Register for a FREE 2-hour workshop!
Click Here
Optionetics Commentary

Closing Wrap-Up, July 2


Change text size

MOST POPULAR ARTICLES

SPONSORED LINKS

Jody Osborne, Optionetics.com
July 2, 2009

Jobs data leaves traders in a selling mood Thursday with the major market indices seeing large declines. The Dow ($INDU) fell 223.32 points, or 2.63 percent, to close at 8,280.74. The S&P 500 ($SPX) lost 26.91 points, or 2.91 percent, to a level of 896.42. The Nasdaq ($COMPQ) gave up 49.20 points, or 2.67 percent, to finish the session at 1,796. 52. Market breadth was negative by a 5-to-24 and 5-to-23 margin on the Big Board and Naz respectively. Volume was on the light side heading into the three day weekend with the NYSE trading 733 million shares and the Naz turning over 1.96 billion shares.

The June employment data was a disappointment with nonfarm payrolls falling by 467,000 when a decline of 365,000 was anticipated. The unemployment rate rose a tenth to 9.5 percent, which was a tenth below estimates, but this did little to assuage worries about the jobs market. The bulls have been able to keep a majority of their gains since March's lows on the view we are seeing green shoots in the economy, but this data took a toll. The fact is that traders are starting to want to see actual improvement in the economy, not just less bad news. In related news, weekly jobless claims fell by 16,000 to a level of 614,000.

The disappointing jobs data did push commodity prices lower with crude falling $2.89 a barrel, or 4.17 percent, to close the session at $66.42. This also put downward pressure on oil producers with Chevron (CVX) down 3.16 percent to $64.42 and ExxonMobil (XOM) off 2.93 percent to $68.49. Overall, the NYSE Oil Index ($XOI) lost 3.47 percent to 890.43. This index has a 52-week range between 744.56 and 1,535.39, showing just how volatile the sector has been.

For the week, the Dow gave up 1.88 percent with the SPX down 2.44 percent and the Naz off 2.27 percent. The losses for the SPX this week pushed the index into negative territory for the week, joining the Dow. In fact, the SPX also closed below support at the 900 level. Another reason for concern is that the CBOE Market Volatility Index ($VIX) is not showing much fear. The VIX rose just 6 percent Thursday despite a large loss for the SPX. This index sits below 28 although it hit a high near 90 last October. When traders aren't showing fear, it can set up further declines. Normally, stocks will climb a wall of worry, but fear is not rising much despite declines the past three weeks.

Optionetics.com ~ Your Options Education Site


Visit Jody's Forum
  

Recent Articles by Jody Osborne, Optionetics.com

© Copyright 1995-2009 Optionetics. All rights reserved. This material is for personal use only. Republication and re-dissemination, including posting to newsgroups, is expressly prohibited without the prior written consent of Optionetics. Optionetics is a registered trademark of Optionetics, Inc.
Optionetics, Inc. and optionsXpress, Inc. are affiliated companies under common ownership of optionsXpress Holdings, Inc. Optionetics and its affiliates, officers, employees, independent contractors, and former owners may receive compensation in connection with marketing efforts, may not be registered as a Broker-Dealer, Investment Adviser, with any state, or otherwise, and their materials, products and services may not be reviewed and/or approved. Further information is available here (http://www.optionetics.com/about/legal.asp). Optionetics.com is an educational portal of optionsXpress Holdings, Inc., providing content for educational and informational purposes only. optionsXpress Holdings, Inc. is not a broker/dealer. Investors need a broker to trade options, and must meet certain requirements. All securities, futures, and investments are offered to self-directed investors by optionsXpress, Inc. Member FINRA, SIPC, CBOE, ISE, BOX, ArcaEx, PHLX and NFA. All prices in USD unless noted otherwise. Copyright © 2009 optionsXpress Holdings, Inc.