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The market traded higher this morning on the back of improved unemployment claims numbers, but it didn't last. After trading as high as $1444, SPX closed at its opening price, $1433, unchanged for the day. RUT fared a little better, closing at $830, up $3. Trading volume was mixed with 2.8 billion shares of the S&P 500 stocks, above the 50 dma of 2.4B, but trading volume was down 11% on NASDAQ and up 7% on the NYSE. The VIX declined almost one percentage point to 15.6%.
Today's trading action was not bullish by far, but perhaps not bearish either. After all the bulls managed to push SPX to $1444, but they could not hold those gains; on the other hand, the bears could not break support at $1430.
The report of new unemployment claims came in at 339k, down from last week's 369k and continuing claims are 3.27 million, down 20 thousand. Maybe traders read the fine print later in the day and found out that California's numbers were not included in the report - oops! We will have to wait until next week to see if unemployment claims really declined. That may have contributed to the market taking back this morning's gains.
My Oct iron condor stands at a P/L of +$260 with delta = +$75 and theta = +$138. I will apply the two sigma rule tomorrow; it doesn't look like the 790/800 put spreads will survive that test. The Nov position stands at a P/L of +$1,260 with delta = +$27 and theta = +$58.
As long as VIX holds steady or declines (as it did today), and support holds on SPX, perhaps this market will muddle through this earnings season. But it is hard to predict what kind of bad news could pop up from Europe or if a slew of poor earnings forecasts start to take their toll.
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There wasn't much economic news today, but that didn't stop the market from sliding further down. SPX lost $9 to close at $1433 while RUT closed down $1 at $827. Trading volume was largely unchanged with 2.4 billion shares of the S&P 500 trading. Trading volume increased 1% on the NYSE and increased 9% on NASDAQ. RUT traded down to touch its 50 dma at $825 but then bounced. SPX is nearing its 50 dma at $1426, but held support at $1430 today. Interestingly, the VIX closed unchanged on the day at 16.3%. Does that suggest the downward trend of the past three sessions is bottoming out? At a minimum, it indicates the big players are not buying a lot of protection.
The FOMC's Beige Book came out in the afternoon, but it didn't move the markets - no surprises: The economy is slowly recovering; some areas are better and some are worse, blah, blah, blah.
My October iron condor stands at a P/L of -$320 with delta = +$103 and theta = +$161. The November position is up $1,100 with delta = +$35 and theta = +$52.
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Trading volume fell dramatically as many traders took the Columbus Day holiday off work. Trading volume on the NYSE fell 27% and dropped 26% on NASDAQ. Trading in the S&P 500 dropped to 1.7 billion shares, well below the 50 dma at 2.4 B. SPX closed down $5 at $1456 and RUT dropped $4 to close at $838. Volatility expanded a bit with the VIX rising almost one point to 15.1%. SPX remains trapped between the highs set in mid-September and the lower edge of the bullish trend line of the past several months. The 50 dma is down at $1424.
There was no economic news to push the market today. The Fed's beige book comes out Wednesday; unemployment claims report on Thursday and then PPI and consumer sentiment numbers are released Friday. So no huge events are scheduled for this week, unless there is a big surprise in one of those reports. And, of course, we always have the possibility of market moving news coming out of Europe. Europe's debt situation and economic slowdown have moved to the back burner along with the fiscal cliff worries. For my fellow Mad Magazine fans, "What, me worry?" I loved that magazine when I was younger.
My Oct iron condor on RUT is limping along with a P/L of $180, barely in the black and delta = +$48 and theta = +$67. By contrast, the Nov position is already up 6%. So we wait to see if anything changes when everyone returns to Wall Street tomorrow.
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The traders returned from their holiday and volume shot back up to normal, but the mood turned gloomy after both the World Bank and the International Monetary Fund (IMF) forecast a slowing global economy. SPX dropped $14 to close at $1441 and RUT closed at $828, down $10. Trading volume on the S&P 500 increased from Monday's anemic levels, but just hit the 50 dma at 2.4 billion shares. Trading on the NYSE was up 37% and trading on NASDAQ increased 39% on the lows on Monday. Volatility edged up a little over one point to 16.4%; this is still a reasonably low volatility number, so traders have not hit the panic button as yet.
Alcoa kicked off the earnings season with a better than expected report, but warned that the coming quarters will be impacted by the slowing of China's economy. Rioting in Greece continues and the IMF predicts that the Greek debt will reach 171% of GDP this year and increase to 182% next year. The IMF report states that the target of the bailout of 120% of GDP will be almost impossible to reach by 2020. I cannot understand how it is that the plight of Greece and Spain has not registered on us here in the states.
My Oct condor is now under pressure again with recent market weakness; the P/L stands at -$340 with delta = +$101 and theta = +$127. The Nov position stands at a P/L of +$700 with delta = +$26 and theta = +$66.
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Have the bulls run out of steam? Or was today just a case of traders taking their profits before relaxing for the weekend? The jobs report was on everyone's mind before the open this morning, and I think it should be described as reasonably positive with 144k new jobs and the unemployment rate decreasing to 7.8%. Like much of the economic data we have been seeing for a while, it is weak, but at least moving in the right direction. SPX promptly ran to $1471 but then the bears clawed it back to close at $1461, virtually unchanged on the day. RUT lost $2 to close at $843. Trading volume decreased with 2.4 billion shares of the S&P 500; trading on the NYSE dropped 10% and trading on NASDAQ increased 3%. The VIX dropped down to 13.7% during the euphoria this morning, but then climbed back to close at 14.3%, down about 0.2 points.
When I draw the trend line on the SPX chart from early June to today, this bullish trend lines up very nicely. But now SPX is getting squeezed between the previous highs around $1465 and the trend line around $1445. When I saw the jobs report this morning, I thought that might be the impetus to break out to new highs, but that wasn't the case. I wonder what news we have in store for next week and which way this market may tip?
My Oct RUT condor stands at a P/L of +$60 with delta = +$49 and theta = +$118. My Nov iron condor at 750/760 and 910/920 stands at a P/L of +$1,100 with delta = -$0.5 and theta = +$57. That is about as delta neutral as you can get!
Enjoy the weekend. Remember to pause in your list of chores around the house and spend some quality time on what's really important in your life.
