[Weekend Summary]
Dear Member:
The Dow 30 Industrials, S&P 500 and Nasdaq each made relatively modest gains today and over the last 5 days. That is the bullish side of the story. However, neither the Dow nor the S&P 500 could climb back above the 200 day exponential moving average. The Nasdaq did stay above that line after reaching down to touch it today. I would classify the situation as an intermediate bear requiring extreme caution in entering bullish positions. I would like to see the Dow and S&P climb back above the 200 day before jumping into too many bullish plays. That is not to say that there are not bullish stocks out there; it just requires more care and effort in trying to find the right ones.
The markets are closed for Thanksgiving and have a shortened trading day next Friday.
Options can provide several ways to trade markets such as the one in which I now find myself. This week, I closed my puts on Safeway (SWY) for a 6.5% gain before commission in 3 weeks and today realized a 28% return on risk with the expiration of the remaining legs of the iron condor on the Russell 2000 Index (RUT). Fortunately, I closed the put legs of that condor before expiration to retain the $2 a share gain.
I also opened a new iron condor with a wider spread for Dec and got a $2.40 opening credit. I'll be able to keep that if the index remains between 710 and 860 at Dec expiration and I have made no adjustments. The index closed today around 766.50.
The short leg of the Citigroup (C) spread is making money and I may look to roll it next week. The spread on QQQQ looks OK for now, but I will be watching for an opportunity for further adjustments. The SPY spread does not expire until Dec '08 so there is nothing to do there at the moment.
The spread on Sirius Satellite Radio (SIRI) is also OK at the moment with no adjustment currently required.
I hope you and your families have a wonderful Thanksgiving.
Bill
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