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Sunday, March 27, 2016

Weekend Portfolio Analysis (March 27, 2016)

Let's just say, life in South Florida, especially Miami Beach, is a constant challenge to a relatively young man's discipline. It's been a glorious weekend of vice and capitalist pollution but Thank Allah it is over. The Weekend Portfolio Analysis was never in greater danger than in the last few hours. But then I think about the hordes of traders waiting for my insight; insecure, and weak without proper guidance. I think about my duty to a business that generates insurmountable amounts of hard cold cash, and can't help but come back here, and provide you with the gift of my presence.

Well, price finally seems to have lost its unlimited bullish horniness. The incipient divergences pointed out last week seem to have played out for now and for the first time in five weeks, prices went down over all, in a short week of trading.

Recent Trading Activity

- No Trades. I was too focused on Obama's trip to Cuba. In my opinion, the second most aggressive act against the Castro's regime, behind the Bay of Pigs Invasion in 1961, was Obama's speech this past Tuesday. What a brilliant piece of art! To be studied by future generations of Diplomats and Politicians. Electric. No seriously, I didn't trade.

Market Conditions
(Click on image to enlarge) 
Stochastics: 70 (neutral) 
McClellan: -15 (neutral)
Stocks above their 20 DMA: 58% (neutral)


No man's land. You know the drill.
Magically, that invisible descending resistance trend line was the wall where price stopped and started to retrace. Why there? Why precisely there? I had drawn that line several weeks ago, which you can see in previous articles. You never know when resistance or support will be respected or broken, hence the challenge for practitioners of this pathetic profession. But again, why there? Is there really any merit to technical analysis and the most basic forms of support and resistance areas? Many believe they don't exist, but I so beg to differ each and every day....

 
Current Portfolio

May31 SPX 2125/2150 Credit Call Spread
18 deltas. Adjustment point is now around 2,075. If it happens, I will take a loss and deploy a 2185/2195 position with typical full size.

June30 SPX 1500/1525/2150/2175 Unbalanced Iron Condor
3 deltas on the Put side at the moment and 18 on the Calls. Adjustment point for the week estimated at around 2,085. I believe we won't see this number, but if we do, I will deploy a new 2225/2250 using full size.

July29 SPX 1650/1657/2200/2225 Unbalanced Iron Condor
No concerns. Still a young position with Lots of baby-sitting ahead. Nothing to do here.

July SPY Long 169 Puts
Portfolio Insurance


Action Plan for the Week

- Adjust May and June unbalanced Iron Condors if SPX reaches 2,075 and 2,085 respectively. I believe there is very little chance for this to happen. After the first crack on that rally, the bulls start getting more nervous. It was time for price to take a pause, and my bias is a little bearish right now. I favor the notion that the descending resistance line will continue to be respected for a while. I may be wrong. If I am, the adjustments will be made as outlined earlier.

- Close the Put side of the June Iron Condor for 0.40 debit or better given the opportunity. Current price is 0.55.

- If the market declines, consider closing the Call side of the May Iron Condor for break-even or slightly better to avoid excessive upside exposure.

- No new positions unless we see a 4 or 5% decline, where I would attack with a RUT Credit Put spread in the mid to low 700's. Jul29 options.


Economic Calendar
Monday: Pending Home Sales
Tuesday: Consumer Confidence. Yellen speaks.
Wednesday:ADP Non Farm Employment change. Crude Oil Inventories.
Thursday: German Unemployment, Europe's CPI, Chinese Manufacturing PMI
Friday: US Non-Farm Payrolls, Unemployment Change, ISM Manufacturing PMI


Options Trading results - With closed positions and trading costs included, we are down 1.60% for 2016 while the market is down 0.39%. The portfolio is currently 47% invested, 53% in cash.

Forex Trading results - Up +2.68% for the year. No position.

Take it easy, but take it anyways!
LT

If you are interested in a responsible and sustainable way of trading options for consistent income with solid risk management, consider acquiring LTOptions, my options trading system to the last detail.

Check out 2016 Track Record


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