August 22, 2017

Archives for January 2008

Options expiration can’t come soon enough

What a day! The market gaps lower on the Intel earnings, then moves immediately higher to close the gap. Once it closes the gap it turns tail and heads for the April lows in which it (S&P 500) bounces and then proceeds to move steadily higher throughout the day to reach 1391 fifteen minutes before the start of the final hour of trading. Then, well, it collapses into the closing bell to close ht day lower at 1373. Just your typical trading day during the week of options expiration. Not much has changed since yesterday. The market moved deeper into oversold territory, seasonal bullishness, strong support around the 1365-1370 level, the gap from 1/4 still hovering above, and several sentiment extremes that have recently entered the … [Read more...]

Options expiration around the corner

Update on Iron Condor position: Wow! A 2.8% loss in the S&P (SPX) today was certainly unexpected. The sharp decline has left our SPX Iron Condor only 20 points or approximately 1.5% above our short put strike. Moreover, Intel came out with earnings after the closing bell that did not please Wall Street. The negative report has pushed the futures lower so if the futures stay where they are then we should expect to see a gap lower A gap lower would push the market further into an oversold state which typically leads to fade of the gap. If this occurs we should get a bit of reprieve coming over the next day or so. Only time will tell, but I have to admit I am pulling for the bulls this time around. So from a technical standpoint and … [Read more...]

Options Expiration Looms

All of the major indices bounced off of oversold conditions for the second time in less than a week. The question is will today's rally gain any steam? We are nearing resistance levels once again so any upside, but a break of the near-term resistance in the S&P should bring the market back up to close the downside gap that occurred on 1/4. The same goes for the other major indices. I have to admit that I am very excited about the future of our Iron Condor strategy. With only three days left with are 56 points or 4.1% above our short strike. If all goes well and are Iron Condor spreads expire worthless we will add another 4.9% (includes commissions) to the 25.1% since we switched over using an extra-wide range. That would make a 30% gain in … [Read more...]

Some breathing room for our SPX Iron Condor – Introducing new Iron Condors on 1/21

The major indices have moved back into a neutral state, although the shorter-term overbought/oversold measures like the RSI (2) are inching ever closer to an overbought state. We still have a ways to go to reach that level, but a move back up towards the 1435 area would certainly do it. We could see a reprieve over the coming days, but I still think the downside gaps from a few days ago will close before another significant move lower (if it actually happens) occurs. Just my opinion. We are entering a period of bullish seasonality over the next five days, but as we witnessed just a few weeks ago seasonality doesn't always pan out and should never be the sole reason to place a trade. I just want to make you aware that it is out … [Read more...]

Will the bounce continue?

It was an unbelievable day for the market. After moving to the 1378 level the market bounced sharply and never looked back . It closed at 1409. Could this be the short-term bottom everyone has been awaiting. It certainly looks that way, but as we all know anything can happen. Several of the indicators we follow are pointing to a follow through, but again anything is possible. As I stated yesterday I had not seen oversold levels this extreme in quite some time.  Some of the oversold indicators were near 9/11 levels which is incredibly low. Again, the question is how far, if at all, will the bounce move to the upside? There is still the downside gap on 1/4 that is yet to be closed in the major indices (IWM, DIA, SPY, QQQQ) so I would not … [Read more...]

Market moves deeper into oversold territory.

Nine straight days of lower closes in the underlying SPX (S&P 500). The market has managed to move lower every day since we initiated our SPX Iron Condor trade back on 12/27. The decline since 12/27 (eight trading sessions) in the S&P (SPX) is 6.8% as of the close today. Even with the sharp sell-off we are still roughly 30 points above our short put strike or 2.2% with eight more days until SPX expires (European style option). Extreme oversold levels are still pointing towards a short-term bounce, but they have so for several days. As we move further and further into oversold levels the probability of a short-term bounce increases. However, the 200-day moving average for the S&P is about to turn lower which often means that we are in or … [Read more...]

Market Remains in Oversold State

The market vacillated wildy today and ended the day with mixed results. Many of the indicators that we mentioned last Friday are still pointing to a short-term bounce, but as we all know there are no guarantees. Our main level of concern at this juncture is the 1360 level on the S&P. We are still approximately 56 points or roughly 4% above the short put strike and as we have seen declines can come fast and hard. A short-term bounce should give us some extra breathing room, plus it might afford us the opportunity to get out with a small gain in case we want to take some profits off the table and move on to next month. As I always say this is a marathon and not a sprint. As always we will keep you (our paid subscribers) informed of any … [Read more...]

Major Indices at Extreme Oversold Levels

The magnitude of the selling this past week surprised many, including myself. Thank goodness for using extra wide ranges in our SPX Iron Condor and the selective nature of the ETF Extremes. Is it possible that we will see a signal in the ETF early next week? The market officially entered an extreme state on Friday so Monday could be interesting. I have been patiently sitting on my hands for months waiting for a signal so I certainly hope a signal is in the cards for early next week. Bullish seasonality? What bullish seasonality. So much for the second and third trading days being historically bullish. As I always say, I never trade on seasonality alone. I like to use it an added tool when the indices I follow reach extreme levels. Now that … [Read more...]

Seasonal Let Down – Short-term Bounce Still In the Cards?

Yesterday I mentioned the overwhelmingly bullish seasonal tendency that typically occurs on the second trading day of the year. Well, we didn't exactly get that today. While the Dow and QQQQ finished the day slightly above water the S&P and Russell 2000 finished the day flat to lower. History did not not exactly repeat itself today. That being said, three out of the four major indices are in an oversold state with the Russell being the most recent participant. As I said yesterday, this typically precedes a short-term reprieve or bounce. Moreover, the RSI (2) a short-term overbought/oversold measure is currently reading 2.1. This is an extremely low reading and one that also typically precedes a short-term move higher. Of course, as I … [Read more...]

Short-term Bounce?

Happy New Year! I hope all of you had a wonderful holiday season. After some much needed rest I am back and ready for a prosperous 2008/ Our service will be implementing quite a few additions to the service this year so stay tuned. On the first trading day of the year the market decided to move decisively lower on a lower than expected ISM number of 47.7%. Analysts predicted a reading of 50.5%. A reading below 50% indicates economic contraction which is why the reaction to the report was so fierce. Anyway, I try not to pay too much attention to the so-called noise.I allow the noise to move the market into extreme levels and then I begin to pay attention. The move lower today pushed two out the four major indices we follow into … [Read more...]