July 21, 2017

Archives for June 2007

Another Successful Expiration! Strong Resistance Overhead Coupled With Seasonal Weakness Next Week Could Lead To A Short-Term Breather.

Expiration week is finally over and the bulls have managed to once again push the market higher. Since the lows established in July 2006 the S&P (SPY) has been higher during expiration week 11 out of 12 times. Even with the bullish sentiment this week I still expect to see weakness over the short-term (1-5 days). As I have stated over the last few days  I do expect to see another test to the downside next week. Maybe, not to the recent lows, but at least a decent move to the downside particularly if the market can reach an overbought state going into the week of post expiration. Also, the week after June Triple-Witching has seen the Dow lower 15 out of the last 17 years. With strong resistance overhead (1540 in SPX) coupled with seasonal … [Read more...]

Post Expiration Blues?

I hate to repeat myself, but in this case I think the information is well worth repeating. Earlier in the week I mentioned that “since the low established in July 2006 the S&P (SPY) has been higher during expiration week 10 out of 11 times. If the market lives up to its recent historical precedent I would expect to see the historically weak period of post options expiration kick in.” Barring a major setback in the upcoming inflation reports over the next two days the market should be able to continue its winning ways again this week. However, I do expect to see another test to the downside next week. Maybe, not to the recent lows, but at least a decent move to the downside particularly if the market can reach an overbought state going … [Read more...]

Week after June Triple-Witching Lower 15 out of last 17 years

Earlier in the week I mentioned that “since the low established in July 2006 the S&P (SPY) has been higher during expiration week 10 out of 11 times. If the market lives up to its recent historical precedent I would expect to see the historically weak period of post options expiration kick in.” Barring a major setback in the upcoming inflation reports over the next two days the market should be able to continue its winning ways again this week. However, I do expect to see another test to the downside next week. Maybe, not to the recent lows, but at least a decent move to the downside particularly if the market can reach an overbought state going into the week of post expiration. Also, the week after June Triple-Witching has seen the Dow … [Read more...]

Watch Out Below and Range-Bound Summer Bodes Well For Our Short Iron Condor Strategy

The market continued the sell-off today and is now approaching Friday's low. I expect to see the S&P (SPY) touch 149 over the next few days which, if touched, should bring our short-term indicators into a very oversold state. If this does occur I would expect to see a bounce off of this support level although I am not so certain the market will react like it did during the last correction on February 27th. A move below Friday’s low and the market could be witness to a wave of selling. During the last correction (Feb. 27th) the market moved sharply lower, bounced, tested the lows again and then began the move to new highs. This is typical in a bullish market so a break of this trend could be a warning sign of things to come. However, it … [Read more...]

It feels different this time

The market (S&P) shot higher today and then muddled around the 1510 area. Overhead resistance looks strong at the 1515-1518 area and another push to that area should make for a decent short-term fade. The late day move below 1510 could be a sign of things to come over the short-term (1-5 days). I would not be surprised to see a test of Friday's lows by the middle of next week. As I stated last week "since the low established in July 2006 the S&P (SPY) has been higher during expiration week 10 out of 11 times. If the market lives up to its recent historical precedent I would expect to see the historically weak period of post options expiration kick in." A move below Friday's low and the market could be witness to a wave of selling. … [Read more...]

What to expect during the week of options expiration and more…

After three days of selling the bulls decided that it was time to step back into the market. After reaching oversold territory yesterday all of the major benchmarks bounced today and are now situated firmly in a neutral state. It took a while for the market to get going today, but around 1:30 EST the bulls appeared and took back roughly half of the decline yesterday. The next substantial move should give a clear signal as to where the market is headed over the intermediate-term. Clearly, the bulls and bears are in a tug of war and probably will for months. As I have stated over the past few weeks, I expect to see the major indices carve out a trading range and then bounce within that range as the summer progresses. As for the … [Read more...]

Back into an oversold state. Jump in VIX could make for some excellent premium plays.

All of the major benchmarks are now in an oversold state. The last time this situation occurred was during the February 27 correction and we all know what happened then. Given all of the indicators that I have given over the past few weeks I am not so certain that we are going to have a similar reaction this time around. The intermediate-term trend seems to be swaying towards the bearish camp. I am a little hesitant at this juncture to play a short-term move. Our proprietary measures are nearing an extreme in the ETF Extremes strategy so there could be a signal there in the coming days. Our proprietary measures have been accurate roughly 92% of the time so, as always, we will patiently wait for the market to come to us. It has served us … [Read more...]

What about a neutral based strategy now? The “Summer Doldrums” are typically the time to at least consider the notion.

Could this be the time to utilize a neutral based strategy such as an Iron Condor strategy? After a rough patch during the March and April options expiration periods, May and now the June option expiration period have turned things around. Is it a coincidence that the seasonal favorite and old Wall Street adage kicked in right around this time.   How about the "sell in May and go away" theory now? I know, I have mentioned it repeatedly over the past few weeks, but for good reason. After the huge rally that the market has experienced over the last several months there is certainly no better time for a month long consolidation or trading range than the period known as the "Summer Doldrums".   The adage typically begins on the fourth … [Read more...]

Summer Doldrums? Watch the 1530 area in the S&P.

Summer Doldrums? Watch the 1530 area in the S&P. I stated yesterday that the market would most likely experience a short-term reprieve over the next few trading days and that came to fruition today. When all of our benchmarks (including Oil (OIH) and Gold (GLD)) are in an overbought state the likelihood of a sustained move to the upside is low. Unfortunately, we did not get the signal necessary to place a trade in our ETF Extremes strategy. We were extremely close, but remained discipline. Our approach has led to 13 out of 14 successful trades and a cumulative return that exceeds 215% (add the individual trade return on our performance page). Obviously, there are no complaints here with that type of overall performance. A signal does … [Read more...]

Unsustainable gains ahead?

Unsustainable gains ahead? For the third day the market traded in a fairly tight range. There seems to be tug of war around the 153.50 area of SPY. Currently the bulls have the edge, but that could change quickly. Our short-term indicators are nearing an extreme as seen below. We haven't seen all of the benchmarks (including OIH and GLD) line up like this in quite some time. In almost every case, the short-term (1-5 days) looked bleak as the S&P struggled to move higher over the next few days. Watch to see how the market reacts around the 153.50 area in SPY and 1530 in SPX. A move below this could lead to a decent leg lower. Premium continues to get sucked out of our SPX Short Iron Condor position. The position is currently … [Read more...]