July 28, 2017

S&P Stuck in a Range

Over the last couple of days the S&P (SPX) has traded between 1430 and 1450. Typically, the longer an underyling, in this case the S&P, trades in a defined range the more violent the breakout.

On a strictly seasonal basis, tomorrow is a fairly bullish day with the Dow, S&P, and Nasdaq finishing the day in the black 66.7%, 61.9% and 76.2% respectively. However, technically speaking, the shorter-term indicators we follow are suggesting that a short-term top is near and a pullback looks possible. As for the magnitude, who knows, but the 1430 area should be watched closely. A break below this level could bring talk of a retest and sellers will most likely oblige and attempt to push the market lower.

I mentioned the iron condor yesterday and how we will begin to follow the SPY and SPX and compare the two when we add a position next week. We also have plans to start a Leaps based strategy using SPY as the underlying. This should also be very educational as it will give me a chance to introduce greeks and how they are used in the options arena. I can’t wait.

Remember, watch the 1430-1450 area. A sell-off looks probable but, as I said before, if the 1430 area can support the short-term tumble then I think the Street might look at this as another opportunity to step into the market. We shall see soon enough.

 Overbought/Oversold for August 21, 2007

SPY – 53.8 (neutral)

IWM – 62.7 (neutral)

DIA – 45.9 (neutral)

QQQQ – 54.2 (neutral)

GLD – 35.5 (neutral)

OIH – 41.0 (neutral)

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Andrew Crowder, www.crowderinvestments.com