The markets went from 2096.47 to 2110.30 in a shortened trading week for a 0.66% gain.
(Click on image to enlarge)
McClellan: +74 (neutral)
Stocks above their 20 Day Moving Average: 69% (neutral but very close to overbought)
We're obviously close to a short term overbought extreme but not quite there yet. The three indicators I like to follow are saying that there is still room for this thing to move up. The upside is limited though. Last week I mentioned that the markets were unlikely to move past 2120 during the trading week (from February 16 to February 21) and I was right about that. For me, the top this week is around 2135. I don't see SPX going above that level this week as it would be more than 4% above its own 50 Day Moving Average, which based on history is a rare event.
At this point, and with two positions already open, there is no urgency to add something new. I don't like individual Credit Put spreads now, and as for Credit Call spreads I will wait a little bit more.
SPX 1845/1850/2170/2175 unbalanced Iron Condor
27 days to expiration and 76.28% probability of success. The Call side is the most concerning piece, but the position is not looking bad.
SPX 1855/1860/2200/2205 unbalanced Iron Condor
This position was initiated two days ago. A young position, obviously far from being threatened. Nothing new to say here.
Action plan for the week
I'll adjust the March unbalanced Iron Condor if SPX hits 2140 or so. But like I said, I think that's very unlikely to happen in the upcoming week. If I have to adjust, I will still use March options and will deploy capital in the 2190's area. This is an unbalanced Iron Condor so the loss on the Call side would be small. I would play the adjustment with full position which would allow me to recover everything and come out with a winner.
If the market reaches and overbought extreme, I'd like to initiate a March RUT 1300/1310 Credit Call spread position for 1.00 credit or better.
If we stay sideways, or if we fall from current levels I will do nothing. That's unless we fall so hard that a short term oversold extreme is reached. It looks like a stretch but anything is possible. With a 4% market fall or so, I would sell the RUT March 1070/1060 Credit Put spread for 0.60 credit or better.
Monday: Existing Home Sales
Tuesday: German GDP, Europe CPI, US Consumer confidence, China's Manufacturing PMI
Wednesday: New Home Sales
Thursday: US Core CPI, Core Durable Goods orders.
Friday: US GDP, Pending Home Sales, Chicago PMI, Michigan Consumer Sentiment.
Good luck this week!
Check out 2015 Track record