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Saturday, March 2, 2013

Weekend Portfolio Analysis (03-01-2013)

Folks, March has just begun and it is traditionally a Bullish month. According to Moneychimp, from 1950 to 2012 we have had 40 positive Marchs and 23 negative ones and the average return has been +1.07% (considering the negative months in this calculation). Historically speaking that makes March the fourth strongest month of the year behind December, November and April. The typical negative March has mostly been between -1% and -4%. In only one occasion the return was bellow -7% which was an isolated -10.18% occurrence in 1980. I'm not suddenly bullish. Merely suggesting that market crashes in March are unlikely according to past history. Obviously anything can happen.

SPX went from 1515.6 to 1518.20 this week for a small 0.17% gain. Technically speaking we are still in the uptrend channel whose formation started back in November 2012, and the uptrend hasn't been broken yet.

(Click on image to enlarge)
Stochastics at 68 neither overbought nor oversold
McClellan at -12 neither overbought nor oversold
50.20% of stocks are above their 20 SMA
64.02% of stocks are above their 50 SMA

The CBOE Index Put/Call ratio at 1.23 showing a neutral reading as well as the Equity Put/Call ratio at 0.74.

This is not an extreme level and there is plenty of room to move in either direction before the market becomes overbought or oversold again. I would avoid selling options close to current price action at this point.


Positions in the March expiration cycle.

SPX 1445/1450/1560/1565 Iron Condor
(Click on image to enlarge)
Probability of success at expiration has gone up to 76.86%. The short strike price of the Calls side at 1560 looks pretty safe and the Put side at 1450 is not too concerning at this point. My plan is to take this whole position to expiration in 13 days.

RUT 825/830/955/960 Iron Condor
(Click on image to enlarge)
Probability of success 89.26%. This position has been comfortable from the very beginning. RUT going up to 955 or down to 830 seems unlikely in the next 13 days. I don't anticipate having to touch it this week.


Positions in the April expiration cycle

SPX 1375/1380/1580/1585 Iron Condor. Also looking good at this point with a 72.06% probability of success by expiration.


Action plan for the week

All three positions look fine at this point. But anything can happen. Specially SPX 1445/1450/1560/1565. I'll keep an eye on it for possible adjustments if the market explodes to higher than 1550 or below 1460. Other than that, I will look for an extreme move in order to open the second April position. I want to sell an April credit spread in RUT if the market becomes too overbought or too oversold.


On The Forex Front

Due to the limitations imposed by Forex brokers on the Metatrader platform for Paper Money accounts, specifically the fact that your account expires after a month of inactivity, I had to enter a manual trade this week in the account used by the LT Trend Sniper System. Just in order to keep it active and prevent it from expiring. This little manual trade was simply entry an immediate exit, and it won't be considered in the year end results. The system is currently close to triggering a short signal on the EURUSD, but still needs about 130 more pips of down movement.


Economic Calendar

As usual for the first week of the month, this will be a very active week in terms of releases. By the way a Calendar page for that purpose has been added to the site.

Sunday - China Non Manufacturing PMI
Tuesday - Europe retail sales. US ISM Non-Manufacturing Index
Wednesday - Europe GDP. US ADP Nonfarm Employment Change
Thursday - Trade Balance, Initial jobless claims
Friday - Nonfarm Payrolls and Unemployment Rate

Good luck this week folks!


Check out 2013 Track Record

Related Articles:
March 2013 SPX Iron Condor
SPX March Put Credit Spread Roll Up to book profits
March 2013 RUT Iron Condor
April SPX Iron Condor
LT Trend Sniper - A forex strategy that works

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