Range-bound trading continues to dominate

June 29, 2007

It was another widely vacillating day for the market, although the end result was the same as yesterday; flat. The struggle over who controls the 50-day moving average continues to dominate the market, but for how long? The market remains in a sideways trend and by the looks of it, could for several months.

As I have stated in the recent past, this should prove advantageous to those who employ premium selling strategies, particularly if the the VIX (investor’s fear gage) stays above 15. It currently stands at 16.23, well-above the 200-day moving average of 12.40. One thing to note, as the VIX rises, the more options traders prepare for choppy waters ahead. So be prepared for vacillation, although it should be contained within the range (with slight expansion as the summer progresses) the market has established since the onset of May.

While our ETF Extremes strategy has been dormant (we are patiently waiting for a signal) our SPX Short Iron Condor has benefited greatly from the rising volatility and the range-bound price action of the market. Now that the VIX is above 15, we are able to widen our chosen range which increases our likelihood of success from expiration cycle to expiration cycle. As it stands, the market is a smidge above the midpoint of our 160 range with only three weeks left until expiration. It has been like this since the May expiration cycle began. We stand to make over 13% in the strategy if the market falls within our 160 point range.

According to the “Stock Trader’s Almanac”, the first trading day in July the dow has been up 14 out of the last 17. Furthermore since 1950, the Dow has finished higher over 76% of the time. Enjoy the weekend!

Overbought/Oversold levels for June 29, 2007

SPY - 48.3 (neutral)
DIA - 49.1 (neutral)
IWM - 47.9 (neutral)
QQQQ - 59.8 (neutral)
GLD - 47.7 (neutral)
OIH - 45.4 - (neutral)

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Filed Under Crowder's Daily Market Commentary ·

Post-Fed, Where Now?

June 28, 2007

As expected, Fed day price action kept in line with the recent past. The day started off range-bound, followed by a decent advance, then chopped around until the Fed release. Once 2:15 EST hit(Fed release), the market vacillated widely, but in the end the price action was mute as market closed the day flat. Nothing gained, nothing lost.

Now the market is firmly entrenched in a neutral state. However, our shortest-term indicators are in an overbought state so I would expect to see a decline, or at least an upside struggle, over the next few trading sessions. The S&P’s 50-day moving average is still in play and the bulls and bears are playing a mean game of tug of war. I think this time around the bears are favored.

Thank you Mr. Volatility!

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Overbought/Oversold levels for June 27, 2007

SPY - 47.8 (neutral)
DIA - 47.3 (neutral)
IWM - 55.3 (neutral)
QQQQ - 57.3 (neutral)
GLD - 47.4 (neutral)
OIH - 43.2 - (neutral)

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Filed Under Crowder's Daily Market Commentary ·

Thank you Mr. Volatility!

June 27, 2007

The market rallied today ahead of the FOMC policy meeting which I found to be quite surprising. Yes, the overall market was oversold, but given the market-moving tendency of Fed meetings I expected to see the market trade sideways until the big event. Typically, that is what occurs, however, as we all know the market has a mind of its own.

shortest-term measures are in an overbought state so a spike higher tomorrow would most likely fail.

Our condor positions (which were established Monday) are comfortably within our 160 point range. That is right 160 points! We are ecstatic with the position and with the expected returns of over 13% over a four week period. Thank you Mr. Volatility!

Overbought/Oversold levels for June 27, 2007

SPY - 48.0 (neutral)
DIA - 47.7 (neutral)
IWM - 57.3 (neutral)
QQQQ - 58.0 (neutral)
GLD - 26.5 (oversold)
OIH - 52.9 - (neutral)

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www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

In an Oversold State

June 26, 2007

The large-cap benchmarks are now in an oversold state and I expect to see a bounce over the next few trading days. However, the upcoming FOMC policy statement on Thursday at 2:15 EST could limit any upside attempt. In the recent past, the market has struggled ahead of a Fed announcement, especially after a sharp move occurred. I would expect to see similar price action this time around. Also, remember that the trend established immediately following the announcement is usually reversed within the next few days. So be aware of false breakouts. Ideally, I would like to see the market sell-off hard immediately following the Fed meeting and as a result move into a “very oversold” state. If this occurs a signal in our ETF is all but certain. Our indicators are very close to a signal.

Overbought/Oversold levels for June 26, 2007

SPY - 24.3 (oversold)
DIA - 26.4 (oversold)
IWM - 28.6 (oversold)
QQQQ - 33.0 (neutral)
GLD - 24.5 (oversold)
OIH - 29.7 - (oversold)

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www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Great premium and nearing oversold

June 25, 2007

The S&P tested the recent lows again today and this time the major benchmark was able to hold below the 50-day moving average. This could be key going forward as the 50-day could act as overhead resistance over the short-term.

The major benchmarks that we follow are nearing an oversold state, which should give us a signal in the ETF Extremes portfolio. Although, as my loyal readers know by now the oversold/overbought indicator is just one of the many indicators that make up the ETF Extremes strategy. It has been awhile since our last trade and with a 92% win ratio we look forward to any opportunity that the strategy brings.

As for our SPX Short Iron Condor, we were able to bring in very good premium today while increasing our range significantly. We now have a 160 point range for the underlying SPX to vacillate in over the next four weeks. The underlying SPX has to move over 5.3% up/down over the next four weeks before we are in jeopardy of taking a loss. We certainly like the odds on this trade and if the underlying SPX finishes within our chosen range the strategy stands to make 13.5% over the next four weeks (options expiration).

Overbought/Oversold levels for June 25, 2007

SPY - 33.1 (neutral)
DIA - 33.1 (neutral)
IWM - 36.8 (neutral)
QQQQ - 40.2 (neutral)
GLD - 38.1 (neutral)
OIH - 50.2 - (neutral)

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Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Another Test Of the 50-Day and Jump in VIX Leads to Wonderful Premium Opportunities

June 22, 2007

would prefer to see an oversold reading in the S&P before considering a short-term (1-5 day) long position.

As for our Iron Condor strategy. It looks as though sitting on the sidelines this past week was a very wise decision. As I expected, the sharp decline came this week and resulted in an increase in the VIX. The increase in the VIX has led a nice jump in premium so our expected trade in the SPX Short Iron Condor strategy on Monday should allow our gains to exceed 10% over the next four weeks (July expiration) while increasing our range from 140 points to 160-180 points. That is certainly wonderful news for the Condor strategy. I will be sending out several proposed trades early Saturday to all of our paid subscribers. Of course, as always, only subscribers to the SPX Short Iron Condor strategy will receive the real-time alert on Monday.

Overbought/Oversold levels for June 22, 2007

SPY - 38.3 (neutral)
DIA - 36.2 (neutral)
IWM - 42.3 (neutral)
QQQQ - 46.1 (neutral)
GLD - 47.3 (neutral)
OIH - 68.7 - (neutral)

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Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Range bound trading persists. Our condors should benefit greatly as a result.

June 21, 2007

Range -bound trading persists in this market and by the look of it we should expect more of the same going forward. The indices we follow are firmly situated in a neutral state. My hope was that we could see the market, more specifically the S&P, move into an overbought state. We were close to hitting that point today, but the 50-day moving average once again acted as a strong area of support.

The range is slowly being established and I expect as the summer progresses there will be some wonderful opportunities to fade range extremes. I will discuss in further detail tomorrow.

In regards to our SPX Short Iron Condor strategy we should be in very good shape next week with the recent market sell-off. I stated last week that “the July Expiration cycle, it is a five week cycle, so we have decided not to establish a position next week as we prefer to only go out a maximum of four weeks. This could prove to be advantageous if the market does indeed move lower next week as a move lower will increase the VIX (volatility measure) and will allow us to bring in more premium. We are perfectly happy with gains ranging from 6-10% over the course of four weeks.”

The VIX is now above 14%, which if it holds, should bode well for the condor strategy. Typically the higher the VIX the higher the premium. The higher the premium the higher the return. Hopefully, we see 15% by the time we place our trade Monday.

Overbought/Oversold levels for June 21, 2007

SPY - 50.9 (neutral)
DIA - 52.0 (neutral)
IWM - 50.4 (neutral)
QQQQ - 62.8 (neutral)
GLD - 40.0 (neutral)
OIH - 66.4 - (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Short-term Bears Finally Step Up

June 20, 2007

As expected, the short-term bearish indicators that had trickled into the market over the past 5 trading days finally proved too much for the market to overcome. The market witnessed a steady decline throughout the day and managed to break a few key support levels. The 1515 on the S&P is the most important and should be closely watched over the next few days. According to our overbought/oversold indicators there is still a bit more room for the indices to move even lower and I would not be surprised to see further declines come to fruition. However, each time the market has hit an oversold reading it has moved sharply higher as a result and I expect to see the same type of price action this time around as well.

The market is still in the “sell in may and go away” range and should contniue to do so with slight expansion as the summer progresses. As I have stated over the past few months this should bode well for our SPX Short Iron Condor strategy. We have yet to place our condor position for this expiration cycle (as we prefer to only go out a max of four weeks) so if you wish to join the condor service you have until this Sunday.

Overbought/Oversold levels for June 20, 2007

SPY - 41.9 (neutral)
DIA - 44.9 (neutral)
IWM - 41.7 (neutral)
QQQQ - 48.6 (overbought)
GLD - 43.4 (neutral)
OIH - 53.0 - (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Same news, different day

June 19, 2007

Overbought/Oversold levels for June 19, 2007

SPY - 66.9 (neutral)
DIA - 63.3 (neutral)
IWM - 66.0 (neutral)
QQQQ - 71.5 (overbought)
GLD - 64.8 (neutral)
OIH - 79.1 - (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Short-term outlook remains bearish

June 18, 2007

The short-term bearish signs continue to pile up. Last week I mentioned several short-term bearish tendencies as the market moved into post-expiration.

The week after June Triple-Witching has seen the Dow lower 15 out of the last 17 years.
Strong resistance overhead (1540 in SPX)
Historical tendency for post-expiration weakness

Now we have another to add to the list.

The market traded in a fairly tight range during the latter part of last week and continued the trend today. Today the S&P (SPX) experienced one of the tightest trading ranges of the year. Going forward, a period of narrow, range-bound days, similar to the last three trading days, does not bode well for the market over the short-term.

It would be nice to see an overbought confirmation (to go along with the other bearish signs), at least intraday, in the S&P to increase the bearish edge. A test of the 1540 area should bring the underlying SPY close to an overbought area and could make for a nice short play. However, a sustained move above 1540 could negate any meaningful move to the downside. The S&P needs to move below 1530 and hold the move before for a short-term correction can be considered.

Certainly the S&P feels pent up in this area (1530-1540) and the longer it trades in a range the sharper the move once the range is broken. My guess is by the close Wednesday we will see the market lower. Wednesday of this week brings a seasonally bearish day with the S&P trading roughly 38% higher historically. The Dow (DIA) is even worse at approximately 33%. Remember, we are only speaking of a short-term move (1-5) days.

Overbought/Oversold levels for June 18, 2007