Horizontal yellow lines represent the boundaries of my March and April Iron Condors. In other words, those are the points I don't want the market to reach.
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McClellan: +25 (neutral)
Stocks above their 20 Day Moving Average: 63% (neutral)
Neutral territory here and plenty of room to move in either direction before reaching the boundaries of the long term channel. I'm cautious in circumstances like this and prefer to not play individual credit spreads. The last price extreme was December 16, 2014 where I played a successful Credit Put spread. Since then I haven't seen short term extreme markets, so my activity continues to be pretty limited to long term Iron Condors. I'm really not complaining. So far, so good. My positions haven't been threatened in 2015 and I've been trading without pressure. Thankfully.
SPX 1845/1850/2170/2175 unbalanced Iron Condor
20 days to expiration and 81% probability of success. Starting to look very good. No concerns with this position right now.
SPX 1855/1860/2200/2205 unbalanced Iron Condor
80% probability of success 48 days to expiration. Also looking great but this is a young position. Lots of baby-sitting ahead. No concerns at all by now and shouldn't be a problem in the upcoming days.
Action plan for the week
Ok here's the thing. Last weekend I mentioned the top on the way up for the week was 2135. I didn't see SPX going beyond that. I turned out to be right. It's a very simple yet effective analysis that takes into account how far the hypothetical price would be from its own 50 Day Moving Average and then judging whether that would be extremely rare based on past history. For this week I think 2138 would be a stretch. But to make it pretty, let's use a round number. Let's say 2140. I believe 2140 is very unlikely in the next 5 trading sessions.
Well, according to my estimations, the Call side of the March Iron Condor (2170/2175) reaches the adjustment point at around SPX 2150 (30% probability of being in the money). If I think SPX 2140 is not going to happen, I feel even more confident that we won't see 2150. For the April Iron Condor the adjustment point is even beyond that, around 2165 or so. All this means, I am not concerned if the market moves up as I believe my adjustment points will not be reached in a week.
On the way down there is plenty of room in both trades. Adjustments won't be necessary.
As for entering new positions. I will only sell Credit Call spreads if I get to sell March RUT 1300/1310 Credit Call spread for 1.00 or better. That is looking like a very remote possibility. I would also sell April RUT 1330/1340 for 1.00 credit or better. It's far from that. But those are two plays I would do without hesitation. Not both at the same time obviously, I would only trade one of them.
As for Credit Put spreads, I need for SPX to fall to at least 2030 - 2035. That's close to 4% below current prices. A 4% move in just a week is not common. So, chances are, I won't enter Credit Put spreads in the next trading sessions.
Overall, it all looks like I won't enter new trades. But that's fine. I'm happy riding my existing Iron Condors problem free.
Long Term Investing
This week I bought 5 shares of Toronto Dominion Bank (TD) at $53.06 Canadian Dollars on Tuesday. It was a pretty well timed purchase. This is a small capital that I had accumulated as a result of dividends and it was simply sitting idle. I now own 31 shares of TD which I plan to hold forever.
As I mentioned earlier, my long term investment activity will be limited in 2015 as a result of my move to the US, the need for capital at hand, the uncertainty around the job situation and the first three mandatory months without a work permit and so on. However, there are a few things that I want to accomplish in my long term investment accounts. Lately my portfolio has been too susceptible to the price of oil instead of the price of the overall markets. On any given day, I look at the oil futures and I immediately know whether my portfolio will be up or down regardless of what the TSX or the SPX indexes do. Obviously, I have more exposure to energy than necessary. I own shares of Exxon Mobil (XOM), Chevron (CVX), Suncor Energy (SU.TO), Crescent Point Energy (CPG.TO) and Black Diamond (BDI.TO).
While I'm fine holding Exxon, Chevron and Suncor, the other two do not make me very happy. I want to cut my holdings in Crescent point by at least half. I currently own 114 shares so I can start doing things like Covered Calls. As for Black Diamond, I want to get rid of it entirely. These two investments were mistakes that do not align with my investment philosophy: Crescent Point is not a dividend grower, Black Diamond is still too small a company. Those two were just speculative moves. I felt attracted by the dividend yield offered by CPG and by potential exponential growth of a small company like BDI (less than a billion in market cap). But obviously I'm not at ease with these holdings nor with the overall sensitivity of the portfolio to the price of oil.
In addition to this, for 2015 I also want to increase my position in TD to about 50 - 55 shares. I would like to initiate positions in Canada National Railway (CNR.TO) and Enbridge (ENB.TO) as well as increase my existing position in TransCanada (TRP.TO). Just waiting for better prices in all three of them. If I get to do all this in 2015 I will be very satisfied with my long term investment portfolio and will be able to sleep much better.
The LT Trend Sniper robot started its second position of the year just a few hours ago. The beast went short EURUSD at 1.11972 with Stop Loss set at 1.13847. It's betting on a continuation of the long term downtrend. We'll see how this one goes.
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Sunday: Chinese Manufacturing PMI
Monday: German Manufacturing PMI. Europe's CPI. US ISM Manufacturing PMI
Wednesday: ADP Nonfarm Employment Change, ISM Non-Manufacturing PMI
Friday: US Nonfarm Payrolls, Trade Balance, Unemployment Rate
Good luck this week my friends!
Check out 2015 Track record