8/29/2008 7:44:57 PM
The system remains in Buy mode.
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 again. From the chart above, 1310 - 1315 is the area of resistance for now, if this is surpassed, then the 1330 level approximately becomes the next level of resistance. The sideways action is likely to continue in the medium term and it's unlikely that 1340 will be surpassed if we get that level.
SPX Chart - Shorter Picture
Monday started off with a big downer, with the market dropping 25 points in a day, and then on Tuesday, support at 1260 was tested once more and held, by Thursday, we broke through 1290 to close at 1300. On the one hand this was positive, although Friday came along and we dropped 17 to close at 1283 pushing us back into the triangle zone. This leads to the possibility that Thursday was a one-day wonder and simply part of a range bound market.
Having said that, financial stocks actually held up and even finished in the black, this is quite positive as financials have a tendency to lead the market. The other factor that could support the market next week is that most people will be back from the holiday period. Volumes lately have been quite low and some say that manipulation of prices happen during these periods. So next week, we could see some more decisive moves as volumes return to normal.
1320 - 1340 is still the target in the short term, but we need to see a decisive break above 1300 for that to a probability. For now, we remain in range bound market between 1260 and 1300 and uncertainty is prevailing.
For next week, support is 1270 - 1260 and resistance is 1300 - 1315.
Our open positions remain sound, we attempted to get a 1380/1390 Call spread on both Monday and Friday, but on both occasions the market fell away on open and we didn't come close to getting a fill. We'll see what next week will bring and go from there.
The quote this week is from Ralph Waldo Emerson, "The measure of mental health is the disposition to find good everywhere."
Enjoy the long weekend and feel free to email me at firstname.lastname@example.org with any questions or comments.