[Weekend Summary]
Dear Member:
Call me chicken, but a market rising on decreasing volume at the end of summer and approaching Labor Day gives me cause for concern. A market that is moving up on decreasing volume is generally considered bearish and I have no reason to think otherwise right now. I doubt that direction will be determined until the big players come home from the south of France and the Hamptons after Labor Day.
Several subscribers wrote expressing some appreciation for my caution at this point and while I thank them for their sentiments, I can only say I am trading my own money and I only want to take what the markets will give me and right now that isn't too easy to determine. As I have mentioned over the last several weeks, I have a lot in cash and am entering new positions with great caution.
Having said all that, the stochastics on the Q's has turned over but DMI remains negative. Signals do appear mixed though the Nasdaq did have a fairly bullish week. If I see a DMI crossover, I may well convert my directional puts to a credit spread and further reduce risk.
The Sirius Satellite Radio (SIRI) spread may offer the chance to buy back the short leg for a profit on the leg and the ability to repeat the process. There is definitely plenty of time on that one.
I am still ok with the spread on SPY and Citigroup (C)should let me know whether to sell some calls to create another spread or just hole the long call position. The near term movement will dictate my decision on that one. In any event, I like the spot I'm in with C.
Have a great weekend.
Bill
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