at $1410; that level served
as solid support in late October before the plunge after the election
broke through to the downside. It is difficult to draw a good trend line
on this chart. Even though the last several sessions have been very
bullish, I am cautious. The potential for negative news out of either Europe or D.C. is very high. In my opinion, this market is on thin ice.
We didn't have much in the way of economic reports today, which may have accounted for the lack of direction in the markets. Durable orders and Case Schiller both report tomorrow.
My Dec iron condor on RUT stands at a P/L of -$1,170 or -6% with delta = -$117 and theta = +$95. I hedged this position during Friday's strong move upward. Given the economic situation facing us, it is surprising that I am hedging call spreads.
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Today marked the third day SPX hit at or near resistance at $1410 and then closed lower. SPX traded as high as $1409 today before being pulled back in the last two hours of trading to close at $1399, down $7. RUT traded stronger than its big brother all day and closed down $1 at $808. The VIX increased less than half a point to 15.9%. Trading volume on the S&P 500 increased a bit from yesterday to 2.4 billion shares, but is still running below the 50 dma. Trading on the NYSE was up 11% and trading volume on NASDAQ was up 10%.
Durable goods orders were flat for October. The Case Schiller housing price index increased 1.5% in October. The Conference Board's consumer confidence survey increased a bit to 73.7 for Nov, up from 73.1. So economic data was flat to modestly positive; but if that buoyed the market, it didn't last long.
The European finance ministers appear to have worked out a new debt refinancing deal for Greece, although the accord must still be ratified by several government Parliaments. But it is very doubtful that any of these deals are going to save Greece. The question I am wondering about is: what are the global ramifications of Greece defaulting on all of this debt?
My Dec condor stands at a net P/L of -$890 with delta = -$114 and theta = +$89. The 830/840 call spreads remain under pressure with delta of the 830 calls at 24, but the position is hedged with long Jan 830 calls.
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Many traders have already left the offices for the Thanksgiving holiday, so the trading volume dropped off markedly today. However, markets traded upward modestly. SPX closed up $3 at $1391. RUT ran up $5 to close at $798. VIX increased slightly to close at 15.3%.
SPX broke through and closed above the 200 dma Monday, then dropped below the 200 dma yesterday but rallied to close above the 200 dma. Today SPX opened at yesterday's close and traded up slightly. The point of this review is this: the 200 dma has been decisively broken, but a bigger question remains. Has this recent down trend been reversed? I'm not so sure. The real test will come after the holiday weekend. Each trading session this week has been on successively weaker volume.
My December iron condor on RUT stands at a P/L of +$400 (+2%) with delta = -$111 and theta = +$110. The 830 call is now at a delta of 16, so we are nearing a decision point on adjusting this condor position. The exchanges will be closed tomorrow and open for half a day on Friday. We will have a better sense of where this market is going next week.
Enjoy the holiday weekend with your families as you focus on your many blessings.
