As the market went from 2104.49 down to 2077.57 (-1.28%) the world became that more bearish and pessimistic. But fear not. Despite all the doom and gloom I believe we won't see a huge correction or anything like that in 2015. Give this markets some credit: European debt issues, Greece, China's debacle, Commodities crash, ISIS, end of QE, possible interest rate hike, and,...and,...let me say this, the markets are still up 0.91% year to date. Sure, it is not 2013, but this market has shown some serious resilience to go down with all that has been thrown at it. As the US Economy keeps marching well, with more jobs being created with consistency, I favor the notion that there will be no cataclysm in the home of the brave. And as for the interest rate thingy, if it happens, isn't it a recognition that things are better? I don't know. This joke of an industry is full of contradictions as every single piece of news can be used to defend both the bullish case and the bearish one.
So, that's today's talk about market fundamentals. Which I never analyze as I think they are irrelevant to the type of trading that we do but some people have asked about my view. So, I thought I would reflect my opinion, as useless as that may be, and in the process make this article that much more entertaining. Now, let's get down to it shall we?
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McClellan: -32 (neutral)
Number of Stocks above their 20 Day Moving Average: 34% (neutral)
No man's land but close to a short term pessimistic extreme. Not my ideal time for new entries, but with a small 1.5% decline it will be show time. The 2040's in the SPX is a very interesting battle zone. The market will be in a short term oversold condition down there and it will be ideal for out of the Money Put selling. Using September options, it will be possible to sell Put spreads around the 1875 area for 0.30 credit or better. As usual, you will be afraid as the whole world will seem to be coming to an end and the terrible feeling that the likes of Justin Bieber and Miley Cyrus won't be there to save us will be on the prowl.
RUT 1350/1360 Credit Call Spread
This fight is over and it has been won. I'll just ride this one all the way to expiration.
SPX 1925/1930 Credit Put Spread
99% probability of success with 2 weeks left. The perfect girlfriend. The one that never cheats on you.
September RUT 1120/1130/1330/1340 unbalanced Iron Condor
79% probability of success, down from 84% last week. Still plenty of time for the market to inflict some pain with 6 weeks to expiration. I may need to defend the Put side if RUT falls down to the 1180 area (RUT is currently trading at 1206 so 1180 is now easily within reach)
Action Plan for the week
August positions look great, nothing to do there.
My September RUT position will need adjustments on the Put side in the event that RUT reaches 1180 or so. If that happens this week, I will close the 1120/1130 Put spread for a loss and will deploy new capital in the 1050 zone. The Iron Condor will be 1040/1050/1330/1340 after the adjustment and that should be the end of the story.
If the down move is "organized" (politely inside the downtrend channel) then 1180 will not be reached this week. I have to be alert nonetheless.
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Tuesday: German ZEW Economic Sentiment
Wednesday: China's Industrial Production, US Crude Oil Inventories
Thursday: US Retail and Core Retail Sales
Friday: Europe's CPI and GDP. US CPI and Michigan Consumer Sentiment
Good luck this week my friends! Thanks for dropping by!
Check out 2015 Track record