Dr. Duke's Blog

Details

Written by Dr. Duke

Created: 23 April 2015

 The markets traded lazily this morning, but the bulls regained their strength around noon and pushed higher, with SPX briefly touching the all-time high at $2120, but it couldn't hold it, pulling back to close at $2113, up $5. RUT traded higher by $6 to $1272, but RUT didn't make it back to the highs it set last week. Volatility continues to contract with the VIX closing down 0.3 points to 12.4%. Trading volume popped up today with 2.3 billion shares of the S&P 500 stocks trading today. Trading volume rose 6% on the NYSE and increased 11% on NASDAQ.

Initial unemployment claims came in at 295k, flat with last week's 294k. Continuing unemployment claims increased by 50k to 2.33 million. New home sales dropped off from last month's annualized 543M to 481M for March.

I closed the May 1110/1120 put spreads in my May iron condor on RUT today for $0.08. That locked in a nice 17.6% gain for May and brings the Flying With The Condor™'s gains for the year to +17.1%. The June condor on RUT at 1100/1110 and 1350/1360 stood at a net gain of 11% at the close today.

I haven't seen a summary of all of the earnings announcements to date, but my perception is that the news has been better than expected. Maybe the bulls are encouraged and starting to jump back in this market.

Details

Written by Dr. Duke

Created: 22 April 2015

 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.

Details

Written by Dr. Duke

Created: 21 April 2015

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.

Details

Written by Dr. Duke

Created: 20 April 2015

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%.

Details

Written by Dr. Duke

Created: 17 April 2015

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.

Details

Written by Dr. Duke

Created: 15 April 2015

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.

Details

Written by Dr. Duke

Created: 14 April 2015

Buoyed by favorable earnings from JPM before the open and better than expected retail sales, SPX opened higher, but then fell out of bed, trading down to $2083 before recovering late in the morning. SPX managed to hang onto a modest gain of $3 into the close at $2096. RUT traded flat, closing at $1265, down about twenty cents. The VIX fell back only about 0.2 points to close at13.8%. Trading volume in the S&P 500 was unchanged at 1.8 billion shares. But trading volume was up 7% on the NYSE and was also up on NASDAQ, but only marginally at +2%.

Retail sales came in at a gain of 0.9% for March, a big improvement over February's 0.5% decline. The Producers Price Index (PPI) rose 0.2% in March, up from last month's 0.5% drop.

This market wandering is doing wonders for my condors; the May position is up 13% and the June position is already up 5% even though we still have 65 days until expiration. We were able to open the June position early because we closed April early and freed up capital.

Get your black arm bands ready for tomorrow...

Details

Written by Dr. Duke

Created: 13 April 2015

The bulls were still in charge this morning as the market opened, but they lost their "mojo" around 10 am ET, and the market just steadily traded off the rest of the day. The end result was to give back essentially all of Friday's gains. SPX closed at $2092, down $10; this is right at the $2090 support level, but really just in the middle of the larger trading range from $2040, the low from mid-March, and $2120, the high set in late February. But RUT was a somewhat different story; it traded off its intraday high at $2172, but managed to close up one dollar at $1266. Volatility was quick to react, with the VIX gaining 1.4 points, closing at 14.0%. 

There was some weak economic data out of China, suggesting a slowing of that economy, but no significant U.S. economic data was reported today.

Trading volume fell off today with 1.8 billion shares of the S&P 500 trading. Trading volume declined 6% on the NYSE, and only rose 2% on NASDAQ. Perhaps traders are awaiting the earnings announcements from J.P. Morgan and Wells Fargo tomorrow morning. So much news has been made about the ill effects of the strong dollar, that one is tempted to predict it was overkill, but we'll see. One of the problems with contemporary journalism is that original thought is rare.

Details

Written by Dr. Duke

Created: 10 April 2015

SPX made short work of the resistance at $2090 by closing for the second day above that resistance set back in December but reaffirmed several times over the past couple of weeks. SPX closed up $11 at $2102 and RUT followed suit with a close at $1265, up $6. Volatility continued to contract with the VIX dropping another half point to 12.6%. In mid-March, SPX broke out above $2090 but was stymied around $2110, so that is the next resistance to be broken before tackling new all-time highs above $2117.

Trading volume was pretty flat today with 2.0 billion shares of the S&P 500 trading; that is slightly higher than yesterday but remains below the 50 dma at 2.2B. Trading volume was down on both the NYSE (-7%) and NASDAQ (-12%).

As I explained yesterday, traders may be in a "wait and see" mode for now. Below average trading volumes seem to support that thesis.

My May iron condor on RUT stands at a net gain of 12% today and my June iron condor on RUT is up 5%.

I'm off to start my weekend of working out in the yard for the first time this year. Unlike some of you, we are just starting to see some green sprouts. I wish you all a pleasant weekend.

Details

Written by Dr. Duke

Created: 09 April 2015

I noted yesterday the apparent trading channel of $2040 to $2090 for the SPX. The bulls pushed the market higher today and SPX closed up $9 at $2091. So SPX is right at that resistance level that has been so resistant for the past few weeks. But RUT pulled back $4 to close at $1259. So I am not convinced we have seen a break-out just yet. An open and close above $2090 tomorrow would be encouraging, but the true confirmation of the bullish trend continuing would be a break-out to a new all-time high above $2117. Some of the large banks and Goldman Sachs will be announcing earnings next week. Perhaps that will give the bulls the ammo they need to push higher. We'll see.

Watching the market trade higher on increased volume would be a bullish sign - one that didn't occur today. Trading in the S&P 500 stocks was flat with yesterday at 1.9 billion shares, below the 50 dma. Trading volume was flat on the NYSE and only increased 3% on NASDAQ. Traders are not concerned about the bottom falling out anytime soon; the VIX dropped another point to 13.1% today.

The weekly unemployment claims report was a mixed bag today. Initial claims rose 14 thousand to 281 thousand, while continuing claims dropped 23 thousand to 2.3 million. No significant economic data is due out tomorrow; will it be a slow day in the markets or will it surprise us? My guess is that traders will sit on the sidelines waiting for the earnings announcements scheduled for next week.