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Sunday, August 12, 2018

Weekend Portfolio Analysis (August 12, 2018)

This week's analysis has been published at

Download Weekend Portfolio Analysis (2018-08-12).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The Weekend Portfolio Analysis will be available on this site next week for historical reference.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 (August 4, 2018) 
Recent Trading Activity

- Closed the August SPX Elephant Put side on Monday for a $1,100 gain. This Elephant is now entirely closed.

- I tried to initiate a September SPX Elephant on Friday without luck. I tried a few strikes, different widths and credits to no avail. I didn't want to sacrifice a lot of credit, which was small to begin with. I will try to establish a September SPX Elephant again on Monday.

Market Conditions
(Click on image to enlarge)
Stochastics: 77 59 (Neutral. Up from 59)
McClellan: -64 (Neutral. Down from -7)
Stocks above their 20 DMA: 47% (Neutral. Up from 44%)

No man's land

We had the expected upside action in the first half of the week but the market lost strength as it approached all-time highs. I had mentioned that the 2,870 level should offer some decent resistance the first time. Looks like it did. Oscillators are now pointing downwards, so I'm expecting some downside action early in the week. Potential support around 2,800 (which acted as resistance for 6 months), and 2,870 is the new horizontal resistance. So, 2800 - 2870, that's the range I think will be in play for this week. I'll try to play outside this range, which won't be difficult to do when you go out to September expiration options. In the longer time-frame, I think the 2870 will be surpassed at some point later this year, and I'm looking at the red diagonal line at the bottom as potential long term support. Situated in the low 2,700's now.

The VIX is now above 13. Still historically low, but at least a little more attractive than the 11's we had been seeing in the last few days. This is good for deploying a new Elephant. Which is my plan for Monday.

The Russell Index:
(Click on image to enlarge)
Still weaker than the S&P500 and very close to its 50-day average, leaving more upside room. The All-time highs in the 1,710 region have acted as strong resistance three times before, and it is apparently out of reach for now. Seems like a reachable target at some point before the end of the year. Potential support, also horizontal in the 1615-1630 region. Positions in RUT looking very safe (yellow lines)

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.

Aug. RUT/IWM 1500/1510 - 154 Elephant Put side
Net credit: $1,100. One week to expiration
(Click on image to enlarge)
Defense line: 1,555 to the downside (adjust Put side). This is very unlikely and the position should expire for max on Friday without hassle.

Sep RUT/IWM 1530/1540/1795/1805 - 158/180
Net Credit: $1481. Six weeks to expiration
(Click on image to enlarge)
Defense lines: 1,585 to the downside (adjust Put side) and 1,770 to the upside (Close all Calls at a loss. Keep riding Put side, whose credit is greater than the loss to be suffered on the Call side, resulting in an overall net winning trade). Looking good here. Call side has again about $400 in profits already. I'll see if I can take it off finally for that gain at least.

Action Plan for the Week

- Once again, I'll try close the Call side of the September RUT Elephant. The credit obtained on that side was $448 on entry and the gain is already $400. Closing it would give an opportunity to re-open it on a market rebound, since this position is still 6 weeks away from expiration.

- Let the August RUT Elephant Put side expire for max profit on Friday.

- Deploy a September SPX Elephant on Monday following the usual guidelines described on the Unbalanced Elephants Guide.

Economic Calendar

Monday: China's Industrial Production and Unemployment Rate.
Tuesday: Europe GDP and German ZEW Economic Sentiment. 
Thursday: US Building Permits, Housing Starts, Philly Fed Index.
Friday: Europe CPI. US Michigan Consumer Sentiment & Expectations.

Take it easy folks,

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Check out 2018 Track Record

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