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

June 15, 2007

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 weakness next week I do expect to see the market take a breather over the short-term.

This should bode well for our ETF Extremes strategy. With the spike higher this morning we attempted to place a trade, however, once we place our order the underlying SPY quickly moved away from our target price. With the market trading in a fairly tight range we decided to keep the order open in hopes of being filled later in the day. Unfortunately, SPY did not move higher and we were forced to cancel our order.

”

The June Expiration cycle also saw a 9.2% gain in our SPX Short Iron Condor strategy. Not a bad return for a four week period. Even with the recent volatility over the past few weeks our short strikes were never in jeopardy. Since the April Expiration cycle we have increased our range from 100 points to 140 points. With the SPX currently trading at 1533 the S&P would have to move up/down 4.6% over a four week period for our short strikes to be in jeopardy. The probability of such a move is low.

As for 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. I will talk about this further in our newsletter/expiration report out this weekend (for paid subscribers only).

In the report I will also discuss the upcoming Black Gold strategy which uses the underlying OIH and GLD and is based on the indicators used in our ETF Extremes strategy. We will be following the progress of this strategy over the next three months in our newsletter (subscribers only).

Overbought/Oversold levels for June 15, 2007

SPY - 62.1 (neutral)
DIA - 65.8 (neutral)
IWM - 66.4 (neutral)
QQQQ - 70.7 (neutral)
GLD - 48.6 (neutral)
OIH - 75.1 (overbought)

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 major benchmarks as the underlying. Furthermore, you will receive two free months of our investment newsletter when you purchase our White Paper. Check it out!

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Post Expiration Blues?

June 14, 2007

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 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.

The market has indeed moved higher and is moving ever closer to an overbought state., the S&P (SPY) has moved higher without dipping into negative territory once over the last two days which is often a negative over the short-term. Tomorrow is options expiration so we could see some volatility early. If the market is able to sustain the recent gains tomorrow I would expect to see a signal in the ETF possibly tomorrow or Monday. As always we will keep our loyal subscribers abreast of the situation

With European options settling at the open tomorrow our SPX Short IRon Condors look to be profitable once again with over a 9% profit this month. With the July Expiration lasting five weeks we will not be establishing positions next week. We like to only go out four weeks so we will wait until the following week. 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.

Overbought/Oversold levels for June 14, 2007

SPY - 60.6 (neutral)
DIA - 61.9 (neutral)
IWM - 56.4 (oversold)
QQQQ - 63.0 (neutral)
GLD - 41.6 (neutral)
OIH - 70.2 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

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

June 13, 2007

Filed Under Crowder's Daily Market Commentary ·

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

June 12, 2007

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 is June and if we do see a push higher I would not expect the move upwards to be nearly as fast as last time. As my loyal readers know, I expect to see a trading range over the summer months and firmly believe in the “sell in May and go away” theory particularly this year.”

Our SPX Short Iron Condor strategy looks like it will profitable once again this expiration cycle. With only two days (and the open Friday) left we are comfortably situated near the middle of our 140 point range. While the market has tumbled, we should make roughly 9% for the June Cycle. Not bad. If the range bound market continues or if it doesn’t move sharply in either direction our Condor Spread Strategy should do very well over the period known as the ”summer doldrums”.

If you would like to know more about how the intricacies of how we trade our Condor strategy please refer to our White Paper. With the purchase you will receive two free months of our newsletter.

Overbought/Oversold levels for June 12, 2007

SPY - 32.6 (neutral)
DIA - 31.5 (neutral)
IWM - 29.0 (oversold)
QQQQ - 37.2 (neutral)
GLD - 28.6 (oversold)
OIH - 40.2 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

It feels different this time

June 11, 2007

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.”

Overbought/Oversold levels for June 11, 2007

SPY - 44.7 (neutral)
DIA - 43.8 (neutral)
IWM - 44.0 (neutral)
QQQQ - 45.0 (neutral)
GLD - 36.0 (neutral)
OIH - 53.2 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

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

June 8, 2007

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 short-term, options expiration is next week so be prepared for some volatility. 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.

Even with the move today our ETF Extremes is still close to a signal. My guess is that a signal will be triggered within the next 1-7 trading days. It has been several weeks since our last signal, but this is not surprising as we have seen droughts like this before in the strategy. Opportunities are made up easier than losses so we will never force a trade due to lack of a lack of signals and with a cumulative return (add the trade profit/loss on the performance page) of 130.7% since Jan. 2006 why would we. If you,let a few pass you by don’t dwell on what could have been. There will always be more opportunities around the corner. Remember, this is a marathon not a sprint.

This is not a get rich quick strategy, but rather a long-term approach to options trading/investing that should continue to handily beat the overall. Yes, there are short-term plays that can make a huge gains over the short-term,but as any professional options trader will tell you most, if not all, blow-up in due time.

This is one of the frustrating aspects of my newsletter service. In the options world, individuals interested in newsletters become disillusioned by the outlandish gains that are reported without fully understanding all aspects of options trading. Many think the more you trade the better. The more action, the more exciting. It makes sense, but unfortunately, it is not how one is able to sustain themselves in the options arena for a long-period of time.

Our theory is less is more and our performance speaks for itself. We teach sound capital preservation and money management techniques coupled with a disciplined strategy. This does not mean that our strategies are the holy grail. Let me be frank, that does not exist. We are realists. Many think that this the crutch to our approach. However, I have to disagree wholeheartedly.

When I began this newsletter my goal was to take a boutique approach. I wanted to teach people effective strategies that they could use for the long-term. I look at our strategies like an individual security. Every strategy, whatever it may be, has its strengths and weaknesses so why not diversify a basket of strategies, much like a hedge fund. Putting your eggs in one basket, particularly in a leveraged investment is a risky endeavor and in my opinion an irresponsible way to manage your hard earned money.

As I stated in the June 1 newsletter: “one thing we do know for certain is that we have found a rare, unique, and concrete opportunity that makes the world of sense to us and we trade it to make gains over the long-term and the long-term is what matters”.

Overbought/Oversold levels for June 8, 2007

SPY - 42.0 (neutral)
DIA - 41.9 (neutral)
IWM - 43.6 (neutral)
QQQQ - 47.6 (neutral)
GLD - 23.3 (neutral)
OIH - 39.1 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

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

June 7, 2007

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 well since the strategy began.

One of the issues with tomorrow is that on a seasonal basis it is very bearish with the S&P finishing higher only 28.6% of the time. Next week brings, options expiration, which is typically bullish so this could make for an ideal entry into a short-term play. Although, I am not ruling out dipping my toes tomorrow even with the bearish seasonality especially if the market gaps lower at the open.

As much as many of you want to deny it the summer doldrums are here. As I stated weeks ago, expect to see a trading range with slight expansion as we move through the summer months. With today’s sell-off the S&P (SPY) is now below where the major benchmark opened on the fourth trading day of the month, where the ”sell in May and go away” theory begins. If the trading range continues throughout the summer it will to bode well for our neutral-based SPX Short Iron Condor strategy.

Moreover, the VIX (a measure of the implied volatility of S&P 500 index options) has jumped to 17.06 which is roughly 4 points higher than when we established our June Condor spread. What does this mean? It means that the premium should increase significantly (if the VIX holds up of course) when we put on our new Iron Condor position. It also allows us to forfeit some of the extra premium for a wider range. Currently we are using a wide range of 140 points. As long as the underlying SPX (S&P) falls within our chosen range at option expiration (typically a four to five week period, although even in a five week period I usually only go out four weeks) the strategy is profitable anywhere from 5-10%, sometimes slightly higher/lower.

Overbought/Oversold levels for June 7, 2007

SPY - 17.7 (very oversold)
DIA - 16.1 (very oversold)
IWM - 25.3 (oversold)
QQQQ - 26.2 (oversold)
GLD - 35.5 (neutral)
OIH - 37.4 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

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

June 6, 2007

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 trading day of May due to the bullish seasonal tendencies that surround the end/beginning of most months.

) closed the day at $151.84, up $1.09 or .72% since the old Wall Street adage “sell in May and go away” began.

As you can see from the minimal 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 have referenced several times over the last few weeks.

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. – 1.0%

Apr. – 1.3%

May – .0.3%

Jun. – 0.2%

Jul. – 0.9%

Aug. – 0.0%

S&P. – (-0.6%)

Oct. – 0.9%

Nov. – 1.8%

Dec. – 1.7%

Again, the Stock Trader’s Almanac states that a $10,000 investment compounded to $544,323 during the November-April period over the last 56 years compared to a $272 loss for May-October. I think that sums up the significance of the historical period known as the “Summer Doldrums”.

Again, keep this in mind as we move into the summer months. Corrections happen. Flat periods happen. The market can’t continue to advance in this manner without corrections and lengthy consolidation periods. This is the nature of the market.

Want to learn more? Our White Paper give a detailed account of what is needed to trade an Iron Condor strategy successfully. Buy the White Paper today and you will receive two free months of our newsletter.

Consider learning alternative investment strategies as a way to diversify your current portfolio so that you are better equipped in any market environment, bullish bearish or neutral.

Overbought/Oversold levels for June 6, 2007

SPY - 33.7 (neutral)
DIA - 28.9 (oversold)
IWM - 44.4 (neutral)
QQQQ - 45.0 (neutral)
GLD - 66.5 (neutral)
OIH - 51.6 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

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

June 5, 2007

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 look imminent over the next few weeks, but as always we will not force the action. We always wait for the market to come to us. That is the one of the keys to success in trading/investing.

Now that the market has experienced the short-term sell-off it will be imperative that we watch the 1530 area of the S&P (SPX). Bullish or bearish, whichever direction the market decides to move over the next few days could be telling over the intermediate-term.

I still think the old adage “sell in May and go away” applies to this summer’s performance. If indeed we are correct our SPX Short Iron Condor strategy will be the beneficiary.

Overbought/Oversold levels for June 5, 2007

SPY - 59.6 (neutral)
DIA - 56.1 (neutral)
IWM - 67.3 (neutral)
QQQQ - 75.1 (overbought)
GLD - 65.7 (neutral)
OIH - 68.4 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Unsustainable gains ahead?

June 4, 2007

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 worth$.40, $.50 less than we had originally sold the Condor spread. We are still over 40 points away form the short call strike so we still feel comfortable with our current position. A move to the downside this week will certainly diminish the premium in the condor spread. A sharp move lower could allow us to avoid the risk of expiration week by exiting the trade for a nice profit. Of course, by exiting early the profit would be slightly less than the max gain,but it would also eliminate all risk to the position.

Overbought/Oversold levels for June 4, 2007