January 2008 Trade Summary - SPX Iron Condor

December 27, 2007

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 screen a year is not much to ask. Again, I will not be answering any emails until after the New Year.

See you in 2008! Have a wonderful and safe New Year. I can’t wait to get started next year. We will be expanding our offerings in the newsletter (mostly European Style Iron Condors and the return of the Gap Fade strategy).

Most of all, I want to thank you all of you again for all of the kind words over the past year. The service has taken off over the past two years and we hope to make it even better and prosperous in 2008.

The following is the January ’08 expiration cycle trade for the SPX Iron Condor strategy.

I have to admit that I have never had such a difficult time getting a trade off on an Iron Condor trade. The holidays really caused some havoc for all of the spread traders out there, particularly the ones that prefer wide ranges. Volume was anemic all week which made it extremely difficult to get an order off plus the holidays were priced in which also led to lower prices. As I stated repeatedly, I was not willing to push a trade through just to have a position in play. I would rather not have a trade on if that was the case as the Iron Condor strategy is a marathon and not a sprint. Of course we could have decreased our range to possibly bring in more premium, but that goes against what this strategy is about, especially since we adjusted the strategy on 8/28/07.

I am still enthused by the results as the strategy will make 4.6% over the next three weeks. However, $.50 is the low limit that I will take for an Iron Condor spread. Anything less than $.50 and I just can’t rationalize placing a trade.

Again, we certainly like the odds on this trade. If the underlying SPX expires within our chosen range (1360 – 1590) the strategy stands to make 4.6% over the next three weeks (options expiration).

Please do not hesitate to email us with any questions or comments that you might have regarding the strategy.

We placed the following trade:

Sell to open SPX Jan08 1590 calls

Buy to open SPX Jan08 1600 calls

Sell to open SPX Jan08 1360 puts

Buy to open SPX Jan08 1350 puts for a credit of $.50

Have a wonderful and safe New Year!!!

Andrew

Filed Under Crowder's Daily Market Commentary ·

Seasonal Bullishness Continues - Major Indices Back In Overbought Territory

December 26, 2007

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 position in play. A 240 point range will requite the underlying SPX to move 8.1% up/down over the next 21 days before our position is in jeopardy and yet we should still be able to bring in roughly $.50 - $.60 or a percentage return of 4.5% to 6% over the next three and a half weeks. Again, my guess is that we will have to bring in a lower credit for the expiration cycle due to all the aforementioned reasons stated above.

We attempted to get a trade off again today, but we could not get a decent price. Volume was anemic today which certainly doesn’t help with prices. My buddy told me the floor was dead and I beleive it judging by the volume and horrible spread prices that were being offered. My hope is to get a SPX Iron Condor position in play tomorrow or Friday, but as I stated above I will not try to push a trade through just to have a position in play. Remember this is a long-term strategy (a marathon, not a sprint). I have accepted the fact that we will most likely take in lower premium this month (between $.50-.$60), but again we will still reap a return over the next three and a half weeks that range from 4.5% to 6% depending on our position. Things could change if we see a sharp move in the underlying SPX over the next day or two, but for now this is what the market is offering.

Due to the recent success (since we changed the Iron Condor strategy on 8/28) of the SPX Iron Condor strategy we are nearing capacity for subscribers. If you wish to get in now please do so. We will still take subscribers in the SPX Iron Condor, but unfortunately we will have to add you to the waiting list once we max out our subscriber base and that could be very soon. This is mostly due to liquidity reasons and so we can remain attentive to our subscribers needs. Again, I hope you understand.

Have a wonderful night!

Overbought/Oversold for December 26, 2007

S&P (SPY) - 71.6 (overbought)

Russell 2000 (IWM) - 76.7 (overbought)

Dow (DIA) - 70.7 (neutral)

Nasdaq 100 (QQQQ) - 74.9 (overbought)

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Filed Under Crowder's Daily Market Commentary ·

January 2008 Expiration Cycle - Iron Condors

December 24, 2007

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 premiums to be a bit lower than normal.

The VIX has also moved towards the high 18’s from 26 last month. Due to this we will have to bring in our range a bit, most likely a 240-260 point range and possibly bring in a slightly lower credit. We do not want to push a trade through just to have a position in play. A 240 point range will requite the underlying SPX to move 8.1% up/down over the next 22 days before our position is in jeopardy and yet we should still be able to bring in roughly $.50 - $.70 or a percentage return of 4.5% to 8% over the next three and a half week. My guess is that we will have to bring in a lower credit for the expiration cycle due to all the aforementioned reasons stated above.

For those of you who observe the upcoming holiday, Merry Christmas and for those of you who do not have a wonderful day off! I will be back Wednesday.

Overbought/Oversold for December 24, 2007

S&P (SPY) - 65.7 (neutral)

Russell 2000 (IWM) - 74.4 (overbought)

Dow (DIA) - 68.3 (neutral)

Nasdaq 100 (QQQQ) - 71.4 (overbought)

Filed Under Crowder's Daily Market Commentary ·

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

December 21, 2007

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 could be difficult for a move to sustain itself above that level.

Yesterday I stated that December 2007 has not been kind to the market. Well, that changed today. Just a few weeks ago I wrote an article titled “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.

Today the market moved above the 1479 level and into postive territory for the month of December so the historical precedent remains true, at least so far.

One thing that should be worrisome over the short-term is the large gap higher today. Typically large gaps like this have a tendency to weigh down the market and given the other reasons for concern (over the short-term) I would not be surprised to see the gap close over the next few trading days. The gap in the Russell 2000 (IWM) is the one to watch because of the short-term overbought state that it has entered. As I stated before, while the other indices are nearing an overbough state, IWM entered overbought territory today. Moreover, the RSI (2) reading for IWM is above 95 which often signals a short-term reprieve. The wild card right now is seasonality so we shall see who wins this tug-of-war next week.

Back to the gap today. Buying a large gap open (above 0.5%) on options expiration and holding until Monday has led to a paltry win ratio of approximately 22%. Could this be the exhaustion gap the Bears have been waiting for? Again, we shall see soon enough.

Food for Thought

According to the Stock Trader’s Almanac (makes a great Christmas gift) the week after triple witching the Dow has finished higher 12 out of the last 15 years. Furthermore, the trading day following Christmas has been higher nine years in a row.

Daily Market Insights

Is the VIX telling us something?

Overbought/Oversold for December 21, 2007

S&P (SPY) - 58.7 (neutral)

Russell 2000 (IWM) - 71.7 (overbought)

Dow (DIA) - 60.7 (neutral)

Nasdaq 100 (QQQQ) - 67.6 (neutral)

Filed Under Crowder's Daily Market Commentary ·

Will the market receive a bag of coal this year?

December 20, 2007

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 1468 level to close the gap.

Food for thought - tommorow is triple witching and according to the Stock Trader’s Almanac the Dow has closed the day higher 18 out of the past 26 years.

Our Iron Condor has once again closed within our established range set four weeks ago. This will make our fourth consecutive month of gains since we drastically adjusted our trading rules. The new strategy began on 8/28 (September expiration cycle) and has seen a gain of 25.1% over that time frame.

As I stated yesterday (and on I blog that I frequent throughout the day) the financials(XLF) will need to move higher for this rally to be taken seriously. Remember the financial sector makes up roughly 20% of the S&P so if it continues to act like a laggard than expect the upside to be limited. I am of course speaking over the short-term (1-5 days).

December has ceratinly not been kind to the market. We could be entering into unchartered territory if month ends lower. Just a few weeks ago I wrote an article titled “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 currently in, but I am starting to have my doubts. A move above 1479 on the S&P would get us there. We shall see soon enough.

Daily Market Insights

What do the Bears think?

Overbought/Oversold for December 20, 2007

S&P (SPY) - 46.9 (neutral)

Russell 2000 (IWM) - 60.0 (neutral)

Dow (DIA) - 42.1 (neutral)

Nasdaq 100 (QQQQ) - 53.9 (neutral)

Filed Under Crowder's Daily Market Commentary ·

Possibly entering unchartered territory

December 19, 2007

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 currently in, but I am starting to have my doubts. A move above 1479 on the S&P would get us there. We shall see soon enough.

As you can see from the chart below our current SPX Iron Condor position is once again well within our chosen range for the expiration cycle. I just wanted everyone to see just how wide of a range that we have been using since we adjusted the strategy after our last loss. If you think the S&P will not move more than 8.5% - 10% (percentages vary depending on our chosen range for the expiration cycle) then I urge you to take a look at our Iron Condor strategy. Even with such a wide range we will still make roughly 8% every four weeks. Please do not hesitate to email us with any questions that you might have.

Overbought/Oversold for December 18, 2007

S&P (SPY) - 37.0 (neutral)

Russell 2000 (IWM) - 48.2 (neutral)

Dow (DIA) - 34.0 (neutral)

Nasdaq 100 (QQQQ) - 28.2 (oversold)

Filed Under Crowder's Daily Market Commentary ·

Will intraday reversal kick-start Santa Claus rally

December 18, 2007

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.

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Oversold!

December 17, 2007

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 opens higher and continues to advance the oversold state will most likely ware off to quickly for a signal to be triggered. We shall see soon enough!

As for our Iron Condor, SPX is currently situated right in the middle of the range we chose roughly three weeks ago. SPX would have to advance/decline 150 points before the position is in jeopardy of taking a loss.

We have decided to add a few more Iron Condor strategies to the newsletter using only European style options. While others have had success trading Iron Condors with ETF’s we like the advantages European style options give us particularly with our specific way of trading Iron Condors.

We will add the additional strategies after the New Year so if you want to reserve a spot for the upcoming Iron Condor strategies a little early email us at support (at) crowderinvestments.com.

Overbought/Oversold for December 14, 2007

S&P (SPY) - 29.7 (oversold)

Russell 2000 (IWM) - 26.4 (oversold)

Dow (DIA) - 29.8 (oversold)

Nasdaq 100 (QQQQ) - 23.9 (oversold)

Filed Under Crowder's Daily Market Commentary ·

Santa Claus Rally and More

December 14, 2007

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 whoosh down that many bears have been predicting for months. It certainly feels like it. Of course, no one really knows, but after watching every tick in the market this week I can tell you that every bull rally was quickly sold off by the bears. Typically, this is never a good sign. Futhermore, even with all of the selling the indices still have some room to move lower over the short-term. The last time we saw extreme oversold levels was during the correction in early November (Nov. 12th to be exact). Since that occurence the S&P (SPY) has only been able to rally a paltry 2.4%. Moreover the high of this recent rally formed a lower high than the previous two short-term rallies which means that a downtrend is in play.

Santa might actually step into an extremely oversold market. The timing couldn’t be better that is for sure. The “Santa Claus” rally comes on the 21st this year, the day of December Triple Witching and a day that has seen the Dow higher 18 out of the last 26 years. Santa historically rides the bull onto the second day of the new year before heading back to the north pole. How the market performs during this small time frame is usually indicative of future intermediate to long-term performance, particularly if the bears are out to play.

Next weeks brings options expiration and December triple witching. According to the StocK Trader’s Almanac (makes a great stocking stuffer by the way) Triple-Witching week has witnessed higher weekly returns in the Dow 20 out of the last 22 years.

As for our Iron Condor strategy, the move lower today pushed our underlying SPX comfortably within our chosen range. This will be our fourth straight month of gains in the strategy and a perfect four-out-of-four since altering our strategy to using extremely wide ranges.

Worth a Read

Feeling Bearish

Overbought/Oversold for December 14, 2007

S&P (SPY) - 39.3 (neutral)

Russell 2000 (IWM) - 33.2 (neutral)

Dow (DIA) - 39.4 (neutral)

Nasdaq 100 (QQQQ) - 38.1 (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 3 stock options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.

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Watching 1490 on the S&P

December 13, 2007

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 to survive and thrive in the past and I’m confident the same will hold true now. - Charles Kirk

Our Iron Condor position continues to look very good as the underlying SPX (S&P) is currently 6.8% below our short call strike and over 13% above our short put strike. While many services are sweating the recent move we are comfortably within our chosen range. Since we altered the strategy by choosing extra large ranges (and tweaking a few other guidelines) our strategy has had three consecutive winning expiration cycles and if all goes well over the next five trading days we could have our fourth.

I would like to remind you that space is limited in the SPX Iron Condor. However, if we do max out we will add you to our waiting list. Join now!

Overbought/Oversold for December 13, 2007

S&P (SPY) - 51.0 (neutral)

Russell 2000 (IWM) - 45.2 (neutral)

Dow (DIA) - 53.4 (neutral)

Nasdaq 100 (QQQQ) - 48.0 (neutral)

Filed Under Crowder's Daily Market Commentary ·