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Saturday, March 1, 2014

Weekend Portfolio Analysis (March 1, 2014)

Ok for whatever reason I can't log in to TOS today. So this will be a "chartless" article if that is even a word. I could have said "fuck it! nobody pays me for doing this". But I decided to be the nice guy that I am and give my readers the ultimate weekend pleasure: My weekend portfolio analysis. So, without TOS, and without charts here it goes.

According to Finviz the SPX index went up +1.4% this week. That was certainly more than I thought possible, and ladies and gents,'s business as usual for this market. So, far it is starting to look as stubborn as 2013.

Market conditions (without TOS)
Stochastics: 76 - 78 (neutral)(last time I checked. Don't remember the exact number but it was below 80)
McClellan: +129 (neutral)(again my memory may be failing here but for sure it was below +150.
76.80% of stocks are trading above their 20 Day Moving Average (overbought)

We are not extremely overbought, there's room to keep going higher. I remember there was a bearish divergence in the charts: Stochastics and McClellan were going down as price has kept going up. So, there might be some hope for those who want to see this market take a break. The problem is, you never know when those signals are going to materialize. So, overall, a market that is close to an overbought extreme but it is not quite there yet. I believe there is room for a 1% push higher this week but no more than that. We'll see. This is not a good time for selling Puts.

March positions
RUT 940/950 Bull Put Spread Very comfortable and way out of the money. Nothing to do here. I could potentially sell a March 1240/1250 Bear Call spread this week in RUT, if I can get 0.70 - 0.80 credit. That would complete an Iron Condor here with very good possibilities in my opinion.

SPY 159/161 Bull Put Spread Also very comfortable and way out of the money.

SPY 191/193 Bear Call Spread This trade was entered on Monday. I looked like a genius at first but not so much now. It is not that bad yet, but it is the position I have to look carefully in the March exp. cycle for possible adjustments. Which I will talk about in the Action plan for the week section.

April positions
RUT 1020/1030/1245/1255 Iron Condor
Also a new position entered on Monday. Still young. The market went up this week, but the 1245 Call is still safe and I don't think I will need to take care of anything here this week. Still plenty of room and time

Action plan for the week
Ok, I could think of opening new trades, but when there is a position that could suffer (March SPY 191/193 Call Credit Spread) I need to take care and design a contingency plan for it above anything else. For example, this week I thought of opening an April SPX 1950/1955 Bear Call spread. Nice trade in my opinion and clearly above the projected uptrend channel, but I decided not to act. Why? Well, because I have an SPY 191/193 in March which may be threatened in the next few days. And If I need to roll it up and out to April, then I would end up having an April SPY and an April SPX Call Spread, both around the same prices. I hate that concentration of risk. Yes, you can make money trading like that, and even look smart showing off your 60% portfolio return come year end, but, what if? what if the market goes up unstoppably during March and April? Catching the Lazy Trader with 3 Bear Calls spreads (SPX, and SPY being almost the same, plus the existing Call side of the RUT Iron Condor)? So, nop, I didn't bite.

So, here's my plan.
Let's say the market keeps going up this week and SPY hits 189 ish or so. At that point my SPY 191/193 Spread will be close to hitting the 30% probability of finishing in the money by expiration (twice that value is the probability of touch, that'd be a 60% probability that at some point before March 21, SPY touches 191) If that happens, then I will close the spread for a loss. It should be worth around 0.50 credit at that point and because I opened it for 0.16, it would represent a loss of 0.34 credit or $374 in 11 contracts per leg. But I will counter attack with an SPY 193/195 Call Spread in the same March expiration cycle that will give me around 0.15 credit of $165 in 11 contracts per leg. That still doesn't cover my loss on the 191/193, it barely mitigates it. But in addition to that I would also sell a RUT 1240/1250 Credit Call Spread in March. To sum up, my final March positions would be:
SPY 159/161/193/195 Iron Condor
RUT 940/950/1240/1250 Iron Condor

Both with very decent probabilities of success where I would be recovering my SPY 191/193 loss and would position my self comfortably above any violent projected trend line.

Now, if we stay sideways I probably won't do anything.

Finally if we sell off, I might take off the SPY 191/193 spread as soon as I get a small profit that covers commissions. Just to remove the looming threat and have a positive March anyways.

Long Term Investing
Finally this week, I added 35 shares of Rogers Communications Inc. at $42.98 to my Dividend Income Portfolio. I now have 68 shares of Rogers at an average cost of $44.334. The position is projected to give me $125.12 dollars in the form of passive income (dividends) per year. I am still invested in 8 Canadian companies and 7 American ones. For details of my Dividend Income portfolio visit the Results page.

Economic Calendar
Sunday: Chinese HSBC Manufacturing PMI
Monday: US ISM Manufacturing PMI
Wednesday: US ADP Non-farm employment change and ISM Non-Manufacturing PMI
Friday: Unemployment Rate, Non Farm Payrolls, Chinese Trade Balance

Good luck this week folks!

Check out 2014 Track Record

Go to the bottom of this page in order to see the Legal Stuff


  1. Good plan as usual. Well thought out and conservative. Now you see why I hate bear call spreads and will only sell them when very overbought. I think we are very overbought right now. I have one April position with IWM iron condor. I have the 125/127 on the call side and 103/101 on the put side.

    While it is possible that we can go up another 2% or 3% next week, it would be very rare. I don't want to predict where the market is going anymore because I am usually wrong. But what I know is that during market extremes, it usually will go in the opposite direction. So I am expecting next week to be somewhat weaker. But what the heck do I know.

    1. Yes, we all feel that we suck at predicting market direction.
      In this case I think +2% this week is very unlikely, but will see that come Friday. I think your IWM Iron Condor is a solid play


  2. Very detailed plan in case the markets keep going up, wonder if the Crimea crisis will press the risk on mood, thank you for your posts Lazy, we are learning a lot.

  3. Thanks you Hector. It looks like you were right. Futures down big pre-market today.

  4. Surprised to see you don't have BCE in your portfolio. Stable and a good dividend.

  5. Yeah, good company and historically stable dividend payer. I have been waiting for a good entry close to the 52 week low, but havent had my opportunity yet.