The "potential short-term bounce in the making" that I talked about yesterday occurred as expected. SPX hovered above the 1374 support area that I mentioned yesterday for the first half hour of the trading day before fall ing back to the 1374 support area that I have talked about over the last few days. SPX bounced quickly off the 1374 area and moved back to the opening highs before falling back to the 1374 area around noon. This time the support wasn't there and we witnessed a wash out situation which brought SPX as low as 1364 before the sharp intraday reversal occurred. The bounce began around 1 EST and lasted until the close.
It looks like the bounce could continue for the next few days, which would play out exactly like the historical seasonal tendencies. If the market is able to move higher over the next day or two I would expect to see short-term post expiration weakness next week.
One thing is for certain, selling premium should be very attractive next week, which should be advantageous for our SPX Short Iron Condor. The extra premium should give us the opportunity to bring in more premium while at the same time widening the chosen range.
Overbought/Oversold levels for March 14, 2007
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SPY - 40.6 (neutral)
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DIA - 40.4 (neutral)
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IWM - 44.6 (neutral)
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QQQQ - 50.4 (neutral)
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OIH - 58.9 (neutral)
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GLD - 39.9 (neutral)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com