July 21, 2017

Archives for November 2007

Third Straight Month of Gains Since The Adjustment

The November options expiration cycle ended today and our strategies continue to make strides. The SPX Iron Condor strategy made another 7.9% over the past four weeks. This is the thrid straight winning trade since we adjusted the strategy to go with a high probability trade. We have averaged 260 points ranges over the past two expiration cycles. With the VIX hovering around 25 we should be able do the same if not better during the December cycle. December is a five week cycle so we will wait another week before we establish our new SPX Iron Condor position. This means that you ahve one week to get into the strategy before we place our next trade. Our newly adjusted Iron Condor strategy has made 25.1% since the adjsustments were enacted … [Read more...]

Positive Seasonality Approaching

Thanksgiving is next week and historically the market performs very well the day before and the day after the holiday. The Stock Trader's Almanac states, "long into weakness prior, exit into strength after". They go on to state that "for 35 years the combination of the Wednesday before Thanksgiving and the Friday after had a great track record, except for two occasions. Since 1988, Wednesday-Friday lost six of eighteen times with a total Dow point-gain of 502.41 versus a Wednesday-Monday total Dow point-gain of 704.77 with only four losses. The best strategy seems to be coming into the week long and exiting into strength Friday or Monday." If the market continues to sell-off tomorrow we could witness another push into oversold … [Read more...]

Options Expiration Nears

The market gapped higher today for the second straight day. Unlike yesterday's price action the market quickly sold off at the open to close the gap. Once the gap was closed the market traded sideways into the final hour. About a half hour before the closing bell the bears stepped in and pushed the market sharply lower. Now the major indices we follow are back in a neutral state and we are back in a "sit on hands" mode. Iron Condor Strategy SPX is safely within our chosen range and with only two days left until expiration there isn't a need to take the position off. We will let the positions expire worthless and collect the max gain. This will be our third straight month of gains since we adjusted the strategy by using our new … [Read more...]

Rally – Now What?

Ah the doubters. It is truly amazing what one day can do for the market. Yesterday the sky was falling and we were expected to prepapre for the worst. Today, the same talking heads were calling for an end-of-the-year rally. Now the question shifts to where now? Oversold conditions were quickly removed today as the market gapped higher and never looked back. Much of the gains occurred before the opening bell even rang. The Nasdaq 100 (QQQQ) opened $.67 higher at $49.40 and rallied throughout the day to close up $2.01 or 4.1% to $50.74. It was the best performing day for that index since April 2003. The large gap higher this morning kept many traders on the sidelines as over the last week or so any attempt to move the market higher was … [Read more...]

Oversold Extreme Continues

The major indices moved further into oversold territory. Three out of the four indices we follow are now in an extreme state with a reading of "very oversold". The RSI (2) and (3) for the Nasdaq 100 (QQQQ) are 1.8 and 5.4, respectively. The is the lowest RSI (2) reading and the second lowest RSI (3) reading of the year. As I stated on Friday, the market typically bounces off extreme levels over the short-term (1-3 says) and this time around is no different. One interesting note about this current "oversold" market is that it has yet to trigger a signal in the ETF Extremes strategy. Typically when we see these types of oversold extremes a signal will shortly follow. The lack of a signal has kept us on the sidelines during the recent … [Read more...]

Markets Move Into An Oversold Extreme

After the large gap lower today the market spent most of the trading day moving sideways to slightly higher. As the market neared the final hour of trading the S&P had actually moved into postive territory. The price action looked similar to Thursday, that is until shortly after 3:00 when the markets began the sharp and relentless move lower. All of the major indices finished near or at the lows of the day as a result.   The Dow (DIA) and Nasdaq 100 (QQQQ) are now in a "very oversold" state. The RSI (2) and (3) for the Nasdaq 100 (QQQQ) are 3.2 and 8.1, respectively. Only twice this year (3/5/07 and 7/27/07) has the tech-heavy indice seen oversold levels this extreme. Typically, the market will bounce off extreme levels. When an … [Read more...]

Dow, S&P, and Nasdaq 100 In An Oversold State

Three out of the four major indices that we follow are in an oversold state. Typically, this type of oversold extreme leads to a short-term (1-3 days) advance. The Nasdaq which according to the talking heads, mostly Mr. Booyah, have repeatedly stated over the past few weeks how tech is the current safe haven. Well, after nearly a 6% decline in two trading days I think quite a few market analysts might be reconsidering that notion. As I stated earlier, the sharp declines over the past few trading days have pushed the tech-heavy Nasdaq 100 (QQQQ) into an "oversold" state and very close to a "very oversold" state. Typically, sharp moves into an extreme, in this case oversold, precede a short-term move to the upside and I expect the same … [Read more...]

Back in an oversold state. Signal on the horizon?

The S&P (SPY) and Dow (DIA) are back in an oversold state and could move even further into an oversold state, possibly reaching an extreme if the futures continue to move lower in to the opening bell tomorrow. This means that a signal could occur in the ETF Extremes strategy in the coming days. Yippee! Of course, I will inform subscribers in real-time if a signal comes to fruition. The strategy has a win ratio of 86.7% (13 out of 15 winnig trades) since the first trade occurred on 2/16/06. Our patience and complete understanding of what it takes to successfully trade a strategy has led to cumulative gains that have exceeded 110%. A lack of understanding has led to quite a few subscribers leaving the newsletter as most desire action … [Read more...]

The Importance of Position Sizing

Position Sizing How much should you allocate to each trade? This frequently asked question lacks definitive answers. Why? The answer is quite simple; as investors, we all have a different set of goals. There are just too many variables out there (age, income, retirement goals, spending habits, etc.) to give a universal answer to the question. Options brokers allow you, the investor, the flexibility to allocate your account by specified dollar amount, specified quantity, percentage of available buying power, etc. It is your responsibility to figure out what works with your risk tolerance and investment goals. This brings us to the important and rarely covered topic of Position Sizing. To many investors, especially options … [Read more...]

The sell-off and the recent success of the SPX Iron Condor

The sell off today led to an oversold reading in one out of the four major benchmarks (IWM) we follow with two others very close to reaching that extreme (DIA and SPY). Obviously the financial sector, which makes up roughly 21% of the S&P has weighed the major market benchmark down. However, after another -1.8% loss in the SPDR Financial Sector (XLF) and an RSI (2) reading of 6.1, it looks as though the financial sector is due for a short-term bounce (1-3) days which consequently should help with a short-term recovery in the S&P (SPY). Our SPX IRon Condor strategy is sitting right in the middle of the 260 point range that we have chosen for this four-week cycle. If all goes well over the next 9 trading days we should see the third … [Read more...]