July 21, 2017

Archives for March 2013

Sideways Trading Persists…But for How Long?

Today marked the 14th straight day of range-bound trading. For those that favor directional trading it's been exhausting. For those of us who sell options and favor time decay over direction, well, it's been wonderful. After roughly two and a half months of relentless rallying the market has finally settled down and looks to normalize. The recent price action shouldn't be too much of a surprise. The past three years have allowed the bulls to celebrate early and often, but unfortunately the party typically ends shortly after the first quarter ends. An intermediate-term reprieve kicks in and the bears finally are allowed their time to shine. And while the party might not last long, the decline is usually short and somewhat … [Read more...]

Where Might We Be Headed?

A few random thoughts. The S&P 500 (SPY) has pushed lower for three consecutive days. The net loss a paltry 0.9%. But the intermediate to long-term extreme overbought state that had reached record highs has a lot of work left before it gets back to a neutral state. If anything, we now have another target area for our bear calls spreads and if we get a push into a short-term, yes let me repeat, a short-term oversold state in the market, we just might have to add a few bull put spreads. While the push lower hasn't been impressive I still think we have more room to go. How far? Take a look at the chart below.                   The blue lines mark the … [Read more...]

Can the Dow (DIA) Continue at this Pace?

I think the answer is obvious. The Dow pushed higher for the 10th consecutive trading day. The Dow hasn't seen a streak like this in over 17 years. Three months into the year, the Dow has shot up nearly 11 percent while the S&P 500 has gained 9.6 percent.                                     For those of you familiar with the normal distribution model, the Dow is on now firmly entrenched in the  tail portion of the curve. Basically, when we see a streak like what we are currently witnessing in the major market indices a correction is not far behind. Think about it for a second. The … [Read more...]

Has the Reversal Started?

Important Note to Subscribers: Before I begin I wanted to remind those of you with SPY positions that ex-dividend is on Friday the 15th. It is imperative that if you have any ITM strikes you must take off that position unless you want to be on the hook for the dividend. I will be sending out a trade alert Thursday (possibly tomorrow if SPY moves lower) to remind my subscribers to take the appropriate steps if they indeed have any ITM strikes. The S&P 500 finally took a reprieve today after seven straight days of gains. SPY traded as low as $155.22, but finished the day back up towards the $155.70 level...indeed frustrating for those of us with bear call spreads. But again, it's all about staying the course. And given the current … [Read more...]

Bulls Beware…Major Indices at Historic Extremes

Yes, the market has rallied in the face of, well, almost everything. While I have my doubts about the sustainability of the current rally I'm not going to give you the reasons why...because it's only my opinion and as we all know when using a statistical approach towards investing/trading opinions are essentially useless. The Russell 2000 (IWM), S&P 500 (SPY) and Dow (DIA) have recently pushed to all-time highs which has pushed our High-Probability, Mean Reversion indicators to extreme overbought states. Moreover, if you look at the RSI over various timeframes you will quickly notice that most of the ETFs I follow are pegged right now. Typically, when this time of reading occur we see a decent decline short-term decline going … [Read more...]

New Heights…But For How Long?

As we all know by now, the major market benchmarks have pushed to all-time highs. The Dow (DIA) and S&P 500 (SPY) continue to frustrate those of us who sell premium for a living, but given the short-term overbought state I remain comfortable with my current positions. If anything, the current overbought state allows for more opportunities to sell bear call spreads...especially when looking at the longer-term chart below. There is no doubt that the pot odds side with the bears at the moment. Even if we are wrong in our directional assumption, like we have been over the past few months, by using a high-probability strategy a margin of error is inherently created. Basically, you can be wrong, yet still have a profitable trade..that … [Read more...]