Not much has changed. The major
benchmarks that we follow remain in an overbought situation and a
short-term pullback is still anticipated. The next two days are quite
bullish on a seasonal basis according to the Stock Trader’s Almanac.
That being said, I am more comfortable, at least over the
short-term, with the short side of the market. The market, more
specifially the S&P (SPY) has vacillated in a fairly tight range
over the last four days and typically when we see range-bound trading a
sharp move is right around the corner. With the market overbought, an
unclosed gap lingering, and the curse of the October 7’s in play
(discuss tomorrow)…well…I think you see where I am going.
SPY Diagonal LEAPS Strategy
Our new stock options strategy, SPY Diagonal LEAPS contiues to make
gains. Another $78 today thanks to time decay (theta) for a total gain
of $1,035 or a 5.2% gain. The underlying SPY has only advanced 2.5%
over the same time frame.
Our overall delta position is currently 69 and the gamma is -20.
Theta declined slightly today which is a signal that it could be time
to consider rolling into the next months options. Most likely we will
do so over the next 1-3 days so stay tuned. This will be an important
discussion as it is the most important aspect of trading the strategy.
Overbought/Oversold for October 10, 2007
S&P (SPY) - 71.5 (overbought)
Russell 2000 (IWM) - 72.4 (overbought)
Dow (DIA) - 60.3 (overbought)
Nasdaq 100 (QQQQ) - 89.3 (very overbought)
Subscribers please check the Insiders’ page
of the website if you wish to check the overbought/oversold levels of
the following 22 ETF’s: OIH, XLF, XLE, XLY, XLK, XLV, XLB, XLI, XLP,
TTH, XLU, GLD, FXI, ILF, EZU, EWA, INP, UNG, DBA, DBB, DBE, and DBP.
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Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com