10/12/2007 8:09:24 PM

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Our services' net portfolio gain is 64.63% over 9 months. A 79.42% Annualized Return! For a full break up of this performance, CLICK HERE.

Our system remains in Sell mode.

Position Recap:

On September 25th we sold an SPX Oct 1355(SXYUB)/1345(SXYUT) Put Option Spread for a net credit of $0.35. (i.e. $35 per $1,000 of margin)

Note: The number of put spreads we sold was only half the amount we would normally do. On the performance page this will be shown as 8 contracts.

On October 1st we sold an SPX Oct 1590(SXMJR)/1600(SPBJT) Call Option Spread for a net credit of $0.70. (i.e. $70 per $1,000 of margin)

SPX Chart

It was an interesting week, the SPX made a new all time high on Thursday at 1576.09 before reversing sharply, it managed to reach both the upper and lower trend lines of the mini uptrend, in one day! We've been anticipating that the market would be taking a breather and up until Thursday, it seemed like nothing would stop it.

While Thursday gave us a little breathing space and may have given us a glimpse of what lies ahead, the mini uptrend shown in the shorter time framed chart above still holds true. It really doesn't matter whether I think a drop is still imminent and that the technical indicators suggest lower prices, the bottom line is that we have one week to expiry and we have a position that doesn't have as much of a buffer as I would normally like (i.e. the 1590/1600 call spread).

Next week brings a whole swag of earnings reports from leading companies, so depending on how the market reacts to this will determine whether we need to defend our position. We'll know by Wednesday if action is required and if so, I'll send out an email on what action to take.

Have a great weekend and Feel free to email me directly at angelo@stockbarometer.com if you have any feedback or questions.