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Swing and Swap

|Includes: SPDR Gold Trust ETF (GLD), SPY

 

 
Sorry for the belated post, I failed to hit the publish button this morning and then had to run out for a meeting, so here is a combo plate of my opening thoughts and an adjustment to out bearish SPYDR Gold Trust (NYSEARCA:GLD) position. 
 
Stock futures have reversed overnight losses and are now poised to open moderately higher but will have basically only recouped the late day sell-off that occurred Friday afternoon.  Thin holiday trading should lead to these type of intraday price swings and  swoops, the kind of environment in which the HFT and algos can run rampant and wreak havoc.   In that vein technicals should hold sway during the next few days.  Last Thursday and Friday may have provided the type of downward whoosh that washes out enough people to create an intermediate term bottom.  The market is oversold by a variety of measures and one would have to pretty aggressive to initiate new shorts down at current levels.
 
Even those that are in the bearish camp, especially technicians, those that employ some form of Elliott Wave theory, are now anticipating a rebound back to the 1060-1080 level before the S&P 500 turns to a new leg lower.  The VIX provided a potentially bullish signal on Thursday when it turned lower on the day even as the S&P 500 was making session and new 7 month lows.  This divergence could be a sign that the bulk of selling had culminated in that investors were no longer felt the need to rush and pay up to buy put options. 
 
This morning I may be looking at slapping on some iron condors in the Spyder Trust (NYSEARCA:SPY) on the belief that it will remain between 102 and 106 for the next week and their will be an accompanying decline in implied volatility and the time decay of a shortened week will impact premiums.  I’ll send an Alert with any action taken.
 
In the meantime I am taking some money off the table in the GLD buy rolling down the $119 puts to the $116 strike for a $1.70 net credit.
 
-Sold to close 10 July $119 puts at $3.20  a contract
-Bought to open 10 July $116 at $1.50 a contract
 
This takes $1,700 off the table, and gives us a free bearish exposure- actually locks in a minimum of $250 profit. 


Disclosure: SPY, GLD