8/22/2008 7:17:56 PM
The system remains in Buy mode. We've been in buy mode for over a month now and while the trend remains, that's where we'll stay.
On August 15 we sold a half position in an SPX Sep 1395(SXYIS)/1405(SXZIA) Call Option Spread for a net credit of $0.60. (This was done through Interactive Brokers, The auto trades didn't get a fill on this occasion)
On August 18 we sold a full position in an SPX Sep 1195(SPTUS)/1185(SPTUQ) Put Option Spread for a net credit of $0.90
The premium received now is $120 per $1,000 of margin required per spread.
SPX Chart - Bigger Picture
Not a lot has changed this week, we essentially had a sideways move. From the chart above, we can see that if 1310 is surpassed, the 1330 region is stiff resistance. The sideways action is likely to continue in the medium term.
SPX Chart - Shorter Picture
The trend held this week as support at 1260 was tested, which remains positive for the short term. For next week the downtrend line that intersects at just below 1300 and that will be the test. If we can break above this line, then 1320 - 1330 becomes the target.
Today's action was encouraging and there is a good chance we'll see a break higher next week, although the 1325 region still poses substantial resistance and this will likely contain any advance.
In summary, the bias remains up for the short term but there's still a triangle pattern and so uncertainty prevails.
For next week, support is 1270 - 1260 and resistance is 1300 - 1325.
In relation to our positions, both the call and the put spreads remain sound. We may enter a new trade on Monday morning, so watch your email Sunday evening.
The quote this week is from Henry Valentine Miller, an American painter and writer, known for his famous novels Tropic of Cancer, Tropic of Capricorn and Black Spring, "In this age, which believes that there is a short cut to everything, the greatest lesson to be learned is that the most difficult way is, in the long run, the easiest."
Have a great weekend and feel free to email me at email@example.com with any questions or comments.