August 1, 2014

January 2008 Trade Summary – SPX Iron Condor

We were finally  able to get the SPX Iron Condor trade off this afternoon. The details are below. For those of you who subscribe to the Iron Condor strategy please check the Insider's page of the website for more detailed information on the trade. I also wanted to let all of you know that I will be taking the next two trading days off (Friday and Monday). Of course, I will be keeping an eye on the market, but I will not be answering emails or posting to the blog. I typically take this time off to reflect on the prior year by writing my year end summary for subscribers. This allows me a few days of much needed downtime to take a break from the rigors of trading. We all need a break once and a while and I think two days away from the … [Read more...]

Seasonal Bullishness Continues – Major Indices Back In Overbought Territory

All four of the major indices we follow have moved back in an overbought state. We saw half of them enter Monday and the rest (DIA and SPY) entered today. Typically when we see all four reach this type of extreme we will see a short-term reprieve over the coming days. The last two trading sessions have been comaprable to watching paint dry. It is more painful when I am sitting in front of the trading desk all day attempting to get a Iron Condor trade off. he VIX has moved towards the high 18’s from the 26's at the same time last month. Due to this we will have to bring in our range a bit, most likely a 220-240 point range and possibly bring in a slightly lower credit. We do not want to push a trade through just to have a … [Read more...]

January 2008 Expiration Cycle – Iron Condors

Santa continued to bring short-term chher to the markets today. As a result, the tech-heavy NASDAQ 100 (QQQQ) joined the Russell 2000 (IWM) in overbought territory with the other two major indices we follow trailing close behind. In our Expiration Report Saturday we mentioned the possibility of having prblems getting our SPX Iron Condor off due to the abbreviated trading session today. As I suspected, that situation occurred so we will add the position Wednesday if the risk/reward scenario meets our requirements. The Jan08 expiration cycle is a bit tougher than most for adding Iron Condors because of the abbreviated sessions, and the two holidays that fall within the expiration cycle. The market prices the holidays in which causes the … [Read more...]

Bearish November Leads to Bullish December (Will the Historical Precedent Hold Up)

SPX settled today at 1484.95 well within our 300 point range of 1590-1290. The gain for the December expiration was 7.9%, our fourth consecutive gain since adjusting the Iron Condor strategy on 8/28. Since we made the adjustments the strategy has made 25.1%. As for the current state of the market we are nearing a short-term overbought state in many of the major indices we follow (IWM actually entered an overbought state today). Seasonality is still with the bulls and I would not be surprised to see the S&P hit 1490 early next week, but according to the indicators I follow the upside should be limited. Plus, 1490 is an area of very strong overhead resistance in the S&P. Coupled with the aforementioned short-term overbought state and it … [Read more...]

Will the market receive a bag of coal this year?

What do you know, another late day rally today. We have witnessed four straight days of similar price action in the S&P. The S&P will open higher, sell off, trade in a fairly tight range for the rest of the day and rally towards the closing bell. Basically the market has been on a treadmill for four days. Typically, when we see sideways action like this over several consecutive trading days the market will move sharply outside of the range. I have to admit I am leaning towards the bullish camp over the short-term due to the strong seasonality and the gap overhead that has yet to close. I would not be surprised to see the gap close and then the market roll over again. The gap occurred on 12/17 and the S&P (SPX) would have to rally up to the … [Read more...]

Possibly entering unchartered territory

Standard & Poors reported a negative outlook on bond insurers. The S&P seems to have found decent overhead resistance at the 1465 level so I would like to see a sustainable push through that level and if that happens I think we could see the 1490 level again in the short-term. Bearish November Leads to Bullish December". Basically, I went back over the last 30 years to see how December typically reacts after a bearish November. Interestingly enough there have been 8 such occurrences (bearish Novembers) and each one was followed by a bullish December. That precedent looks to be broken unless the market can rally 2.5% over the next 6 1/2 trading sessions. It is certainly not out of the question given the bullish seasonality that we are … [Read more...]

Will intraday reversal kick-start Santa Claus rally

.   The question now is will we see a continuation of the move today? Seasonality certainly thinks so. We have officially entered the “Santa Claus” rally phase of the year so the seasonal fanatics will be counting on Santa to bring in the New Year with a bang.  Just remember the key term in the aforementioned statement is short-term.  Overbought/Oversold for December 18, 2007  S&P (SPY) - 37.0 (neutral) Russell 2000 (IWM) - 43.1 (neutral) Dow (DIA) - 37.6 (neutral) Nasdaq 100 (QQQQ) - 28.2 (oversold) 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.  … [Read more...]

Oversold!

All of the major market indices are officially in an oversold state. We have only witnesses this situation once since the beginning of August, which is a direct result as to why our trading has been nonexistent in the ETF Extremes over that same timeframe.  Hopefully, if all goes well, we will see a signal in the next day or two. The indicators are lining up, now we need to see some follow through. The best scenario would be if Goldman Sachs comes out tomorrow morning with a report that rubs investors the wrong way. If that occurs we will most likely see a gap lower at the open which would push the indices into an extreme or "very oversold" state. No guarantees of course, but this wil most likely trigger a signal. If the market … [Read more...]

Santa Claus Rally and More

The sell-off today has managed to put the indices we follow near an oversold state. 1490 continues to act as strong overhead resistance and after struggling with the 1470 level for several days the S&P finally broke that support towards the end of the trading day. A lower open Monday will most likely take the S&P back down ot the 1460 level and into oversold territory. This is when the so-called "Santa Claus" rally could begin, if at all. There is certainly no better time to rally than off of oversold levels, right? Officially, the "Santa Claus" rally doesn't begin unti lthe 21st, but I will talk about that in a bit. I will be watching how the market opens and reacts to the 1470 area in early trading Monday. Could next week bring the … [Read more...]

Watching 1490 on the S&P

According to the Stock Trader’s Almanac Friday is bearish in the S&P with only 38.1% of the trading days closing higher. Who knows what tomorrow will bring, the bulls and bears continue to play the tug of war and until the S&P can overtake the 1490 level with conviction I will continue to lean towards the bearish side over the short-term. Again, I wholeheartedly agree with Kirk's latest sentiment: Be defensive, hold lots of cash, don't be complacent with your longs, protect your assets, and if you're so inclined, look for strength to short. As for putting money to work on the long side, wake me up when we're back to extreme oversold conditions again. I don't plan one single buy until that point is reached. Such a tactic allowed me … [Read more...]