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Saturday, September 7, 2013

Weekend Portfolio Analysis (September 7, 2013)

There was no trading activity this week, just babysitting the two September positions and the October Iron Condor. SPX went from 1635.95 to 1655.17 for a +1.17% gain. This move puts the Iron Condors of the portfolio in much better shape. And now it looks like a potential downtrend channel is being formed after the high of the candle on Friday was rejected as it touched the upper end of the channel which coincided with the 50 day Simple Moving Average.

(Click on image to enlarge)
Stochastics: 66 (neutral)
McClellan: +47 (neutral)
48.12% of stocks are above their 20SMA (neutral)
47.55% of stocks are above their 50SMA (neutral)

This is the perfect definition of no man's land and I don't like to predict price movements in this circumstances. Even though there is a potential downtrend channel in the making, the market is in a neutral stage. That is, far from overbought and also far from oversold which are the two conditions I consistently try to identify. At this point there is good room to move in either direction, and not even the bravest of the bravest should sell close to at the money options.

September Positions
September SPX Iron Condor(1560/1565/1760/1765)
Now looking great with a 94% probability of success in the next 12 days.
(Click on image to enlarge)

RUT 935/940 Bull Put spread
A nice 98% probability of success. What a good girlfriend this one has been almost from the beginning!
(Click on image to enlarge)

October Positions
SPX 1525/1530/1750/1755 Iron Condor Looking better than last week, now with a 78% probability of success.
(Click on image to enlarge)

Action plan for the week
September positions are looking great. With SPX at 1655, it is very unlikely for us to see 1565 or 1760 in the next 12 days. Same thing for the RUT 935/940 Credit Put spread. I won't touch those. My goal is to let them expire worthless. September gains are at this point as close to a certainty as it gets in trading. That would put the portfolio in the black for the first time this year. It's been a tough journey :) Thanks for reading and coming back here all these months in spite of my trading slump. The trading slump was really only January and February, but it is very tough to recover from two consecutive negative months with this trading style. Specially because I was being overly aggressive in a very low vol environment.

The October Iron Condor, is looking very good too, and I won't touch that one either in the next few days. And as for new positions, I would like to see a more extreme market. Either overbought or oversold, I don't really care, but something more extreme than this no man's land territory. If we move up +2% or down -2% then there's a chance I might get interested in selling some out of the money RUT options against that rally or sell off. Otherwise, it will be another week of baby sitting and letting time decay do its thing. Which is boring, but beautiful, and feels really good. To me, the fewer positions the better. 

Economic Calendar
Sunday - Chinese CPI in the evening for us westerners.
Thursday - Initial jobless claims, Continuing jobless claims and Federal Budget Balance.
Friday - PPI, Retail sales.

And that's all my friends! As usual, take it easy but take it anyways. Good luck with your trading this week folks!

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  1. Congratulations for being profitable this year. Last Friday before Labor Day weekend would have been a great day to sell some put spreads on RUT as it was oversold.

  2. It was indeed an excellent time. I would have entered such positions if I hadnt had the exposure I already have of 60% of the portfolio.

    Thanks for reading man!

  3. Letting time decay do its thing is actually quite exciting for me :-) Up another 8 S&P points, what a strange market.

  4. Quite exciting for me too! Funny because when you start trading, it is usually the amount of activity what keeps you engaged. Trades and more trades, and positions, and new positions and adjustments. Over time you get to love the part of "doing nothing".

    8 points up? strange market? It is always strange buddy! Dont try to make a logic out of it.

    Thanks for coming by.

  5. Great positions, glad to see you're having a good month and are back in the black for the year.

  6. Thanks for dropping by my friend. I hope you're doing good with your trades.