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Mid-week market recap: S&P 500 makes new high on Apple

S&P 500 makes new high on Apple
S&P 500 makes new high on Apple

For the mid-week ending July 23, 2014, the S&P 500 made a new record high as Apple posts large gain after reporting better than expected earnings. Earnings season has been very good with many companies reporting this week.

The S&P 500 rose 0.18 percent today as better than expected earnings pushed Apple stock up 2.61 percent; the surge in Apple is the highest since 2012. This occurred as the Dow dropped -0.16 percent; pulled down by Boeing's stock dropping -2.34 percent (despite better than expected earnings).

Earnings season has gotten off to a strong start. With over a fifth of the S&P companies reporting, profits are up 8.1 percent, with revenues up 3.6 percent. This is far better that the results of the first quarter.

This situation in Iraq is not improving. After a suicide bombing in Baghdad yesterday (ISIS claimed responsibility), Iraq's parliament convened to vote for a new president. 31 people were killed and 58 people wounded as a bomb laden car exploded at a checkpoint near a Shiite shrine.

In Ukraine tensions mount as two Ukrainian fighter jets were shot down yesterday over separatist-held territory. U.S. and Ukrainian officials claim that Russian weapons continue to cross the border. This would indicate that Russian President Vladimir Putin was not impacted by world opinion over the tragic downing of the Malaysian airline, and will likely continue his pursuit to destabilize Ukraine. EU diplomats will meet tomorrow to determine new targets for sanctions.

With continued good earnings reports and little response to geopolitical events, we expect the markets to continue to rise, and volatility to drop. If earnings continue to beat expectations, we can expect continued new highs to be reached.

For option traders, place Put credit spreads at 1.5 standard deviations. The expected price of the SPX at the close on Friday will fall within 1953-2021 (or 2 standard deviations).

For more information about options, see the 'Suggested by the author' links below.

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