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Saturday, February 16, 2013

Weekend Portfolio Analysis (02-16-2013)

February 2013 is now in the books of history. It was a bad month for me, and these are the good ones to learn from. I can identify two main mistakes I made:

Mistake 1: Opening the RUT 890/895 Bear Call Spread on January 2. Not only was the market not overbought (against all my rules). But I also disregarded the fact that January is one of the most bullish months of the year. Historically speaking, chances of sell offs are much lower.

Mistake 2: Closing the SPX 1530/1535 on Tuesday. The reason why it was a mistake is because I chickened out. I had an alert set at 1528. A number that was never touched, in fact 1525 was never touched.

As I gain more experience as a trader, I get to know myself better. Whenever I have more free time, and start looking at the market more frequently throughout the day I over think my trades and positions. It's totally confirmed. And whenever I over think my positions my performance ends up suffering.

The less I look at the markets, and the less I trade, the better the results.

Anyways, with expiration yesterday the SPX 1450/1445 Bull Put Spread expired for a full $250 profit. The RUT 855/860/935/940 Iron Condor also expired for full profit of $420

The performance year to date sucks (-14.22%). As scary as the number sounds, it is simply part of trading an aggressive strategy that looks for exceptional returns per year. At this point the bleeding has stopped. No more complicated positions are open. And I believe I'm a little wiser after January lessons.

Market conditions right now

SPX went from 1517.93 to 1519.79 this week for a small 0.12% gain. The uptrend has not been violated yet.

(Click on image to enlarge)

Stochastics at 85 are overbought
McClellan at -19 showing plenty of upside room
63.88% of stocks are above their 20 SMA
77.36% of stocks are above their 50 SMA

There's plenty of downside room, that's clear. But there's also upside room. I believe we're not at an extreme. To me this is a coin toss at this point. No man's land. And I would avoid selling aggressive credit spreads close to current price action.

Current positions

Two positions in March:

SPX 1355/1360/1560/1565 Iron Condor

(Click on image to enlarge)
 Probability of success 77.87%. Temporary profit +$75. Looking good and comfortable. I don't anticipate touching it this week.

RUT 825/830/955/960 Iron Condor

(Click on image to enlarge)
Probability of success 78.98%. Temporary profit +$37.50. Also looking good here. Not concerning.

Finally I will probably add the first April position on Friday this week. With volatility this low, it is definitely a challenge and very risky, so I'll have to go very far out of the money. Looking for smaller returns.

Economic Calendar

Markets are closed Monday for President's Day.
FOMC Minutes on Wednesday will take the focus and Housing Data and PMIs on Thursday.

Good luck this week folks!

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