Post Labor Day Trading
August 31, 2007
August is finally over and for most of Wall Street the end did not come quick enough. Before we get too excited I must point out that there could be more pain ahead for the bulls. Over the last 50 years September has been the worst performing month for the S&P. If I decrease the time frame to 15 years the results are roughly the same with August barely beating out September for the worst performing month of the year. If I decrease the time frame I still manage to get dismal results as the past six years have been witness to overwhelming weakness with an average return of -5.9%.
As dismal as of this sounds, we are actually excited by the new month . September should bring some wonderful opportunities for our ETF Extremes strategy. The ETF Extremes has lagged a bit, due to an unforeseen lack of signals over the summer months. Now that summer is nearing an end we should surely see an increase in signals and believe us we can’t wait.
The one positive is that the strategy has patiently been sitting on the sidelines during the recent market correction. While the market was losing, the strategy was maintaining its curent performance which is far better than the S&P since the strategy began back in early 2006. As I always say, patience is the key in this strategy and those that have been patient have, in most cases, been rewarded handsomely. The win ratio in the ETF Extremes remains one of the best, according to Pro-Trading-Profits (one of the most comprehensive, unbiased references that monitors the performance of newsletter services).
As for post Labor Day trading, well, it is often weak. Over the past 50 years the three days following the holiday have seen an average performance that is less than stellar. However, according to the Stock Trader’s Almanac September has “opened strong eight of the last eleven years”. We shall see soon enough.
As I have stated repeatedly in prior posts the next few weeks promises to bring quite a few changes to the site (new strategies, new insider page (for paid subscribers only) w/daily commentary) and we can’t wait. I hope you decide to join us on the journey! Have a wonderful and safe holiday weekend!
Andrew Crowder, www.crowderinvestments.com
August 30, 2007
Short post again tonight. I am trying to work on the Insider’s page of the site which should be updated in the next few weeks. Also, I am working on a few new portoflios involing LEAP spreads. I was planning on introducing them this week, but I thought this was unfair to my paid subscribers, so I will introduce it to them first with guidelines and will report to my loyal blog readers next week. I established the positions earlier this week and I will post everything, including a few graphs next week. Be prepared to learn about the Greeks.
As I stated yesterday Friday brings one of the more consisitent seasonal biases. Over the last 50 years the trading day prior to Labor Day has been higher 75% of the time with an average return that exceeds 0.4%.
Tomorrow should bring low volume, particularly after teh last of the economic reports are out. I would expect to see volume taper off as we move to the closing bell. However, Bernanke is speaking tomorrow in Jackson Hole. Ahh, Jackon Hole, I spent a quite a few days there in my 20’s. Such a beautiful place and the skiing is phenomenal, but I digress. Fedspeak has had a tendency to move the markets and any slight inference of a move in the interest rates could create some wild volatility on a day that should otherwise be spent in transit to the last holiday destination of the summer. Well, I can assure you I will be grinding it out here tomorrow and I hope tht we do see some volatility tomorrow.
Overbought/Oversold for August 30, 2007
SPY - 52.2 (neutral)
IWM - 48.3 (neutral)
DIA - 54.8 (neutral)
QQQQ - 63.4 (neutral)
GLD - 51.8 (neutral)
OIH - 62.3 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
Riding the Seasonal Wave
August 29, 2007
If you happened to trade the historical seasonal tendencies this week you would certainly have a fatter wallet as a result. Which brings me to tomorrow. Over the last ten years, the 22nd trading day of August (Thursday), the Dow and S&P have only experienced positive days once. If we go out 21 years, according to the Stock Trader’s Almanac, the S&P and Dow have only been higher 38.1% and 28.6% of the time on the 22nd trading day.
However, we must remember that just because the day historically finishes lower, this does not necessarily mean that the losses were significant enough to warrant a trade. After further investigation, since 1950 the average return on the 22nd trading day of August is roughly breakeven. Furthermore, with the strong seasonal tendency Friday I would be more apt to use the wait and see approach for a possible set up late Thursday, early Friday particularly if the seasonal tendency on Thursday lives up to its historical billing with the market moving lower.
The market is quickly approaching the last market holiday of the summer. The trading day before Labor Day is one of the more consistent seasonal biases and should not be overlooked. It follows the typical holiday pattern of strength immediately before the holiday followed by a bout of weakness.
As I said Friday brings one of the more consisitent seasonal biases. Over the last 50 years the trading day prior to Labor Day has been higher 75% of the time with an average return that exceeds 0.4%. This why I am more apt to take the wait and see approach tomorrow. Remember, opportunities are made up easier than losses, so pick your spots wisely.
Of course, as I always say, blindly trading seasonal tendencies is never encouraged. However, keeping a close eye on the upcoming seasonal tendencies and comparing them to the current technical situation of the market often increases the probability of a trade if the two have readings that coincide with each other.
Remember, there are no guarantess in trading, but there are always very good probabilites to be had in the trading/investment world.
Overbought/Oversold for August 29, 2007
SPY - 54.8 (neutral)
IWM - 53.1 (neutral)
DIA - 56.4 (neutral)
QQQQ - 60.3 (neutral)
GLD - 60.9 (neutral)
OIH - 66.4 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
Sell-off Continues
August 28, 2007
Not much to say tonight so I am going to keep it very short tonight.
As expected, the sharp sell-off at the close yesterday carried over into today’s trading. As a result the S&P experienced its largest loss since August 9th.
Tomorrow brings a bit of positive sentiment in an otherwise historically dismal week (look at Aug 27th post). However, we could see a test of the 1425 area in the S&P before a short-term bounce occurs so who knows if the psitive seasonality takes hold. As I always say, historically biased seasonal conditions are, in most cases, never a reason to place a trade. Although, when coupled with other technical indicators, seasonal factors can be a worthy compliment to making an well-informed trading decision.
If the S&P does not test the 1425 area tomorrow I would expect to see it on Thursday. According to the Stock Trader’s Almanac the “next to the last day of August the Dow and S&P were only up once in the last ten years”. Furthermore, on this particular trading day during the last 21 years the Dow and S&P have only been higher 28.6% and 38.1%, respectively. Of course, I want to see how tomorrow plays out, but if we indeed get a nice rally seasonal conditions could once again play a factor in the price action of the market.
I am currently working on making a blog (daily commentary) section for only newsletter subscribers or subscribers to our strategies. This should be released sometime around September expiration, potentially sooner. This will allow me to discuss in great detail the strategies as well as other topics that directly relate to our strategies. I will also begin following other options-based strategies within this section as well. This will certainly add value to the newsletter as it will allow us a forum to freely discuss, on a daily basis, our thoughts on various market strategies. We will also add more in-depth studies to the blog. Subscribers be on the lookout!
Overbought/Oversold for August 28, 2007
SPY - 35.8 (neutral)
IWM - 33.1 (neutral)
DIA - 37.1 (neutral)
QQQQ - 38.7 (neutral)
GLD - 47.9 (neutral)
OIH - 49.3 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
Bearish seasonal weakness coupled with overbought conditions often spells trouble
August 27, 2007
Last week I stated that we should see some short-term weakness going into this week and that is exactly what we saw today. Moreover, by the way the market finished the day we could see a continuation of the weakness tomorrow. As the saying goes “professionals rule the close” and a weak close often carries into the following trading day.
The weakness was not unexpected. Overbought conditions from the initial bounce off the recent lows, and seasonal weakness (according to the Stock Trader’s Almanac the “end of August has been murderous 6 out of the the last 10 years” with the “average loss for 5 days:Dow -2.6%, S&P -2.3%, and the Nasdaq -2.1%) looked to be problematic for the bulls.
Furthermore, on a historical basis tomorrow (the 21st trading day of August) has shown the weakest performance for the month of August. Will we see a test of 1450 in the S&P tomorrow?
With the VIX in a short-term oversold state we thought it was best to wait on adding an Iron Condor position. So far it looks like this was the appropriate decision and if we see more weakness tomorrow (and consequently a rising VIX) we should be able to bring in even more premium. Even with the flat opening today, with the VIX above 20 there were 200 point range iron condors using SPX as the underlying trading for approximately $.85 to $1.00. Not bad, not bad at all.
Again, as I stated last week, we will establish a similar iron condor position in SPY so that we can compare the pros and cons of each underlying.
Also, this week I will begin the SPY LEAPS Strategy which I will discuss in great detail in the daily commentary section. I will utilize the paper trade tool in Thinkorswim to accurately report all of the details including greeks, etc. Stay tuned
Overbought/Oversold for August 27, 2007
SPY - 58.3 (neutral)
IWM - 50.9 (neutral)
DIA - 63.4 (neutral)
QQQQ - 61.6 (neutral)
GLD - 61.4 (neutral)
OIH - 61.8 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
New portfolios next week - follow and learn our new Stock Options Strategies for FREE in the blog!
August 24, 2007
Due to the 5-week cycle in the September expiration cycle I will establish a position next week (4 weeks out). At the same time I will also establish a similar position in SPY so that we can compare how the two react to the market on an individual basis.
Also, next week I will begin the SPY LEAPS strategy which I will discuss in great detail in the daily commentary section. I will utilize the paper trade tool in Thinkorswim to accurately report all of the details including greeks, etc. Stay tuned
The resiliency of the market this past week certainly surpised me. However, given all of the reasons I stated in yesterday’s post I think we should see some short-term weakness next week.
Let me repeat what I stated.
First, going back 20 years in the S&P, every bounce off a major low (if we indeed hit one recently) was brought back to reality. Each instance saw the major benchmark, S&P move lower to test the recent low. Many have compared the price action recently to that of the correction that began in late February. The market bounced for several days, but ultimately came right back down to the established. My guess is this type of action will play out again.
Okay, on to my second reason. Next week brings some fairly bearish seasonal conditions. According to the Stock Trader’s Almanac the “end of August has been murderous 6 out of the last 10 years” with the “average loss for the last 5 days: Dow -2.6%, S&P -2.3%, and the Nasdaq -2.1%”.
Couple the price action of the market recently (it just feels heavy to me) with the oh so convenient seasonal bearishness that lays ahead and I think we could see a test or at least a short-term decline in the near future.
Recent history does not necessarily mean that it will repeat itself again this time around, but given the aforementioned I have to go with historical precedence.
Overbought/Oversold for August 24, 2007
SPY - 74.2 (overbought)
IWM - 64.7 (neutral)
DIA - 71.4 (overbought)
QQQQ - 71.0 (overbought)
GLD - 66.0 (neutral)
OIH - 72.3 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
Market Holds, But For How Long?
August 23, 2007
Given the magnitude of the short-term bounce, the market has done a remarkable job staying afloat. However, I think the short-term holding pattern could be coming to a close over the short-term (1-5 trading days). Why? well ,there area few reasons why I think a test or at least a short-term decline is near.
First, going back 20 years in the S&P, every bounce off a major low (if we indeed hit one recently) was brought back to reality. Each instance saw the major benchmark, S&P move lower to test the recent low. Many have compared the price action recently to that of the correction that began in late February. The market bounced for several days, but ultimately came right back down to the established. My guess is this type of action will play out again.
Okay, on to my second reason. Next week brings some fairly bearish seasonal conditions. According to the Stock Trader’s Almanac the “end of August has been murderous 6 out of the last 10 years” with the “average loss for the last 5 days: Dow -2.6%, S&P -2.3%, and the Nasdaq -2.1%”.
Couple the price action of the market recently (it just feels heavy to me) with the oh so convenient seasonal bearishness that lays ahead and I think we could see a test or at least a short-term decline in the near future.
Recent history does not necessarily mean that it will repeat itself again this time around, but given the aforementioned I have to go with historical precedence.
The VIX has also plunged since the panic set in last week. Check out the follwing link: Watch the VIX and the S&P 500
Again, due to the 5-week cycle in September expiration I will establish a position next week. At the same time I will also establish a similar position in SPY so that we can compare how the two react to the market on an individual basis.
Also, next week I will begin the SPY LEAPS strategy which I will discuss in great detail in the daily commentary section. I will utilize the paper trade tool in Thinkorswim to accurately report all of the details including greeks, etc. Stay tuned!
Overbought/Oversold for August 23, 2007
SPY - 63.9 (neutral)
IWM - 55.0 (neutral)
DIA - 59.9 (neutral)
QQQQ - 61.0 (neutral)
GLD - 44.3 (neutral)
OIH - 63.9 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
Russell Officially Hits Overbought Status
August 22, 2007
I reported yesterday about the how the market was entering a short-term seasonal bullish period and the precedent ceratainly did not disappoint today. After a nice gap up the market vacillated in a fairly tight range for most of the day and then began to rally with 45 minutes left to the closing bell.
As I write this the futures have spiked significantly higher. If the upward momentum holds into the opening bell we could see the shortest-term oversold/overbought indicator we follow (not published) hit an overbought extreme.
If you notice below most of the indices we follow are nearing an overbought situation. Since the low established last Thursday (137.00 on SPY) the market has gained $9.65 without nary a pause so an overbought status is not surprising. Typically, this type of reading means that a short-term top is being established and a slight correction is near. Time will tell.
Now that the market was able to push the S&P above top of the recent trading range (1450) we will look for that level as an area of support if the market does take a pause and possibly take back some of the gains. Watch closely!
Again, due to the 5-week cycle in September expiration I will establish a position next week. At the same time I will also establish a similar position in SPY so that we can compare how the two react to the market on an individual basis.
Also, next week I will begin the SPY LEAPS strategy which I will discuss in great detail in the daily commentary section. I will utilize the paper trade tool in Thinkorswim to accurately report all of the details including greeks, etc. Stay tuned!
Overbought/Oversold for August 22, 2007
SPY - 65.4 (neutral)
IWM - 70.5 (overbought)
DIA - 45.9 (neutral)
QQQQ - 64.4 (neutral)
GLD - 47.0 (neutral)
OIH - 53.7 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
S&P Stuck in a Range
August 21, 2007
Over the last couple of days the S&P (SPX) has traded between 1430 and 1450. Typically, the longer an underyling, in this case the S&P, trades in a defined range the more violent the breakout.
On a strictly seasonal basis, tomorrow is a fairly bullish day with the Dow, S&P, and Nasdaq finishing the day in the black 66.7%, 61.9% and 76.2% respectively. However, technically speaking, the shorter-term indicators we follow are suggesting that a short-term top is near and a pullback looks possible. As for the magnitude, who knows, but the 1430 area should be watched closely. A break below this level could bring talk of a retest and sellers will most likely oblige and attempt to push the market lower.
I mentioned the iron condor yesterday and how we will begin to follow the SPY and SPX and compare the two when we add a position next week. We also have plans to start a Leaps based strategy using SPY as the underlying. This should also be very educational as it will give me a chance to introduce greeks and how they are used in the options arena. I can’t wait.
Remember, watch the 1430-1450 area. A sell-off looks probable but, as I said before, if the 1430 area can support the short-term tumble then I think the Street might look at this as another opportunity to step into the market. We shall see soon enough.
Overbought/Oversold for August 21, 2007
SPY - 53.8 (neutral)
IWM - 62.7 (neutral)
DIA - 45.9 (neutral)
QQQQ - 54.2 (neutral)
GLD - 35.5 (neutral)
OIH - 41.0 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
The Week After - SPY Iron Condor
August 20, 2007
The September expiration cycle is a five week cycle. According to our guidelines in the Iron Condor strategy we will not establish a position next week. We prefer to only go out a maximum of four weeks.
We will also begin to following another iron condor strategy using SPY as its underlying. We would like to see how the SPX and SPY (both follow the S&P 500) differ, premium, price, greeks, volatility, etc. This should be a wonderful oppportunity to further explore the intricacies of the iron condor strategy. My goal is to weigh the pros and cons of each underlying in an open forum so that we can better understand how each react to the market.
Last expiration period was again, not so kind to our iron condor strategy. We have had two rough months in the strategy and if the an iron condor is to succeed it is pertinent to keep losses to a minimum. In most cases, this is a diffult endeavor, particularly in a quickly advancing/declining market. This is the one known kryponite to the iron condor strategy. Remember, 5%,10%,15% gains over a four week period, approximately 80% of the time, comes at a price. Marketmakers know this and patiently wait for the drubbing. There are so many ways to trade iron condors and it is our goal to demystify some of those ways. I will continue to follow the strategy because as we all know stocks, funds and even strategies have there good and bad periods. For the last few years, while the market was trading in a sideways manner and volatility had reached all-time lows, the Iron Condor strategy reigned supreme. Just look at all of the services following this strategy in their respective newsletters, blogs. Now that we have entered a period of volatility iron condrs will ahve to adpat to the new environment, particularly if we continue to see widely vacillating markets. It is the transition periods that condor traders have to endure and as I stated before it is often very difficult. We have certainly seen better days our own iron condor strategy, but this is where we learn the most, during the difficult times.
Overbought/Oversold for August 20, 2007
SPY - 51.6 (neutral)
IWM - 60.8 (neutral)
DIA - 48.6 (neutral)
QQQQ - 44.5 (neutral)
GLD - 36.4 (neutral)
OIH - 49.0 (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 options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com
