Today marked the fourth time this month that the S&P (SPY) tested the 50-day moving average and bounced sharply. The question is how long will the bounce last? The 50-day MA has proved to be a very strong area of support so it will take an all out effort for the bears to sustain a move below 1500 in the S&P. Once that is broken look for the 1485 level as the next area of support. One note of interest is that the upcoming Monday is historically bearish with only 33.3% of the days finishing in positive territory. If the historical tendency proves true once again there could be a decent opportunity early next week. I
would prefer to see an oversold reading in the S&P before considering a short-term (1-5 day) long position.
As for our Iron Condor strategy. It looks as though sitting on the sidelines this past week was a very wise decision. As I expected, the sharp decline came this week and resulted in an increase in the VIX. The increase in the VIX has led a nice jump in premium so our expected trade in the SPX Short Iron Condor strategy on Monday should allow our gains to exceed 10% over the next four weeks (July expiration) while increasing our range from 140 points to 160-180 points. That is certainly wonderful news for the Condor strategy. I will be sending out several proposed trades early Saturday to all of our paid subscribers. Of course, as always, only subscribers to the SPX Short Iron Condor strategy will receive the real-time alert on Monday.
Overbought/Oversold levels for June 22, 2007
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SPY - 38.3 (neutral)
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DIA - 36.2 (neutral)
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IWM - 42.3 (neutral)
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QQQQ - 46.1 (neutral)
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GLD - 47.3 (neutral)
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OIH - 68.7 - (neutral)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com