May 22, 2017

Archives for May 2007

Short Post

No post this afternoon. I am currently working on updating the website which hopefully will not take less than a few weeks. I will try to post later tonight or possibly before the bell tomorrrow. Overbought/Oversold levels for May 31, 2007 SPY -  69.9 (neutral) DIA - 78.5 (overbought) IWM - 73.8 (overbought) QQQQ - 71.2 (overbought) GLD -  56.1 (neutral) OIH - 57.7 (neutral) We work hard to bring you our latest views, opinions and research on a daily basis. If you are a loyal reader and find our thoughts useful please show us your support by joining our newsletter service.  We currently follow 2 stock option strategies and one stock-based strategy in our investment newsletter. All of our strategies use the … [Read more...]

Intraday Reversal Impressive – Beware Over the Short-Term

The S&P (SPY) gapped down at the open only to reverse itself immediately and rally into the closing bell. Now the S&P (SPY) is in a overbought state and is directly below what has been an area of very strong overhead resistance at $153.50 or 1530 in the SPX. Watch this area closely. There is the possibility of a false breakout at this juncture. The key for the bulls is that the S&P can hold the aforementioned areas. Over the short-term a move to the upside does not look sustainable, but every dip has been a buying opportunity, so make sure you are quick enough to lock in some profits of the market affords you the short-term opportunity. The large move today did not have a profound effect on our current SPX Short Iron Condor position. … [Read more...]

Expect a Rocky Road Over the Short-Term

The trading range continues. Expect more of the same for the majority of Wednesday's trading, that is until 2:00 EST when the FOMC Minutes are released. Typically, the market is volatile immediately following the report, but the vacillation usually ends 15 minutes after the release and then a trend usually takes over until the closing bell. I expect the historical tendencies to show up again tomorrow. Currently , the major benchmarks that I follow are in a neutral state, so I do not see a defined edge at this juncture. However, I expect this to change with the FOMC Minutes tomorrow and the Unemployment Report out Friday. Be prepared for a rocky road as we enter the latter part of the week. Our SPX Short Iron Condor positions are … [Read more...]

What to expect Tuesday

Short post tonight! I apologize for the late post. I was sidetracked this afternoon for something that I thought would take minutes and of course it took hours. Murphy's Law I suppose.  Anyway, back to the market. The market rebounded today after the sharp sell-off yesterday. The advance was not much of a surprise as the bulls have used every short-term decline as an opportunity to load up. Moreover, seasonal winds were at the back of the bulls as the day prior to the Memorial Day holiday usually bullish. However, the seasonal winds quickly change direction as we move into next week. Historically, when the S&P (SPY) is higher the trading day prior to the Memorial Day weekend, the large-cap indice struggles the following week, … [Read more...]

“Sell in May and Go Away” lives up to the historical billing so far. The S&P (SPY) up a paltry 0.2% in May.

If you are a loyal reader you know that I have stated repeatedly over the last week or so that a short-term decline was imminent. All of the signs were there. First, the Dow and S&P had reached an overbought state going into a historically weak seasonal period: post options expiration. The bulls gave a valiant effort over the last three trading days, but overhead resistance coupled with the aforementioned indicators proved to be too much this time around. For the first time in what seems like months the market has actually struggled with resistance. As I stated last week, intermediate-term bearish indicators are rearing their ugly heads for the first time in months. Could today's sharp decline be the beginning of one of the most … [Read more...]

Typical Post-Expiration Weakness Coupled with Strong Overhead Resistance

The S&P (SPX) continues to struggle with overhead resistance. Today marked the third straight reversal day and could be a early warning sign of things to come. The large-cap Dow (DIA) and S&P (SPY) remain in an overbought state so short-term weakness would not come as a surprise.   My thoughts from the last few days remains the same, “a short-term reprieve looks likely this week as market performance during post-options expiration is historically weaker than normal. Couple the seasonal tendencies with an overbought market and very strong overhead resistance and you can see why we should expect to see the market struggle over the short-term (1-5 days).” Our current condor position looks very good. We were able to sell the condor spread … [Read more...]

The Song Remains the Same

My thoughts from the last few days remains the same, "a short-term reprieve looks likely this week as market performance during post-options expiration is historically weaker than normal. Couple the seasonal tendencies with an overbought market and very strong overhead resistance and you can see why we should expect to see the market struggle over the short-term (1-5 days)." I stated yesterday, "a push below Friday’s lows could potentially lead to a continued move lower. In a market where every dip has been bought a sustained sell-off could be a signal of things to come over the intermediate-term." Seasonality over the next few days is interesting. Tomorrow is actually quite bearish as the Dow, S&P and Nasdaq are only on average 38.1%, … [Read more...]

In the midst of historical post-expiration weakness

The first day of the June option expiration cycle was greeted with the S&P surpassing its record close for the first time in over 7 years. The market moved sharply higher into the noon hour only to sell off sharply during the final hour of trading. As I stated last week, a short-term reprieve looks likely this week as market performance during post-options expiration is historically weaker than normal. Couple the seasonal tendencies with an overbought market and very strong overhead resistance and you can see why we should expect to see the market struggle over the short-term (1-5 days). I am starting to see several indicators elude to intermediate-term weakness ahead. I will go over some of these tomorrow. Also, as we move deeper into … [Read more...]

Dow is “Very Overbought” Ahead of Historical Post-Expiration Weakness

Not much has changed since my post on Thursday. I stated yesterday that if the large-cap Dow and S&P "can somehow manage to stay in an “overbought” state or preferably moving back into a “very overbought” state tomorrow then a short-term reprieve in the Dow (DIA) looks likely during the early past of next week. Remember, historically if the market is overbought as the market moves into the week of post options expiration a decent short opportunity  is usually found. Our SPX Short Iron Condor strategy settled within our 140 point range today. The strategy reaped a 7.5% profit for the expiration period. Yesterday I presented several reasons why a short iron condor strategy looks attractive during the "sell in May and go away" period. I … [Read more...]

Expect to see a trading range with slight expansion as the market heads into the summer doldrums

On 5/3 I stated "bullish seasonal tendencies (end/beginning of the month) ended today as the market officially moves into the “sell in May and go away” period". On 5/4 the S&P (SPY) opened at $150.75. Today the S&P (SPY) closed the day at $151.30, up $.55 or .36% since the old Wall Street adage began. As you can see from the paltry gains above the S&P has found a comfortable trading range over the past few weeks. I would like to go back to some statistics that I referenced early last week. I looked at the historical average return of the S&P on a monthly basis over the last 60 years to see if actually backed up typical range-bound summer months also known as the "summer doldrums". Jan. - 1.4% Feb. - (-0.2%) Mar. - … [Read more...]