- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1674
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.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1821
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.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1635
Trading volume declined as the markets largely traded sideways today. SPX closed up $1 at $1446 and RUT closed unchanged at $841. Trading volume on the S&P 500 dropped to 2.4 billion shares, beneath the 50 dma. Trading on the NYSE dropped 7% and trading volume declined 11% on NASDAQ. VIX ran up to 16.5% today, but then retreated to close at 15.7%, down almost one percent.
We didn't have any significant economic news today. But tomorrow brings the ADP private employment report, and many traders will use that as a forecast of Friday's non-farm payrolls report. Tomorrow also brings the ISM services index; it will be interesting to see if it turned more positive as its manufacturing counterpart did yesterday.
My Oct condor position stands at a net loss of -$400 with delta = -$56 and theta = +$100. The adjustments have chewed up much of the potential gains for this position; the maximum gain at this point would be around 7%.
The bulls and bears appear to roughly balanced in power; news and economic data may tip the markets either way. There seems to be a strong case for either side of this argument.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1699
The markets continue to basically chop sideways, but today it was on increased volume. SPX traded up $5 to close at $1451 while RUT lost $2 to close at $839. RUT has been running right along the support level at $840 for the past week; this was the resistance level held until the Bernanke announcement on 9/13. VIX dropped a bit to 15.4%, so that measure of fear is relatively complacent. Trading volume on the S&P 500 increased to 2.7 billion shares and trading increased 7% on the NYSE and increased 8% on NASDAQ.
The ADP employment report came in at 162 thousand new jobs and that boosted the market this morning, but the indexes lost much of that in the afternoon. The ISM Services index also buoyed traders with a increase from 53.7 to 55.1. An interesting tidbit was in the details of the ISM report: a decline of 2.7% in employment in the services industries.
Another drag on the market was HP warning of decreasing revenues and earnings. It seems like several blue chip companies have now warned about the upcoming earnings announcement cycle - FedEx started the trend a few weeks ago. I would argue that HP is a special case of a declining company, but FedEx is harder to ignore.
My Oct iron condor at 790/800 and 900/910 stands at a P/L of -$420 with delta = +$67 and theta = +$110. Chances are we won't see much market action tomorrow as traders wait for the jobs report Friday. But that assumes everything in Europe remains quiet.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1745
The ISM manufacturing index surprised analysts this morning with a reading of 51.5 for September, the first sign of expansion after three months of contraction. This prompted a big market rally with SPX surging as high as $1457 before the bears pulled it back down. SPX closed at $1444, up $4 and RUT gained $3 to close at $840. VIX increased 0.6 points to 16.3%; the VIX dropped as low as 15.1 this morning before the bears came back to play.
The SPX candlestick looks like a shooting star, but the body is a bit large for the purist. But the trading activity depicted by that candlestick isn't encouraging. The bulls drive the market quite a bit higher, but then the bears are able to pull the market almost all the way back - not good. Trading volume was basically flat with 2.6 billion shares of the S&P 500 trading; trading volume declined 10% on the NYSE and dropped 4% on NASDAQ.
Construction spending dropped 0.6% in August. Maybe we got ahead of ourselves with the ISM report; after all, it wasn't long ago we were given the anemic 1.3% GDP growth for the second quarter. Today's trading is just one more indicator of the extreme volatility of this market. Imagine if we get a truly bad bit of news...
My Oct condor stands at a P/L of -$520 with delta = +$65 and theta = +$83. Remember: we are working our way toward another jobs report Friday.
