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Saturday, February 25, 2012

Weekend Portfolio Analysis (02-25-2012)

Well, well, well, and we keep going up and up and up. Anyone would say the sky is the limit for this market. Before my usual weekend rant, I want to talk about the title of these weekend articles which I have changed to "Weekend Portfolio Analysis". The reason why I think this change is important is that it accurately describes the purpose of these articles. I was definitely not forecasting market direction for the upcoming week, so a title like "Weekend Market Analysis" was not appropriate. At the same time the other title "Weekend Thoughts" was too generic, and I was attracting the wrong readership to the site, by bringing frustrated moms who were Googling God knows what on a Sunday afternoon and were ending up at my site.

So, it will be Weekend Portfolio Analysis, as I go through the positions in the portfolio, analyze everything as a whole, and talk about possible adjustments or new plays if certain price action patterns materialize in the market.

Ok, so back to business. The week started sort of week, but once again the uptrend remained intact, and a new fresh High for the year was hit on Friday. However, the upside moves are being slower and slower. According to Finviz the S&P500 index only advanced 0.3% this week. Now, take a look at the SPY chart:

(Click on image to enlarge)


The SPY Etf has been trading on a clear uptrend channel that when projected into the future (March expiration) has a range between 139.50 and approximately 144.20. That is, if things keep going this way, slowly trending up. With an SPY 141/143 Bear Call Spread in the portfolio, I certainly have chances of survival, but also, my position can be threatened if the market keeps the same mood of the last two months. However, my plan by now, is to give it more time, and expect some sideways action, or some pullbacks where I win more time. If I feel too threatened this week I might close the position, hopefully without a loss or even a small profit.

As for the IWM positions. A look at the chart reveals we are a little bit more relaxed here:

(Click on image to enlarge)

With a 88/90 Bear Call Spread, I am at the very high end of the projected range, which is good. The 76/74 Credit Put Spread on the other hand is looking really healthy here. I think there will be no need to touch those positions this week.

Portfolio Beta-weighted against the SPX index:

(Click on image to enlarge)

Profit range with SPX between 1270 and 1413 by March 16. Probability of success 75.57%. Days to expiration 20.

Have you all a nice week.
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