01/26/11 Market Update
As we approach the end of January, and another weekly options expiration, the market is flirting with resistance again. The SPY hit a new high of 130 today but backed off into the close.
The market is still feeling a little tired but is being zombie-fied by continued solid earning releases. Europe’s credit crisis is under control (for now) and isn’t producing any headlines, and therefore no headwinds, for markets. However, Asian markets cracked a few months ago and are well off their highs. This is starting to weigh on US markets and will make a continued advance much tougher for US stocks. Earnings season is winding down and will take some of the positive news flow out of the market as well.
Jobless claims and Durable Goods will be released tomorrow and barring any wild number (positive or negative), I believe these are baked into the market. Stocks may stay up to end the week but headwinds will begin to blow over the next week or two or three.
Areas of support remain unchanged at S&P 1280, 1260, 1250, 1225ish, and ultimately at 1175. Resistance remains at S&P 1300,.1310 and 1350.
Clients adding a call spread today to an existing put spread on IWM to create an Iron condor. This is a very short term trade and should be closed Friday with weekly options expiration.
The SPY iron condor expiring this Friday as well is getting close to the short call strike at 130. With a new batch of weekly options available tomorrow opportunities will exist to adjust the spread if needed. A watchful eye is being kept on this one.
Stay tuned and happy trading!
Note: I am currently drafting my year end letter to clients and subscribers and should have it released by this weekend. The communication will cover many topics including: Recent trading challenges and successes diagnosis and action plan, trading strategy, service enhancements and structure and a BookingAlpha Capital update.