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Saturday, March 10, 2012

Weekend Portfolio Analysis (03-10-2012)

Finally some fun! A week with a 2% down day. It had been a while since the last one of those. Funny how headlines all over the internet were talking like it was the end of the universe. After that Tuesday, the market resumed its uptrend, and closed the week with no major damages. S&P500 only lost 0.1% overall this week and now indicators are showing we are far from overbought. I think an assault to resistance at 1380 is very likely this week.

As you know, I closed the IWM 76/74 March credit spread for a small profit. I admit it, I chickened out completely. Closing the spread when IWM was around 79 and my breakeven being bellow 76. It hurts to leave early and leave so much juice on the table. I think I should have waited and opened the IWM 72/70 April credit spread only if I was forced to close the IWM 76/74 March. But given that I opened the IWM 72/70 April, suddenly I had too much downside exposure. If I hadn't opened the 72/70 April, I wouldn't have closed the 76/74 March which would have probably expired this coming week for full profit. Just a good lesson.

Now the two remaining positions in the March portfolio:
The IWM 88/90 March spread looks really comfortable. With IWM sitting at 81.60, it would need to go up almost 7 points (more than 8%) to affect this position. This trade should return full profit of $350 by this Friday.

The SPY 141/143 March spread, although not as comfortable, looks nice too. With SPY sitting at 137.57, it would need a +35 point move in a week. Something unlikely, but definitely possible, who knows. Hopefully I win sometime as the market tries to break resistance and fights in that area for a while. If this SPY is threatened this week, I will try to open a new SPY Call Credit spread in April taking advantage of overbought conditions by then.

Overall, the portfolio beta-weighted vs S&P500 shows a positive outcome of +$672 this week as long as the markets don't reach 1410. Almost 90% probability in our favor.

As for the market this week, I believe the momentum is set for the up side. Although a second rejection of the 1380 level might be harsh. Oscillators (RSI, Stochastics etc) are pointing up and now far from overbought. Only 51% of stocks are above their 20SMA. Plus US reports this week were good which gives confidence.

There will be plenty of activity in respect with news with Industrial Production, CPI/PPI, Consumer Sentiment, Retail Sales and Philly Fed. Also, the FOMC minutes. So, probably a week with substance.

Have fun with this market guys, at least it hasn't been as crazy as last year's so far.

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1 comment:

  1. I agree the media was going crazy about it, but in regards to the IWM 76/74 March credit spread I would have done the same. Cash in while you can. It may have been hasty but we have to make a call from time to time I know I have when looking into my portfolio analysis.