[Weekend Summary]
Dear Member:
This past week continued a bullish move in what has essentially been a bearish market since last October. This week showed some encouraging signs for the bulls in that while volatilities were down, the major indexes cleared some important hurdles. The S&P 500 broke above the resistance around 1400 and above a downtrend line though the move is tempered by somewhat lesser volume than I would like to see to confirm bullishness. The Dow also made a relatively strong move but on a little better volume which should be a little more encouraging to bulls. The Dow has been range bound between about 12,500 and 13,000 for the past month and continues to trade within those parameters. I believe a break in either direction could be significant. The Nasdaq Composite finally cracked the 2500 level for the first time since the beginning of the year, but, again, volume was a little soft.
Last weekend, my condor on the Russell 2000 (RUT) was still looking pretty good, but the upswing in the index the last couple of days before expiration led me to close the call legs at a loss and though the put legs expired with their full profit the trade lost overall. One of the beauties of condors is that one side always has to win so if the other side loses, the loss is at least offset by those profits.
The short May 145 leg (one that I sold) on my spread on SPY expired worthless which is a good thing since I got to keep the 35 cents a share I got (less the commission) for opening that leg less than a month ago. I plan to repeat the process to bring in more income and further reduce risk in the long Dec 140 position at what I consider to be the appropriate time.
I still have my puts on Cognizant Technology (CTSH) and though it has not yet happened, it looks like this one may be setting up a head and shoulders on the daily chart which could lead to the move I have been looking for. Only a little more time can tell.
I opened a straddle on Stec Inc (STEC) this week and am looking for a strong move in either direction or a jump in implied volatility or both to make this profitable. So far, it has moved to the upside.
The spread on Citigroup (C) is setting up so that it looks like I may be able to close the short side at a profit, hold the long position and await another chance to sell more calls against my long leg.
Much the same is true for the Sirius Satellite Radio (SIRI) play as for the Citigroup (C) play. In any event, these spreads are giving me chances to trade short legs dynamically and produce income along the way.
Have a great weekend.
Bill
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