SPX went from 1991.74 to 2003.37 for a +0.58% gain. And because we didn't reach short term extremes I didn't enter a single trade.
Market conditions
(Click on image to enlarge)
McClellan: +125 (neutral)
74% of stocks are trading above their 20 Day Moving Average (overbought)
We're not totally overbought as I like. Although, obviously this thing is closer to a short term overbought extreme than to an oversold one. I could sell out of the money October Calls here on SPX but because Calls are such a serious matter, and because I'm already short Calls on RUT as part of an Iron Condor I prefer to wait until we reach a clearly short term extreme. I want to see that McClellan oscillator showing higher numbers.
September Positions
RUT 980/990 Bull Put Spread. Easy to ride with a 99% probability of success and 20 days to expiration. This should be a hassle free winner.
SPX 1815/1820/2065/2070 Iron Condor. This Iron Condor has an 86% probability of success with 20 days to expiration. I feel it's pretty safe. The Call side is safely above the upper end of the up trend channel.
The September cycle has been pretty quiet for me this year, and if these two positions expire successfully, the performance of the overall portfolio year to date will go up to +17.88%. With three months left in the year after September expiration, that number would put me in a very good position to break the 20% mark in 2014.
October positions
RUT 1020/1030/1230/1240 Iron Condor 77% probability of success with 48 days to expiration. The position is currently losing 0.14% or ($23 dollars in a margin of $1668 for the model portfolio). That's pretty manageable, and still far from getting out of control.
Action plan for the week
Defense, defense, defense. The RUT Iron Condor is the center of my attention these days as it is the one where I might need to make adjustments. I'm optimistic though. The market's looking closer to an overbought extreme and my 1230 short Call looks far from the current price of 1174.
If RUT hits 1205 this week, my short Call (1230) will probably be close to the 30% probability number. If that happens, I'll be closing the 1230/1240 spread for a manageable loss and will redeploy capital with the 1260/1270 bear Call spread, where I would feel very very comfortable. Now, will RUT hit 1205 this week? Will the markets move up almost 3% this upcoming week? I'm optimistic that this won't happen. I think the market is just too close to a short term overbought extreme. I see 1% - 1.5% happening, not 3%. But, anything is possible, and as a trader you have to plan ahead and that's all I'm doing. Close 1230/1240 and open 30 points higher at 1260/1270 if RUT hits 1205 before September 5th.
On the offensive side, I would like to enter a secondary position in October in addition to the existing RUT Iron Condor. I would like to sell a 2090/2095 Credit Call spread on SPX and obtain 0.50 credit for it. The only way that will happen is if SPX reaches 2020. That would be a 1% push higher, which is totally possible.
Like I said in the Market conditions segment, if it wasn't because I'm already short RUT Calls, I would have probably sold SPX Calls. Right now, the 2075/2080 Call spread has a 90% probability of success and it offers 0.55 credit. I think that spread is decently safe, I just want to be extremely careful in my particular situation and that's why I'll wait for a more extreme market.
Forex
Metatrader sucks. I mean it seriously sucks. I know it is the most used platform in the world of retail forex traders, but I think that's mostly due to lack of a serious competition than anything else.
This week, Metatrader decided to disable my paper money account. Along with it, all the history that I had created tracking the results of a particular strategy for months is gone. Gone with the wind. Without a previous, alert, warning or anything.
Anyways, the LT Trend Sniper System is a very simple strategy and it won't be hard for me to track the results manually. The robot would still be riding the short EUR/USD position initiated on July 17 after a new 70 day closing low was made. The robot started to short the pair at 1.3524. Because an 8 day closing high has not been made (which is one of the exit conditions, based on price reversal). And because 8 days haven't gone by without the price making fresh lows (which is the second exit condition, based on lack of progress) then, the position hasn't been closed. EUR/USD is right now priced at 1.3130. That is a 394 pip gain so far. The stop loss had originally been placed at 83.2 pips. That means the reward so far is 4.7358 times the original risk specified for the trade. And because 3% of the capital was being risked, the gain so far represents a +14.20% growth for the portfolio. Simply amazing. I will start using this strategy with real money in 2015 if I find a good reputable retail Forex broker for Canadians. OANDA is my candidate right now. I will also release the robot to the public so whoever wants to use it, can do so. Although the strategy has always been 100% public with zero secrecy. So, anyone out there can trade it manually.
Economic Calendar
Sunday: Chinese Manufacturing PMI
Monday: German GDP, PMI and European PMI. American markets closed (both US and Canada)
Tuesday: US ISM Manufacturing PMI
Thursday: ADP Nonfarm Employment change, ISM Non-Manufacturing PMI
Friday: Nonfarm Payrolls, Unemployment numbers.
Good luck this week folks!
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