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Saturday, September 15, 2018

Weekend Portfolio Analysis (September 15, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-09-15).pdf

If the above link doesn't work for you, simply log in to, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the 2018 Track Record page

Previous Analysis now publicly available:
Weekend Portfolio Analysis (September 8, 2018) 
Recent Trading Activity

- No Activity.

Market Conditions
(Click on image to enlarge)
Stochastics: 81 (Overbought. Up from 28)
McClellan: -35 (Neutral. Up from -135)
Stocks above their 20 DMA: 44% (Neutral. Same as last week)

No man's land

Last week I mentioned that despite the "no man's land condition", the downside started to look more limited. It was a decent short-term read of the markets and the index is higher now with oscillators pointing upwards.

Technically speaking, the all-time high price levels in the 2,915 - 2,920 range may offer some resistance, but my take is that, eventually, this barrier will be taken this year. The index is 2.1% higher than its 50-day. Not an extreme, but it doesn't leave a lot of room for a huge rally this week. A +2% up week would surprise me. It's been a while since we last had one like that. To the downside we have 2,870 and then the 2,800 level. I'm bullish for this weak, but that's just my bias. Again, what matters is that this is No Man's Land and therefore I will play it with a Neutral position (an Elephant).

The Russell Index:
(Click on image to enlarge)
Similar to SPX, the RUT going lower and trading around support, which used to be former resistance. Much closer to its 50-day, which leaves more upside room on an eventual rebound. To the upside, all-time highs around 1,745 can offer some resistance on the first try.

Current Portfolio:
The SPY Calls and SVXY Calls expire in December and January of next year. All bullish bets on a market rebound.

Let's now look at the income plays.

Sep SPX/SPY 2645/2650 - 269 Elephant Put side
Net Credit: $1042. One week to expiration
(Click on image to enlarge)
Defense lines: 2,685 to the downside (adjust Put side). It should give us no problem this weak and I'll let it expire on Friday morning.

Oct SPX/SPY - 2690/2700/3010/3020 - 274/302 Elephant
Net Credit: $1448. Five weeks to expiration.
(Click on image to enlarge)
Defense lines: 2,760 to the downside (adjust Put side). 2,980 to the upside (close entire Call side at a loss. Keep riding Put side). This position has made some nice progress and it has been easy to baby-sit.

Oct RUT/IWM - 1590/1600/1810/1820 - 161/182 Elephant
Net Credit: $1463. Five weeks to expiration.
(Click on image to enlarge)
Defense lines: 1,640 to the downside (adjust Put side). 1,770 to the upside (close entire Call side at a loss. Keep riding Put side). Also good progress made here during the week and looking comfortable now. Pink line nicely moving up as time goes by.

Action Plan for the Week

- Let the September SPX Put Elephant remainder expire on Friday.

- That same day, I will enter the first November position. You can go with either index this time. I'm a little more inclined towards RUT as it has been giving slightly better credits lately. But really, if you like the position of the SPX strike prices better, then not an issue. Markets will move from here to Friday, and credits will change too.

- I'm willing to close the Call side of the October SPX Elephant if I can get about a $300 profit (out of a maximum of $384 credit received on that side). So, around 75% of max profit on that side. We are not quite there yet but with some more market weakness and a little time decay it may happen. I may be able to close the Call side of the October RUT Elephant instead. It depends on which (if any) index moves lower during the week.

Economic Calendar

Monday: Europe CPI.
Wednesday: US Building Permits and Housing Starts. ECB President Draghi speaks.
Thursday: Philly Fed Index. Existing Home Sales.
Friday: Europe Manufacturing and Services PMI. US Manufacturing and Services PMI.

Good luck this week folks!

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Check out 2018 Track Record

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