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McClellan: -123 (neutral)
Number of Stocks above their 20 Day Moving Average: 48% (neutral)
We are at a neutral stage once again. Obviously closer to short term extreme pessimism, which we almost had this Friday. At this point, if you are not as metaphysical as I am, if you are more bohemian, selling Puts is acceptable, for example the 1930/1925 July SPX Bull Put spread with 10% probability of expiring in the money. Personally, I will wait for the extreme reading I always expect.
As for selling Calls. Erase that thought from your naughty and dirty mind. You could be creating an urban legend, a mystery that will amuse and inspire poets and philosophers of the future, who will try to unravel your behavior decades and centuries later wondering what the hell you were thinking.
RUT 1130/1140/1340/1350 unbalanced Iron Condor
2 weeks to expiration and 98% probability of success. This one will go all the way to expiration. No concerns.
SPX 1935/1940/2220/2225 unbalanced Iron Condor
Looking good 82% probability of success, 6 weeks to expiration. Theta decay starts to pick up from now on. I'm liking this position. SPX is sitting at 2092.83 so this position feels very comfortable.
Action plan for the week
Nothing to do to the existing positions. They are safe and won't need adjustments during the week.
As for new positions, it's becoming late for June options so if we reach an extreme, I will probably go with July options. Because I already have an SPX position in July, I would normally default to a RUT credit spread. We're closer to extreme pessimism than optimism, so selling out of the money Puts could be my play, but I need at least a 1% fall from here. Also, RUT doesn't look as oversold as SPX, so, even though I have a July SPX position, I may sell an SPX Credit Put spread as the index looks more attractive for Put selling than the RUT at the moment. With SPX falling to around 2070, I would gladly sell the 1900/1895 Credit Put spread for 0.30 credit or better.
Monday: China's CPI and PPI
Tuesday: Europe's GDP
Wednesday: US Crude Oil inventories
Thursday: China's Industrial Production. US Retail Sales
Friday: US PPI, Michigan Consumer Sentiment
Good luck this week folks!
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