Despite everything, the long term trend is still up and the uptrend channel started on November 16, 2012 is still in play.
(Click on image to enlarge)
McClellan: -31 (neutral)
33% of stocks are trading above their 20 Day Moving Average (neutral)
We're in the middle of the channel.
You know it already. This is no man's land, and I can't enter a new position under these circumstances. I entered a new RUT Credit Put Spread on Thursday when the market had reached a short term oversold extreme, but those conditions were a little relieved that same day in the afternoon with some follow up on Friday. Right now, I would rather wait for a break out of this range or a sell off, and then I would enter new positions.
RUT 1080/1090/1280/1290 Iron Condor With RUT currently at 1151 this position is not looking bad. 83% probability of success, 20 days to expiration. The Put side could take some hit if RUT corrects let's say 3% or roughly 30 points. But I like the chances of this position, and it is looking like a winner.
SPX 1695/1700/1960/1965 Iron Condor 79% probability of success, 46 days to go. With SPX at 1857 we're far from trouble here.
RUT 1000/1010 Bull Put Spread The easiest to ride of all. Way out of the money and 95% probability of success.
Action plan for the week
As much as I would like to enter a final new position in the April expiration cycle, I can't force trades where the opportunities are not clear. If we don't get a break out or sell off this week (and I'm probably talking about +2% or -2%) I will do nothing. Remember my mantra: I don't predict or anticipate market rallies or sell offs, I just react to them once they happen and reach an extreme level. If I don't trade this way, and enter positions before the rallies or sell offs take place, I would be getting killed constantly.
As for current positions, they seem safe enough so I don't anticipate having to make adjustments on them or anything like that this week.
Monday: Chicago PMI, Chinese Manufacturing PMI
Tuesday: ISM Manufacturing PMI and a lot of data from Europe, where the German PMI and unemployment numbers are the most important
Wednesday: ADP Non Farm Employment change
Thursday: Initial jobless claims, Non-manufacturing PMI
Friday: NonFarm Payrolls, Unemployment Rate
So, there's a lot of data coming out this week and it could help in moving this market convincingly in one direction. Thanks for dropping by folks, and good luck with your trading!
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