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Saturday, November 9, 2013

Weekend Portfolio Analysis (November 9, 2013)

What a week folks! What a week! It is so nice to have some fun in a year that has been so slow moving (up most of the time), dull, uninteresting......In the end SPX opened at 1763.40 on Monday and closed at 1770.61. That's a +0.41% gain. The week started slow and boring as usual, then we had a nice down move on Thursday (Looks like the bearish divergence between price action and oscillators worked once again), and finally the rebound on Friday, to prove, yet once again, that this market is pretty strong (specially at this time of the year). 

Looking back at price quotes of Thursday's session, it was possible to sell a December 975/980 RUT Bull Put spread for 0.30 - 0.35 credit with a 90% probability of success. I couldn't pull the trigger because I am not in front of my computer these days. I traveled to Ottawa from Toronto on Thursday (5 hour trip) for some tourism with my girlfriend for my birthday, which was yesterday. So, no trading for me. In fact I didn't think I would write an article this weekend but this is a great hobby for me and I know my readers are expecting it,, my princess is sleeping and not demanding my attention.

Market conditions
(Click on image to enlarge)
Stochastics: 55 (neutral)
McClellan: -98 (neutral)
48.51% of stocks are above their 20 SMA (neutral)
61.83% of stocks are above their 50 SMA (neutral)

To me we are in no man's land and there is room for the markets to move with strength in either direction. We are at the top of the uptrend channel, but who knows. Based on the fact that we are not overbought, a break out might result, specially at this time of the year. Be very conservative with Calls selling, or avoid it altogether until this thing reaches more overbought levels.

November positions
SPX 1565/1570 Bull Put Spread This was originally part of an Iron Condor. I closed the 1800/1805 Call side this week to mitigate risks and travel to Ottawa with more peace of mind. With SPX at 1770, the remaining Bull Put spread is totally safe and will expire worthless this week for full profit.

SPX 1520/1525 Bull Put Spread Sure winner. Will be left to expire worthless and save closing commissions.

RUT 1160/1165 Bear Call Spread With RUT trading at almost 1100 and a 97% probability of success, this position feels really comfortable entering expiration week.

November expiration should be very peaceful for the Lazy Trader and a $480 credit for the model portfolio is very likely to be obtained, which will result in a >  +4% portfolio growth and that will improve the performance for the year to something higher than +8%.

December positions
SPX 1600/1605/1835/1840 Iron Condor once again the 1835 short Call is the only thing that could be a concern at some point, as December expiration is still far (40 days) and it is typically a bullish month. Other than that, I'm not too concerned  at this moment. Probability of success 79%.
(Click on image to enlarge)

Action plan for the week
There is nothing to do with the existing November positions.
As for December, my plan is to close the 1835/1840 Call side of the Iron Condor for profits at some point. But there is a momentary small loss there at the moment. I would be able to close it if we got a healthy pullback. In respect with new positions, I won't open anything right now unless we reach an extreme overbought or oversold level. Obviously, at this time of the year I would prefer an oversold level, but you never know what the market is going to give. If we reach overbought levels I will sell Calls in RUT but I will be very conservative and far out of the money.

Economic Calendar
Thursday: Jobless claims, Trade Balance, Non Farm productivity, Trade balance,European GDP.
Friday: European CPI, Industrial Production, NY Empire State Manufacturing Index.

Good luck these week folks!
Check out 2013 Track Record

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  1. Happy Bday Henrick! As usual, your weekend analysis is a must read for me. You are a very good and conservative trader. I like your trading style.

  2. Thanks for your kind words Jonathan! Glad to have such a loyal reader of this site! I think we have learned a lot this year ad I have had some valuable input from your ideas both here and on Twitter. I think the main goal of becoming a better trader each day is totally within reach when exchanging ideas so transparently and openly. This year has been the worst case scenario for credit spread sellers, no question about that. And if I get to finish +10% or better in a yer like this so straight up and with so low volatility I'm only bound to do better when conditions for this strategy improve.

    Thanks for dropping by once again.

  3. Happy belated birthday LT!

    What amazing market, making new high day after day. And it's still not overbought!

  4. Thanks LEN!!
    Impressive and boring market indeed this year

  5. Feels good to be here as it is very informative.