SPX back near Tuesday’s low. VIX back near Tuesday’s high.

March 2, 2007

The near Tuesday’s low today. The push lower moved the major benchmarks into “very oversold” territory” which in most cases creates a good opportunity for a short-term play. However, our shortest-term indicators still have a bit of room left on the downside which makes me somewhat hesitant to step in at this juncture. Keep an eye on the 1385-1390 in the SPX. How the market reacts to this level should give us a decent indication where this market is headed over the short to intermediate-term.

The VIX is back up near 19, which was the high on Tuesday. The difference this time around is that the reading is not artificially inflated. One thing is for certain, with volatility back options sellers should be happy. Did everyone actually think premiums were going to remain at historical lows forever? Our SPX Short Iron Condor strategy should be able to get much better prices this upcoming option cycle. Furthermore, I should be able to increase the range size which will increase the probability of expiring within our chosen range.

Again, I am patiently sitting on my hands. My hope is that we have one more oversold flush which will bring our shortest-term oversold indicators back to a level where the probability of a short-term bounce is very likely.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for March 2, 2007

SPY - 18.0 (very oversold)
DIA - 16.5 (very oversold)
IWM - 17.8 (very oversold)
QQQQ - 16.2 (very oversold)
OIH - 33.3 (neutral)
GLD - 27.1 (oversold)

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Macey Returns! Patience is the key!

March 1, 2007

I am going to keep this very short tonight as my daughter of 6 months, Macey, returns from her first extended trip away from dad.

The market is currently working through the last three days of crazy trading. I stated this week would be pivotal for the market and indeed my thoughts have come true. If the market can hold Tuesday’s low (I am watching SPX) then I think we could see a decent buying opportunity over the next few days. Typically, the longer we stay in oversold territory the larger the directional move to the upside so I will be watching for that over the coming days. A short-term play looks possible, but I will remain patient until the ideal situation presents itself. There is no need to force a trade at this point especially on a leveraged options trade. I apologize for the lack of info tonight and the unusually short post, but as I stated earlier I have a little girl to attend to. Have a wonderful night!

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for March 1, 2007