Pay Day!

Ka Ching! Ring the register folks, I have been welcomed by a visit from my best Iron Condor friend, Mr. Max Profit!

Honestly, the $NDX has performed beautifully for Iron Condors the last 3-4 months, trending flatly. It is here where I become cautious because with May coming soon, it seems people start to bail from their positions in April. You don't want to be in an Iron Condor during a strong trend, like July - November last year. Better to play either a one-sided credit spread, or maybe a directional Option, rolled into a credit spread if things reverse quickly one you.

At this point I would probably wait for this run-up to peak, then buy some OTM Puts for the way down. Hopefully the $VIX will have subsided making the options inexpensive. We'll have to wait and see.

In the meantime, I am going to look for less-risky Iron Condors to trade.

Have a great weekend!

Happy Trading!

Nothing Like a Little Excitement

Nice try.

Well Traders, the $NDX is out to get me. It's one last breath at the O.K. Corral before that gunslinger goes down. Maybe it is a Swan Song, or maybe a last gasp, but in either case, it may be "too little, too late."

Another "Black Tuesday," the second in two weeks. What is it about Tuesdays and crappy markey days anyway? Well, I am down to my last two days, and a $34 point loss on a $240 point down day on the Dow and it looks like I'll be safe. Still, we must always be dilligent and monitor our trades so I won't count my cash just yet. I am still $73 points to the bottom...let's hope we end the week on a high note.

Happy Trading!

T-Minus 3 Days

Well Traders, it looks like we have a WINNER! The $NDX gained $11.68 to end at $1,756.42 for the day. This puts me $106 from my Bull Put and $144 from my Bear Call, and basically puts me IN THE MONEY!

Unless something major happens, I'll log back in Friday with my Max Profit post...and some gloating for the weekend!

Happy Trading!

March-ing to Max Profits

"Trades don't make money when you open them, they make money when you close them."

Well Traders, I don't know who came up with that quote, but it is somewhat fitting. Without being too brash, and with still time on the clock, my March Iron Condor seems to be pretty safe at this point. I am $94 points to my bottom Bull Put spread, and $156 points to my upper Bear Call spread. Barring a complete meltdown a la last week, I should be able to let all my contracts expire next Friday morning (and save on commissions) and close the trade for Max Profit!

It has been a pretty sweet run in the $NDX as the index has performed beautifully for me with its neutral flow. This month has had its moments of uncertainty, but I held fast to my rules and my support and resisatance levels and things seemed to have turned out okay.

Soon I will be trying out a new Iron Condor strategy by paper trading it, but I will still keep you advised on how it works, and probably make a few mistakes along the way. All part of the learning process. Anyway, enjoy your Friday and your weekend, and unless something significant happens tomorrow, I'll catch you on the other side of the weekend.

Happy Trading!

A Beautiful Bounce

Well Traders, I LOVE, LOVE, LOVE when things I expect to happen, happen! You'll remember yesterday I mentioned the "Bullish Gravestone Doji" candlestick formation. Well, in order to be confirmed, I needed a gap up and a white candle today. Bada bing, bada zing, if that ain't a thing of beauty!

I feel much better going into the home stretch here. The MACD and STO are showing strength, and the Doji pattern gave my Iron Condor the boost it needed today. I am now $91 points to the bottom and it seems barring another meltdown, my best friend, Max Profit should be paying me a visit. Still plenty of time between now and then, and today could have been a "Dead Cat Bounce," but that being said, I like my chances on this one!

Happy Trading!

Possible Bottom Reached

Well Traders, it looked like it was going to open as a disastrous day. The DOW was down over $117 pre-market and the NASDAQ was down almost $19 at one point. However, by the time the markets opened, the negativity was tempered and we actually traded positive throughout the day. In the end though, the Bears won and the $NDX closed down $13 points ($10 of those points were in the last 35 minutes of the day) to close at $1,712.94. I am now only $62 points to the top of my Bull Put with about 9 days left.

In my favor today is the fact that we have a "Gravestone Doji" candlestick pattern, which could be a HUGE relief to me if the index pops a bounce tomorrow. A Gravestone Doji can be a Bullish Reversal Pattern meaning the index will bounce from here and help my trade out. I also have the 200DMA helping as support as well as the MACD and STO very low in their cycle. All these indicators may help me and point to some positive movement in the $NDX over the next few days. I could use some positive momentum about now!

I am also staying out of these Low Reward/High Risk Iron Condors for a bit while I learn a new, and better Iron Condor Trading Technique. The new one will give me a MUCH better Reward/Risk factor (and we are all about Risk Management), and allow me to "Leg In" to my trades. Once I learn more, I'll let you know how I am setting them up.

Happy Trading!

Speed Bump Passed

Well Traders, the 'support area" has been breached. I mentioned yesterday that it would have either been a safety net, or speed bump and at the beginning, it looked like the former. However, as the day wore on and folks didn't want to be short over the weekend they sold off and dropped the $NDX over $27 points to end at $1,726.03. I am now $75 points to the top of my Bull Put and yes, I am a little nervous. I have some free days over the weekend to burn off some time value and the STO and MACD are getting oversold so there may be a pullback. I also have two more support areas that hopefully will hold out for just a few more days and bring a visit from my friend, Max Profit.

I have marked the 200DMA as my Next Support, and a previous support at $1,684 as my Last Support which is really my last line of defense before the trade goes sour. I also have the Channel Median Line as an ally and hopefully that can slow any further precipitous fall of the $NDX.

Should be an exciting and nerve-wracking 2 weeks! Stay tuned!

Happy Trading!

Safety Net or Speed Bump?!?!

Well Traders, what a NUTTY day today. Actually, the last three days. Today, the $NDX started down over $35 points bottoming out at $1,717 in the early morning before making a tremendous comeback, going positive for a short while before falling back to close down $8 at $1,753.45.

So what does this all mean? Well, for one, my "support area" highlighted in gray, though pierced three times, has not closed below yet. That's great for my trade; my identified support is acting just like that, supporting the trade from falling through. So while it has acted like a safety net for now, it may be just a speed bump slowing the index from its eventual fall. How long this may last I am not sure, but at over $100 points to the bottom, and the market craziness seeming to abate, it looks like I may yet again close with some solid returns. We'll just have to wait and see.

The MACD and STO are now getting to a point that they should begin to bottom out around here and head up again, which would basically wrap up anothger successful Iron Condor. It may also give me an opportunity to "leg in" to my April trade. What I mean by that, is let the $NDX climb to a peak, then buy my Bear Call which may be a little more expensive, then wait for the index to fall and bottom, then close the Condor by buying the Bull Put. Basically I am entering the Iron Condor at two separate times then simultaneously. That should be a little more lucrative.

Happy Trading!

Another Black Tuesday?

Well Traders, what is it about Tuesday's and bad stock days? You must have been on planet Mars if you didn't hear about the MASSIVE sell off today in the markets. The DOW went plunging over 540 points at one point shaking up more than a few investors I am sure.

What about the $NDX? Well, the index dropped over $74 points to end at $1,756.27. Looking at the chart you'll see where it stopped...right at previous strong support. Coincidence? I don't know, but we'll see how strong that support REALLY is now, won't we? Here's the chart:
As brutal as this day was to the markets, it was just "eh," to my Iron Condor. I am now practically dead center of my trading range with a little less than 3 weeks to go. Truth be told though, I can't last through a few more days of $74 point drops. A correction was imminent, and this may be the start of it, but let's hope it doesn't really get going until after the 16th!

De-fense! De-fense! De-fense!

Happy Trading!

Testing Support?

Well Traders, my anticipated drop in the $NDX is starting to occur. Today the index was down over $15 points at one point, but closed down $9 at $1,830.59. The MACD and STO are definitely showing weakness as I predicted last week.

Today, the index did test support at $1,820 and held. This may have been a temporary thing as I see the index passing below this point on this downturn. Still, one must always be mindful of what the chart is telling us. Right now it is telling me to watch this support level.

The trade has less than 3 weeks left, so Time Value should start to burn off much quicker as March 16th approaches.

Happy Trading!

A New Friend

Well Traders, another day, another small move on the $NDX. Today the index finished up $7.21 to end at $1,846.34. The $NDX hit $1,850 at one point but fell back during the day. We also finished with a "Bearish Long Legged Doji" which may bode well for my trade. It may signal the top of this recent trend, and with the MACD and STO so high right now, I expect the $NDX to start to fall off tomorrow. Let's hope it heads back to my preferred $1,771 level!

Who is my "New Friend?" Well, I went back to the 5-Year chart and discovered something very interesting, a nice channel the $NDX is trading in right now. I drew the pattern in so I could see where it went and low and behod, it gives me wonderful resistance below my Bear Call spread. I have marked it in BLUE on both charts, but here is the 5-Year so you can see it for yourself.That is pretty convincing stuff. Now, that does NOT mean the index can't break that trend, it just means I have a new ally to help the March Iron Condor.

Happy Trading!

Nearing $1,848 Resistance

Well Traders, it looks like the $NDX is gonna make a run at $1,848 before it decides what to do. I suspect, based on the MACD and STO, that it may get there, then fall back down to support, either at $1,820 (previous resistance), or way down toward the $1,771. If it does fall back down to the $1,771 area, then I would feel pretty comfortable about the trade. At this point though, I am hoping the index does not break through this $1,848 resistance level because then I am really have to be on my toes ready to make a roll or two to protect the trade.

The "White Closing Marubozu" on Wednesday should be a bullish indicator for Thursday.

Let's see how things shake out. Happy Trading!

On the Move

Well Traders, the $NDX has been a cheeky little bugger today. The index rose $12.22 to end the day at $1,833.71. It seems the news at Amazon (AMZN) was good enough to give the $NDX a little push.

So now what? Well, the $1,820 resistance has been breached, so it now becomes support. My next (weak) resistance is at $1,848, which was the high on 1/16. It looks like we may get close to that level, then based on the MACD and STO, fall back down a bit. The March trade lost a bit of ground today, but overall I am still in the plus. I always need to be on the defensive and get ready to move the trade if it gets a little hairy. Until that time though, I am staying the course.

Happy Trading!

Pay Day!

Well Traders, ring the register, it's PAY DAY!! My February Iron Condor was a complete success so today, one of my best friends, Max Profit will pay me a visit! What a GREAT way to start the weekend!

Yesterday the $NDX rose a little over $8 points to end the day at $1,823.41. While this is insignificant for February's play, it may be significant for March's play since that is a break of resistance. We'll have to see if it holds and becomes new support, or if it was just a temporary breach.

I get a FREE day (I LOVE those) on Monday for President's Day since all the markets are closed. In the meantime, we'll see how the March play moves and get ready for April's play. Enjoy your three-day weekend!

Happy Trading!

Testing Resistance

Well Traders, the $NDX got a bug up its butt (as did the rest of the Market) and shot up over 431 points to end the day at about $1,1815. Now, I don't expect a monumental run the next 2 days (well, at least tomorrow and Friday's open) to take me out of February's trade. However, we may be coming up against a pivotal point for March's trade. The $NDX is nearing my $1,820 resistance point and I'll be curious to see if it holds out. To this point, it has acted pretty solid, having only been breached once.

You'll notice that there is a definite consolidation of the price as noted by the "squeezing" of the Bollinger Bands. I was going to note that I would expect some sort of breakout from that pinch yesterday, but today's action kind of confirmed that maybe a breakout was imminent. The STO is also showing some strength but the MACD has been getting smaller recently which just represents the neutral stance of the $NDX recently.

We'll see how this plays out.

Happy Trading!

Final Days for February

Well Traders, Friday's "Bearish Engulfing Pattern," MACD and STO indicators set up today's action pretty well as the anticipated down day occured. Today, the $NDX fell $7.11 points to finish at $1,778 (only $3 from my starting point!). I am only just a few days away from February's expiration and it looks like it was a perfect play for me! There would just have to be an absolute insane run the next few days to spoil my party, which I just don't see happening.

It looks like I have about 2-3 more down days before the next bounce in the "support area" highlighted in gray. Then, we'll see how much the index can run up before being turned back again. I am already looking at April's set up which will occur March 15th. I am hoping this flat trend will continue because I may just play an even tighter spread to see if I can't take advantage of this perfect Iron Condor condition. There is a LOT of time between now and then, so we'll just keep an eye out and monitor the March position for now.

Happy Trading!

Wheeeeeeeee!

Wow. Well Traders, this has been an Iron Condor's WET DREAM! I mean, I couldn't script this any better if I tried, except to have had my spreads at $1,825/$1,850 and $1,750/$1,725. At this pace, that would have made some serious Jack!

Anyway, the $NDX took a nice tumble like I expected, though further and faster than I expected to close down -$25 points to end at $1,785.53. You'll notice the nice "Bearish Engulfing Pattern" which may indicate more downside. I would expect that based on the MACD and STO positions as well. The index has been recently rangebound between $1,820 and $1,750 with the exception of a small pop in mid-January. At this point everything looks golden and next week will be payday on Friday morning for February's contracts. Amen!

On a down note, CyberTrader needs to get their shit together with Penson. I keep getting "Maintenance Call" emails for covered positions which is assanine. If they don't fix the problem ASAP, I'll be taking my business to Think or Swim.

Have a GREAT Weekend and Happy Trading!

FREE Lunch

YAAAAAWN!!! Well Traders, I LOVE days like this. Why? Because it is a FREE Lunch day. I mean a -$0.41 move is basically just giving me my Time Decay for Free, not that I am complaining! =)

Compound this with the STO and MACD positions and a week from tomorrow should be a visit from my BEST friend, Mr. Max Profit.

Happy Trading!

The CSCO Effect

Well Traders, I expected this. Cisco (CSCO) has a pretty big effect on technology, so I knew its earnings were going to affect the $NDX one way or the other. It just so happens that the earnings were good, and the $NDX jumped. Still, if you look at my chart, the effect of the move was minimal for me and the index is still well within my profit range. You'll notice the STO is getting near the Overbought territory and the MACD is moving into its upper range as well. I suspect maybe a few more days of upside before the fall. I still have $1,824 resistance in my favor as well as my Diagonal Resistance line.

At this point, barring any incredible 8 day move, my February Iron Condor looks solid. It is still too early to talk about the March trade, too much time left on the table for that one.

Happy Trading!

March Condor In Play...

Well Traders, I have entered my March Iron Condor today. I debated last week whether or not I should be more aggressive and play a tighter spread but I am not yet comfortable being that risky...I may never be. In this case, my best bet may always be "slow and steady wins the race."

My February play is sitting pretty with only 11 days left. It looks like my buddy Max Profit may be paying me a visit a week from Friday...and he is ALWAYS a welcome friend!

For March, since I sense a bit of neutrality in the index, I played a slightly tighter spread than last time. This play will be worth $4 if it expires in March, which is about 25% better than February's play. As you will see on my chart, I have made the new notations.

For March, I am playing the same 1900/1925 Bear Call, but moved my Bull Put up to 1650/1625 from 1625/1600. A little more risk, but I felt with the way the market has been stagnating, and with some good support levels to protect me, it was worth the risk. We'll see how well I called it over the next few weeks.

Happy Trading!

T- Minus 12 Days...

Well Traders, I was in Salt Lake City last week to brush up on my Options skills. I was attending some INVESTools classes that were terrific! They will definitely help my Options plays in the future as I have a much better grasp of Implied Volatility. Many thanks to my classmates and my Instructors, Sam S., Tyler T. and Scott T., you guys were awesome!

The $NDX has been acting perfectly for my February trade, basically waffling along and not doing much of anything, which is EXACTLY what you want when playing an Iron Condor. Here is Friday's chart:You'll notice how little the index moved overall the past week...sweet! At this point, barring some MAJOR news, I can see this expiring for Max Profit on the 16th.

I am tempted to play a March strike closer since the trend is really beginning to flatten out, but I may just stay the course. I may also consider "Legging In" for this next trade. First, since the MACD and STO are signaling Uptrend, I'll let the $NDX rise to a peak, and once the MACD and STO fall, buy my Bear Call, as well as my Bull Put Long position and let it ride down to the bottom, at which point, I'll close the spread by shorting the Bull Put and closing the spread. I may make more money on the Long side heading down since it will be cheaper. I'll have to crunch the numbers to see how it will work.

For now, I am very comfortable in the February trade, so we'll see what the next two weeks holds.

Happy Trading!

$1,771 Support

Well Traders, another down day on the $NDX, a GREAT way to start my weekend! Yesterday I mentioned a Bearish Engulfing Pattern, which was the second one in 5 days. Today, the $NDX was in a pretty good struggle, but at the end of the day, the Bears won. The index finished down just over $4 points to end the day at $1,772. At this point, it looks like $1,771 is going to hold as support. The STO and MACD are indicating that an uptrend in close at hand, but only next week will confirm that. This being Friday, I get two more "free" days of time-value burn off.

I am beginning to sense another Ascending Channel may be forming here, though at a substantially shallower climb that the previous one. I have already indicated the upper resistance of the channel and marked it as "New Diagonal Resistance" on the chart. Conceivably, a new bottom may be drawn using 12/26 (or 1/3 to be extreme), and whatever the bottom of these next few days is. Should that occur, then that sets up March's Iron Condor beautifully because shallow to neutral trends are an Iron Condor's best friend!

I am off to Salt Lake City on Saturday for further training at INVESTools. I should have some updates next week as well.

Have an enjoyable weekend!

Happy Trading!

Ker-plunk!

Well Traders, THAT was a pleasant surprise! The $NDX was up almost $7 points at the get go, only to freefall the rest of the day. The index ended up falling almost $25 points to end the day at $1,777.75. That is only $2 points from my sweet spot...sweet!

So what does this mean? Well, for one thing, the 30DMA once again comes into play as resistance since the $NDX has fallen below it today. Add to that, another Bearish Engulfing Pattern (highlighted in Yellow) has formed, indicating there may be more downside ahead.

The MACD and STO are in a more Bullish position, than Bearish, but today's action indicates that isn't always an accutate short-term indicator. I still fully expect the index to bounce from around here at some point in the near future. As I mentioned in an earlier pots, I still feel the "support area" indicated on the graph will hold up, and we'll move from there. Notice that the $1,771 area is also still holding, and may at as support. We'll wait and see.

At this point, there would have to be some really incredible action for this trade to fall apart. That is not to say it isn't possible, it just isn't as likely. A moderate move on friday will lead me into a nice weekend burnoff, further putting time value on my side, or at least the erosion of it.

Happy Trading!

Boing!

Well Traders, it was bound to happen. Today the $NDX bounced and gained almost $30 points to end the day at $1,802.23. By looking at the MACD and STO positions, this is a "classic" bounce.

The 30DMA has now been eliminated as resistance and is now considered support.

The next resistance level is $1,824, which was pretty solid two of the last three run-ups. After that, we have the diagonal resistance which is vital to preserve this trade.

Time is starting to be more on my side. With less than a month to go, even a big day like today didn't take too much off the table for my trade indicating that time value is really my ally at this point. Of course, 2-3 more $25 point up days and that could move the trade in the House's favor. We'll wait and see how things shake out.

Happy Trading!

Sweet Spot

Well Traders, I have hit the "sweet spot" on my Iron Condor. What does that mean? It means I am right back to where I originally placed the trade 3 weeks ago. This would be the ultimate closing price because it is basically smack dab in the middle of the credit spreads I used to make this trade.

The $NDX was up as high as $1,790, but was unable to break through. This is significant because that is right where the 30DMA is, and as I mentioned yesterday, this would act as resistance for me, which it did.

The STO seems to have bottomed out here which may mean we could see some support and maybe even a bounce over the next few days. I see the $NDX moving down to the "support area" shaded in gray on my chart. There may even be some support at $1,771 since it has stopped there the past two days.

All in all, this trade looks beautiful right now, let's hope we can bring her home!

Happy Trading!

More Weakness & "Bearish Engulfing Pattern"

Well Traders, the day started with a little hope for the Bulls, but that was quickly dashed as the $NDX fell $25 points at one point before "rallying" at the end for only a $17.79 loss for the day. This puts the index at $1,779.02 which is very close to my "sweet spot" of $1,775.

The MACD and STO are still showing weakness, so I think there is a few more days of downside left, perhaps to the $1,750-$1,761 support area? Also, the 30DMA was pierced today giving me another "ally" to slowing any move to the upside. The more barriers the better as far as I am concerned.

Today's action also created a "Bearish Engulfing Pattern" which according to Investopedia, is "A chart pattern that consists of a small white candlestick with short shadows or tails followed by a large black candlestick that eclipses or "engulfs" the small white one. As implied by its name, a bearish engulfing pattern may provide an indication of a future bearish trend. This type of pattern usually accompanies an uptrend in a security, possibly signaling a peak or slowdown in its advancement. However, whenever a trader analyzes any candlestick pattern, it's important for him or her, before making any decisions, to consider the prices of the days that precede and follow the formation of the pattern."

This may seem to indicate that Friday's little bounce was an aberration, and more Bearishness is imminent.

At this point, my trade is already profitable and the prospects for a close out for maximum profit seem excellent. As always, we always play defense because what the market giveth, the market taketh away.

Happy Trading!

Nice Way To Start the Weekend

Well Traders, not a bad day. The $NDX didn't move very much after its precipitous drop yesterday. The index gained a mere $3.13 to end at $1,796 for the week. Days like this are terrific since most of what happens is time decay burnoff, which is exactly what I want. Now that Options Expiration Day for January has come and gone, time value should burn off at an increasing pace. Still, I must be cautious at all times because what the Market giveth, the Market taketh away!

Looking at the chart, it looks like we still have some downward pressure based on the MACD and STO. It looks to me that we have 2-4 more days of a downturn before we may see a bounce and reversal. The questions is, how far can this fall before it turns again?

Have a GREAT weekend!

Happy Trading!

Better Than Expected...

Well Traders, today was better than expected. The $NDX took a major hit of $34 sending the index to below $1,800. While I expected the index to fall some, I didn't expect this much this fast, not that I am complaining because today's action put my February Iron Condor in a very favorable position.

First, the $NDX broke back below $1,824, which was previous support (now resistance), providing another barrier to a run-up before the February 16 Expiration Date. So now i have $1,824 as resistance, as well as the newly formed diagonal resistance. These may be too tough for the index to break through which is fine by me since that will make the trade successful.

Second, the $NDX hit the 30DMA and stopped, meaning it could be acting as support. We'll have to wait and see what the future holds regarding that.

Finally, the MACD and STO are still showing signs of weakness meaning there still should be some downside to this run, which is fine by me. I am approaching the "sweet spot" of $1,775 which is basically where I started the trade, and puts me $125 to the Bear Call, and $150 to the Bull Put. With only 4 weeks left, that should be enough to make this trade a success, but if the market can fall $34 in one day, it certainly can rise $34 in one day. I still need to be vigilant with my defense. Tomorrow is Options Expiration day for January, so starting next week, the time value should start picking up steam.

Happy Trading!

Pullback Time...

Well Traders, the moment I anticipated has arrived. The $NDX has finally begin pulling back. You will see on the chart (click on it once or twice to enlarge, then use the "back" icon on your browser to return to the blog) that several weakness indicators have formed. First and foremost, the index itself has peaked and has begun to fall. By doing this, I am now able to establish a new diagonal resistance line based on the last two peaks. As you will note, if things go as planned (which is usually a 50/50 chance in the markets), then this trade should be successful by the angle of the diagonal resistance. You will see, it falls below my Bear Call before the Expiration Date meaning this trade would be successful.

Second, the MACD has peaked and is now showing weakness.

Third, the STO has peaked and is now showing weakness.

Now comes the interesting part. How firm is the $1,824 support going to be? Remember, this used to be resistance, and the rule goes, former resistance, when broken, becomes support. You can see the index did hit that level today, then retreated, meaning the support held. We'll have to see what happens in the upcoming days/weeks and see what holds true.

As of now, from what I can see developing, things look to be okay for this trade. Let's hope that remains true for 4 more weeks.

Happy Trading!

Breakout!!!

Ugh! Well Traders, here we go again it looks like. The $NDX got a bug up its ass and took off today, ending up over $18 points. That wasn't such a big deal, but what WAS a big deal is that the index broke through previous resistance at $1,824. That could be huge, and dangerous for my trade since there is nothing really holding the index back at this point. You would have to go back to July 2001 to find these levels! My only saving grace at this point may be the MACD and STO and that next week's Options Expiration is typically a down week too, but who knows? I need to be ready to move if the $NDX hits $1,860 which is certainly not too far away. I certainly liked this when it was rangebound. Let's see how well the $125 point I initially set up holds out.

Happy Trading!

A Rise Before the Fall?!?!

Well Traders, the $NDX took a nice little $20 point pop up today on some good tech news. The index finished at $1,814 putting it just $8 below the $1,824 resistance point I have shown on my chart. The next few days should be interesting as the MACD and STO are pretty high indicating a possible downturn may be just around the corner. Personally, I would love to see a downturn for a few days and head toward the $1,750-$1,761 support I have shaded in Gray. At this point, it is just a waiting game to see if resistance holds. Stay tuned.

Happy Trading!

More of the Same...

Well Traders, another fairly calm day when all was said and done. There is still a pretty good battle between the Bulls and Bears on the $NDX. Apple's big announcement bouyed the index (and the iPhone looks pretty darn sweet IMHO) as that stock soared over 8% to an all-time high today.

You can see the STO has just about peaked at this point. A downturn seems inevitable in the next day or three. The MACD hasn't "peaked" just yet...just a matter of time.

There is still plenty of time value in my Iron Condor, so there hasn't been much movement on the options just yet. That won't happen until we get past the January Options Expiration Day a week from Friday. Still, I am VERY happy with the way the $NDX is just waffling around here, not doing much one way or the other. I hope this duldrum continues for a few more weeks.

Happy Trading!

Days of Calm

Well Traders, we have had two days of calm in the $NDX on Friday and Monday. These are GREAT days for the trade because they just burn off time value, and we are all about burning off time value.

Here is Friday's chart:

As you can see, the MACD and STO are moving up towards the overbought levels, but still have a few days left before they reaches that. Still plenty of room before my first roll point.

Here is Monday's chart:

As you will note by the candle, there was a pretty good Tug-of-War between the Bulls and the Bears, but at the end of the day, the move was negligible...which I LOVE! Now, five more weeks of this neutral trend, and the February Iron Condor will be golden!

You will notice now that the STO has just about reached the overbought area, which will indicate that a downturn may be near. Based on the current height of the $NDX, we may have a lower high, which may indicate a trend reversal to the Bearish side. We'll just have to wait and see.

Happy Trading!

Back In The Saddle...

Well Traders, we are six (6) weeks until February's $NDX expiration date and I entered that month's Iron Condor today.

I placed my Bear Call at $1,900/$1,925 and my Bull Put at $1,625/$1,600 for a 275 point spread. That is pretty wide, so we'll see how it does over the following weeks. Why did I use these strikes? On the bottom, I liked the fact that there are three supports that can slow the index down. The first one is pretty major at the $1,761-$1,751, level which is highlighted in gray. The second is a lighter support at $1,695 and third is a very strong support at $1,630. I gave the Bull Put the extra $25 point buffer because when I entered the trade, the 30DMA was beginning to turn over and head downward, indicating a possible trend reversal. So I used that, plus the fact that folks panic sell, not panic buy as my reasoning.

On the top, basically it was a mathematical decision. In order to make the IC worthwhile in a risk/reward sense, the 125 point distance from the $NDX price (it was at $1,775 when I made the trade, and before the big run-up today) was the furthest point in which the trade still made sense.

I love the fact that the index has been somewhat neutral for the past few weeks, an Iron Condor dream...we'll see if it holds.

Here is my Analysis Sheet I created on EXCEL. You'll see, it has all the pertinent information on here in which to play the trade: the entry, the risk/reward, and rollover points. "Plan your trade, trade your plan." Now all I need, is for the $NDX to follow suit and maintain a neutral course and it will be another profitable trade.

Happy Trading!

Wacky Wednesday!!

Well Traders, Wednesday was a wacky day. It seemed like it started with "irrational exhuberance" as the market soared in early morning trading. The Dow was up over triple digits at one point, and the NAZ was up over 30 points.

Then half-time came at 12:00 pm.

It was almost eerie watching the complete reversal of the markets. The Dow plunged to -30 points and the NAZ was down almost -20 at one point. That is a pretty huge swing in one day IMHO. The markets both ended up for the day when all was said and done, the Dow almost 11 points and the NAZ a little over 7 points.

So what does this mean for February's trade? Well, at one point, the $NDX broke through support at the $1,750 level and I was beginning to believe that we had possibly reached a peak and we were heading downhill. However, since the $NDX ended the day abovemy support area, technically, support has held. Combine that with the MACD and STO positions and the $NDX may have found a temporary bottom here.

Since the index seems to be somewhat sideways trending, which is a beautiful thing for an Iron Condor, February's trade looks to be a straight mathematical one, with maybe 125 to the top, and 150 to the bottom. I have two reasons for padding the bottom. First, the 30DMA is beginning to roll over, which means there may be some bias towards the index heading down, not up. Second, people sell faster than they buy, so the bottom pad helps me with any "panic sells."

I'll give you the Analysis Sheet for the Entry, Exits, Risk/Reward and Profit Potential later today.

Happy Trading!

Rangebound?!?

Well Traders, I hope you had an enjoyable holiday this year. I did, capped off with a wonderful Rose Bowl victory for my beloved Alma mater, USC.

Since my last post on December 20, the $NDX has been in kind of a stalemate. The index has been sort of rangebound between $1,750 and $1,824. If you were a gambler, you could try an $1,850/$1875 Bear Call and an $1,725/$1,700 Bull Put for a pretty good risk/reward ratio, but I wouldn't. While the $NDX looks all warm and fuzzy in its new range, how much of this stagnation was due to two very long weekends with two major holidays? Right now I wouldn't put too much stock in it.

I should be getting into February's Iron Condor trade this Thursday, January 4, which will be six (6) weeks away from the February 15/16 Expiration date for the $NDX. Since the market is closed today, I'll start my risk/reward analysis tomorrow and post it for all to see.

Until then, R.I.P. President Ford (and your Michigan Wolverines!)