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Steady as She Goes

8/1/2008 8:56:55 PM

The system remains in Buy mode.

Current Positions:

On July 22 we sold a half position in an SPX August 1170(SPTTN)/1160(SPTTL) Put Option Spread for a net credit of $1.00.

On July 25 we sold the other half position in an SPX August 1185(SPTTQ)/1175(SPTTO) Put Option Spread for a net credit of $1.20.

The total premium received averages now to $110 per $1,000 of margin required per spread.

SPX Chart - Bigger Picture

The market finished virtually unchanged this week, even though we had a range of almost 60 points! As the candle for this week shows, with a large tail on both the up and the down side, we're in a period of indecision. In the bigger picture, not much has changed, we still have a positive divergence on the MACD, so there is potential for a decent rally still.

SPX Chart - Shorter Picture

In the shorter term, while the market penetrated the 1240 mark to the downside on Monday, it quickly rebounded. This was a positive sign and potentially traces the beginning of a new trend.

For next week, the market is likely to continue it's gyrations and consolidate its recent move, moving sideways between 1245 and 1285. Then the following week, a move up towards the 50 DMA (blue line on chart) into options expiry is likely.

With our open Put positions, we have 2 weeks to expiry and remain sound.

For next week, support is 1240 - 1250 and resistance is 1280 - 1290.

The quote this week is from Sun Tzu, "Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win."

Have a great weekend and email me at angelo@stockbarometer.com with any questions or comments.

 

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