Record-high territory again; now what?
A surprisingly good employment report sent the broad markets surging into the close of the trading week. The monthly jobs report indicated that the US added 287,000 new jobs in June, much higher than the 170,000 expected. This represented the largest increase since last Fall. The unemployment rate rose from 4.7% to 4.9%, suggesting that more people entered the labor force.
This better-than-expected news sent the market soaring; the benchmark index SPX rose 31.93 points to close at 2129.83, +1.53%. This gain represented 1.3% for the week. SPX is now just a couple of points from the all-time high reached last July of 2132.82.
SPX one year month chart
SPX has now cleared what was a major resistance level from 2100 - 2120, so it remains to be seen if the rally will continue into next week. With a move as big as Friday, there is bound to be some retracement before another leg higher. That same 2100 - 2120 that was resistance could provide some support when/if that retracement should occur. Only time will tell if Friday's breakout will hold.
The chart for the volatility index VIX is just as dramatic as SPX; the "fear" index closed at 13.20 yesterday, down 1.56 points or 10.57%. It is now significantly below the historic average of 20, and it seems like lightyears from last August's spike to the 12 month high of 53.29.
VIX one year month chart
We do not have any open positions on this weekend; SPX was out of entry range for the weekly Iron Condor so we are holding cash as our position. Hopefully the summer doldrums will settle in next week, and we can enter a new weekly trade next Friday.
Next week's economic news is summarized below:
8:30 am Import & Export Prices
10:30 am EIA Petroleum Status Report
2:00 pm Beige Book
8:30 am Jobless Claims
8:30 am Producer Price Index
8:30 am Consumer Price Index
8:30 am Retail Sales
8:30 am Empire State Manufacturing Index
9:15 am Industrial Production
10:00 am Business Inventories
10:00 am Consumer Sentiment
Next week is the planned entry for the SPY August monthly Iron Condor. Monday will be 39 days to expiration, so we will look to enter the position sometime next week depending on overall market conditions and available credit.
For those unfamiliar with the strategies we trade, the trade management guidelines for all the Couch Potato Trader plays were most recently published on August 20, 2015, and can be found here:
Link to Articles
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,