July 21, 2017

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 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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