The major indices are once again approaching oversold territory. We still have a little room in the S&P (SPY), but not much. We are nearing an extreme oversold condition so watch SPY closely. A expect to see a short-term pop off the oversold conditions over the next couple of days. How strong the move is will most likely indicate how much the bulls have left in what has been a marvelous run.
Remember, it is the week of options expiration so expect to see some volatility. Typically, returns are best on Monday, Tuesday and Thursday. Friday is statistically the worst performing day during options expiration.
Well, it looks like our Iron Condor trade will expire worthless again this month (third month in a row). Short Iron Condors (a neutral based options strategy) have been a wonderful alternative strategy in the current market. As long as we fall within our given range we will continue to reap profits. The key will be to minimize losses when our short strikes are in risk of being breached. Taking a proactive approach is the best way to fend off losses in this type of strategy. We talk about our approach in our White Paper.
I would also like to let everyone know that we will be offering the opportunity to have our Short Iron Condor auto-traded. We will be limiting the amount of subscribers to 75 so spots will go quickly. If you wish to participate email us at
support@crowderinvestments.com
and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.
Overbought/Oversold levels for February 12, 2007
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SPY - 32.8 (neutral)
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DIA - 31.9 (neutral)
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IWM - 46.8 (neutral)
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QQQQ - 32.8 (neutral)
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OIH - 41.0 (neutral)
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GLD - 65.3 (overbought)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com