August 19, 2017

Reasons for a short-term reprieve?

The market held steady today to the delight of the bulls. However, there are a few bearish short-term indicators that are presently facing the markets.

  1. The indices we follow (as seen below) are nearing an overbought state which often leads to a short-term reprieve.
  2. Tomorrow (11/30), according to the Stock Trader’s Almanac is historically bearish with the S&P finishing in postive territory only 33.3% of the time.
  3. The gap higher in all of the major indices could potentially weigh, at least over the short-term, heavily on the market particularly when combined with the aforementioned.
  4. The Russell 2000 (IWM) seems to be struggling with strong overhead resistance at the $77.00 area.
  5. Volume on the recent rally showed little conviction among the institutional buyers.
  6. Did we see a lower high today – Tim Knight displays what this could mean for the market ahead

Yes, over the short-term I am leaning towards the bearish camp, but I can’t deny the recent post I wrote, Bearish November leads to Bullish December. Every negative November over the last 30 years has been followed by a postive December. Check out the stats.

Our Iron Condor position once again looks very good this month even with the recent volatility. Since we altered the strategy we have yet to see a loss and have made a cumulative return of over 25% in the last three months. This month our range allows for a move in the S&P of over 10% to the upside or downside before our position is in jeopardy of taking a loss. Best of all, even with the incredibly wide range we will still make 7.9% if the underlying SPX expires between our short strikes of 1290 – 1590. There is no doubt we have had a few rough months this year in the strategy, but with the new guidelines and strict position sizing techniques the probability of success over the long-term (and as everyone knows Iron Condors are long-term strategies) has increased dramatically. Check out our recent positon. If you agree give us a try. Spots are limited so sign-up while they are available. If you do not join in time , don’t worry, we will add you to our waiting list.

Overbought/Oversold for November 29, 2007

S&P (SPY) – 62.8 (neutral)

Russell 2000 (IWM) – 56.3 (neutral)

Dow (DIA) – 66.5 (neutral)

Nasdaq 100 (QQQQ) – 68.8 (neutral)

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