(Click on image to enlarge)
McClellan: +85 (neutral)
Number of Stocks above their 20 Day Moving Average: 49% (neutral)
The bullish divergence mentioned last weekend played out beautifully. The market was strong this week perhaps going a little too far too fast. We are not overbought here, but we got close to an overbought extreme during Thursday's session, except for the number of stocks above their 20 DMA which keeps hovering around the 50% mark. The VIX went down precipitously in one of the fastest declines I've seen, closing the week at only 11.95. Selling options now is unattractive, so play it light and be careful out there. No man's land and good room for both up and downward moves, although we're close to all-time highs again and if the next move is up it should be in slow motion.
RUT 1150/1160/1350/1360 unbalanced Iron Condor
90% probability of success with 5 weeks to expiration. Starting to look great. With RUT at 1267 I'm sleeping like a baby with this position.
SPX 1815/1825 Credit Put spread
ThinkOrSwim says, this is funny, that I have a 100.00% probability of success in this position. Enough said.
Action Plan for the week
Both August positions look very comfortable at the moment. The RUT iron condor will need adjustments if RUT hits 1330 or falls down to 1205. With RUT currently priced at 1267 those moves are very unlikely for just a week of price action as they represent a 5% rally or 5% sell off. And as for the SPX 1815/1825 Credit Put spread, there really is no concern here as the market would have to correct more than 10% in a week.
By Friday we will be exactly 8 weeks away from September expiration so I will start considering new positions throughout the week. My candidate right now is the September RUT 1120/1130/1340/1350 unbalanced Iron Condor trying to obtain 0.60 credit on the Puts and 1.00 or better on the Calls. I'm also considering an SPX 1920/1925/2215/2220 unbalanced Iron Condor. Only one of these two positions will be played, not both. I will probably end up doing something slightly different as the markets will have moved by the time I pull the trigger, but this is roughly the plan to start attacking the September cycle.
The Euro had a few consecutive sessions of weakness closing the week at 1.0827 and it is now breaking support.
LT Trend Sniper robot will go short Euro tomorrow (Sunday, July 18) betting on a continuation of this sell off. There is some decent room until the next major support in the low 1.05's, so this could be a nice trade. This will be the fourth trade of the year for the Sniper which is up +15.89% in 2015. Although, as a reminder, I'm playing with very conservative settings that project a long term +9% average annual return with max draw-down below 10%. Meaning that 2015 has been a positive nice surprise above my expectations.
Wednesday: US Existing Home Sales and Crude Oil Inventories.
Thursday: China's Manufacturing PMI
Friday: Germany's PMI and US New Home Sales
Good luck this week folks!
Check out 2015 Track record