Still Range Bound, But For How Long?

The S&P has moved back into the middle of the range and will most likely stay there until the either the payroll report Friday or the Dec. 11 Fed release. Our short-term overbought/oversold measures are moving back near oversold territory, but that doesn’t mean the move lower has ended. There is still room to the downside roughly 1440-1450 which is right at the support levels that I have mentioned in the last few posts. A move to that level and my guess would be that the Bulls will step in with some force. As to whether or not the short-term bounce leads to a “Santa Claus”, well, that is up to Mr. Market to decide.

The move lower has moved the underlying SPX back towards the middle of our 300 point range in the Iron Condor strategy. A comforting feeling indeed. There is nothing better than placing a trade with a huge range and watching it vacillate within the chosen range without coming close to the short strikes. Best of all, we do not have to touch it and yet we will make 7.9% over the four weeks. Not bad, not bad at all.

The wondeful people over at Vix and more agree that now could be the time to get into Iron Condors – Thinking Sideways But Volatile

According to the Stock Trader’s Almanac Thursday and Friday of this week are historically bearish. Only 33.3% and 38.1% of the trading days finished in the black on the S&P.

Overbought/Oversold for December 4, 2007

S&P (SPY) - 51.1 (neutral)

Russell 2000 (IWM) - 42.8 (neutral)

Dow (DIA) - 53.8 (neutral)

Nasdaq 100 (QQQQ) - 48.7 (neutral)

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