June 27, 2017

Archives for July 2007

More Volatility – August is Often Bleak

Yesterday I talked about the importance of the 1490 area on the S&P (SPX). I stated that once reached,  it would most likely act as an area of strong resistance and as a result bring in sellers. The market was able to push the S&P (SPX) to the 1490 level early this morning (with a gap up) only to quickly fade and continue the move lower as the day progressed. The sell-off moved into high gear at the end of the day and brought back recent bad memories of last Friday's collapse. Now the market as a whole is back in an oversold state so one would expect to see another push higher by the bulls in the coming days. However, I am not so certain this time around. The end of the day sell-offs have been sharp and severe. Furthermore, we are moving … [Read more...]

Expected Bounce Leads to….? Iron Condor Adjustment

The anticipated short-term oversold bounce occurred today and has pushed all but one (IWM) of the indices we follow back into a neutral state. As I mentioned last week, extremely oversold conditions coupled with short-term seasonal winds were due to blow in Monday and Tuesday and should lead to a decent bounce. They blew in and yes, the indices advanced. That being the case we could see some follow through tomorrow, but I have a nasty feeling that we will see the recent lows in the not-so-distant future. Remember, the gap from 4/3 and 4/16 are not yet closed and unclosed gaps when approached again tend to weigh down the market. Time will tell. If the market happens to retest the recent lows this would not be out of the ordinary. … [Read more...]

Market Moves Deeper Into Oversold Territory. Now at Historical Extremes.

Did you see the drop this afternoon? the S&P (SPY) moved lower $3 in just under an hour. Wow! Now the S&P is just below the 1460 area at 1458.95. Everyone knows that 1460 is a very strong area of support and given the extremely oversold nature (almost an understatement) of the market I would expect to see a bounce in the next day or so. Moreover, Monday and Tuesday are seasonally very bullish. The one thing that would lead me to believe we could see another push lower is the gap in the S&P (SPY) on 4/16 that was never closed. I have a feeling we could close that in the next week or so. That being said, the underlying SPX is quickly approaching our short put strike and an adjustment needs to be made. We are hoping to get a bounce over the … [Read more...]

Major Sell-Off. How Did Our Strategies React?

Now the market stands $.19 above the opening price of the third trading day in May, when the "Sell in May" theory begins. Even with the sharp decline today our Iron Condor position is still roughly 40 points above the short put strike, so we still have a little wiggle room. If the market bounces, which I expect to see over the next couple of days given the extremely oversold nature of the market, I might use it as an opportunity to widen  the range (lowering our short put strike) which will decrease the risk a bit. We shall see when the time comes.   Our ETF Extremes did not make out as well today. As we state on the site we discuss winners and losers, reagrdless. Losing trades is where you learn the most so it is imperative to dissect a … [Read more...]

Seasonal Tendencies Do Not Disappoint

Our quote vendor is down tonight so there will not be an overbought/oversold report. Beginning next week we will be offering sector overbought/oversold readings which should be of great help to many of you. You requested it and now we are offering it. If there are other indices that you would like for us to add to the overbought/oversold list please do not hesitate to email us with your request. Over the past few days I have stated that Wednesday begins a short-term (1-5 days) period of seasonal bullishness and given the "oversold" to very oversold" nature of the major benchmarks there could be a short-term bounce in the near future. Well, after quite a bit of volatility today the bounce finally took place at the end of the day. The … [Read more...]

“Sell In May and Go Away” Revisited

Today officially ended the mid-July seasonal weakness and as I have stated over the past few posts Wednesday brings a new outlook, at least over the short-term. Tomorrow is the 17th trading day of July and brings bullish seasonality with 71% (since 1985) of the days witnessing a positive return. It could be convenient timing indeed and one that could bode well for our ETF Extremes strategy. The gap from July 12th in the S&P closed today. Yesterday, I stated "the S&P looks like it wants to close the gap before any serious attempt upwards reconvenes". Well, now that the gap has officially closed we will see if the bulls have enough left in the tank to push the market higher. Over the short-term (1-5 days) the probability of a short-term … [Read more...]

August Expiration Cycle

Today's SPX Short Iron Condor trade went as planned. In our Expiration Report (paid subscribers only) we mentioned how we were going to attempt to bring in $1.20 for a 170 point range. We were able to meet those expectations today and as a result the Iron Condor strategy will make 12.9% over the next four weeks if the underlying SPX expires within our chosen 170 point range. The strategy will be positive on a cumulative basis if the strategy is successful during the August Cycle. (paid subscribers can read more on the Insider's page under Condor Trades). Our switch after the April Cycle to trade only four weeks out (wait a week in a five week cycle) while widening our range to at least 160 (170 this month) has proven successful so far. … [Read more...]

Post-Expiration Blues?

Yesterday, I wrote about the likelihood of a period of short-term weakness (1-3 days) that would follow the retest of new highs set earlier in the week in the S&P. Well, the anticipated weakness came today and could potentially continue Monday. The trading day following options expiration is historically weak and next Monday, on a historical basis, is no different. Since 1985 the 15th trading day of July has only finished higher 38% of all days. Given the near oversold levels in the major indices we follow I would be hesitant to take a position at this point, but if the market does indeed move lower into oversold to very oversold by Wednesday we could have a decent set-up. Why? Well, the close Tuesday officially ends the mid-July … [Read more...]

Retest of Highs Now Weakness Expected

Yesterday I stated "we could see a retest of what has been strong overhead resistance (1555) in the coming days." The retest came today in the S&P and now I expect to see at least some short-term (1-3 days) weakness follow. As I mentioned in the post yesterday, "This type of set up could prove advantageous for short-term (1-3 days) bears as we move into post-options expiration. Historically, post expiration is weak, particularly the trading day following options expiration. Furthermore, as I mentioned late last week the market is in the midst of a seasonally weak period. The next four trading days are historically very weak, especially Friday and Monday. According to the Stock Trader’s Almanac July expiration has seen the “Dow lower 4 … [Read more...]

Potential Retest and then Post Expiration Blues?

After the sharp intraday decline the S&P bounced off support levels (1535) late in the trading day and managed to only lose 0.2% on the day. As I write this the futures are up and if they hold overnight we could see a retest of what has been strong overhead resistance (1555) in the coming days. This type of set up could prove advantageous for short-term (1-3 days) bears as we move into post-options expiration. Historically, post expiration is weak, particularly the trading day following options expiration. Furthermore, as I mentioned late last week the market is in the midst of a seasonally weak period. The next four trading days are historically very weak, especially Friday and Monday. According to the Stock Trader's Almanac July … [Read more...]