The major market indices moved higher again today. The move higher led SPY to break out of the tight range that it has been in for the last three days. However, the move higher was quickly met with strong overhead resistance at approximately the 1450 level of SPX. With SPY now in a "very overbought" and several of our other proprietary indicators reading extreme we will most likely take a position if the market nudges a bit higher. As usual our subscribers will be sent a real-time trade alert if we indeed decide on taking a position.
Our condor spread trade is worth roughly $.50-$.60. We initially purchased the credit spread for $1.15 so we are roughly $.45-$.55 in the money right now if we were to take off the trade. The underlying SPX is now 20 points away from our short strike and with options expiration we do not want to be greedy. I will be following this closely over the next few days. A move lower might give us the opportunity to get out of the trade for $25.$35 which would give us a nice profit for this expiration cycle and it will make our third straight successful trade since we initiated the portfolio three months ago. It is certainly tempting as we move closer to expiration. I have seen this strategy really take a dive when an underlying is this close to a short strike and moves ever so closer as we near expiration. Remember, we are in this for the long-term and why take a chance for a loss when you can still make a 8% profit on the month.
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 7, 2007
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SPY - 82.1 (very overbought)
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DIA - 73.4 (overbought)
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IWM - 87.9 (very overbought)
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QQQQ - 71.3 (overbought)
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OIH - 63.6 (neutral)
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GLD - 58.4 (neutral)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com