The market surged higher today leading to the largest one day gain in four years for the Dow (DIA). The sharp advance has pushed the indices we follow (with the exception of the Russell (IWM)) into an "overbought" to "very overbought" state. There could be a fade opportunity to be found in the coming days, but I would tread lightly. The major indices are all at an important juncture as they have managed to push slightly above what has been strong overhead resistance. A move below these levels could stir up the bears and cause a wave of selling, but how long the selling lasts is another question. Being a short-term bear (1-2 days) has been essential in this market as every dip has led to higher highs.
The string move has pushed the underlying SPX closer to the short call strike in our Iron Condor strategy, however, we are still comfortably within our range. This goes to show just how powerful this strategy can be because with a 160 point range, the underlying SPX can vacillate wildly and yet the strategy is still profitable. I do think that a dip in the S&P might bring an opportunity to take the position off, so I will look at that when the opportunity presents itself. There is no need to risk testing our short call strike during option expiration week. Even if we take off the trade for say $.20 the strategy will still make over 10% for the July expiration cycle.
As I have stated over the past few days, the strategy is nearing capacity so if you wish to participate please join soon as we expect to be full by the end of July expiration. More and more people are moving into the strategy so please reserve a spot before it is too late. We intend on staying small because large groups groups leave large imprints which can often cause subscribers problems getting in and out of a position. Since we are dedicated to limiting the subcribers to our newsletter this will never happen with our service.
If you wish to join click the following link:
http://www.crowderinvestments.com/amember/signup.php?price_group=-7
Overbought/Oversold levels for July 12, 2007
- SPY - 71.3 (overbought)
- DIA - 77.0 (overbought)
- IWM - 63.5 (neutral)
- QQQQ - 81.2 (very overbought)
- GLD - 75.9 (overbought)
- OIH - 61.3 - (neutral)
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Have a great night!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com