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Friday, November 16, 2018

Weekend Portfolio Analysis (November 16, 2018)

Recent Trading Activity

- November RUT/IWM Elephant expired on Friday. A $1,568 gain.

- November SPX Credit Put spread expired on Friday. A $1,300 gain.

Market Conditions
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Stochastics: 33 (Neutral. Down from 88)
McClellan: +36 (Neutral. Down from +108)
Stocks above their 20 DMA: 51% (Neutral. Down from 55%)

No man's land

Weakness early on in the weak, decent recovery during the last two sessions to gain good ground back. Oscillators now in a more neutral position, leaving more upside room. I continue to look at 2800 as potential resistance and 2600 as support. I also believe 2600 is strong support and will not be breached in 2018. We're getting close to Thankgiving holiday, and then Christmas. At the same time, Trade War fears and an aggressive Fed increasing rates put pressure on stocks. I've been bullish into year end. Still am. But I'm not dreaming of a rally to new all-time highs. Something closer to 2,800 or perhaps a bit more by Christmas. Time will tell. For now it looks like a whole lot of back and forth without much conviction in either direction. Decent volatility, and this is all music to the ears of neutral option sellers. 2600-2800, that's the battle ground. Selling options outside that range is the idea (preferably a little higher than 2800, a level I think can be breached easier than 2600).

The Russell Index:
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RUT continues to be the weaker of the indexes. It would be my choice for pure Out of the money Credit Put spread selling.  Yes, some recovery on Thursday and Friday. Now battling around 1525, a level which may offer some minor resistance, mentioned in the past. Then the 1460 area, solid support in my opinion.


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 rest of the positions



Dec RUT 1350/1340 Credit Put spread
Net Credit: $1400. Five weeks to expiration
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Defense line: 1410. Adjust Credit Put spread down.


Dec SPX/SPY - 2490/2500/2910/2920 - 257/292 Elephant
Net Credit: $1513. Five weeks to expiration.
(Click on image to enlarge)
Defense lines: 2,595 to the downside (adjust Put side). 2860 to the upside (Close entire Call side at a loss. Keep riding Put side, whose credit is greater than any loss to be suffered on the Call side, resulting in a net winning position in the end).



Action Plan for the Week

- We now have two positions in the December cycle. It will be a matter of baby-sitting them. Both look very safe. No plans to add anything in the December expiration cycle.

- On Friday we will be 8 weeks away from January expiration. Time to enter the first January position. However, as explained in the October 13 article, I will stop writing Weekend Portfolio Analysis after 7 years. Iron Condors/Credit Spreads/Elephants stopped being the center of my investments a while ago. Yet, looking at the site it would seem that is the only thing I do. It gives the wrong message. I'm also a little burned out from writing. It has been by far the most boring year for the website and it shows, with only 77 articles (I always wrote more than 100 easily every year) and without discussing any of the other numerous investments and interesting strategies that exist out there. My Twitter has been almost dead as well. It has been a fatal year. Way more in personal terms than in trading/investing terms. That said, I will trade one Elephant or Credit Spread or Iron Condor per month and will publish the trade and the follow up updates within each page's trade and I'm still available whenever you want to shoot me an email for anything. I expect to come back more creative and energized in 2019, to diversify the content on the website and make it more attractive, educational and valuable.


Economic Calendar 

With US Thanksgiving in the middle, it should be a quiet week.

Tuesday: US Building Permits and Housing Starts.
Wednesday: US Core Durable Goods. Existing Home Sales. Michigan Consumer Sentiment.
Thursday: US Markets closed for Thanks Giving
Friday: US Manufacturing PMI, Services PMI

Good luck this week my friends,
LT


Check out 2018 Track Record


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