8/8/2008 8:05:03 PM
The system remains in Buy mode.
On July 22 we sold a half position in an SPX August 1170(SPTTN)/1160(SPTTL) Put Option Spread for a net credit of $1.00.
On July 25 we sold the other half position in an SPX August 1185(SPTTQ)/1175(SPTTO) Put Option Spread for a net credit of $1.20.
The total premium received averages now to $110 per $1,000 of margin required per spread.
SPX Chart - Bigger Picture
In the bigger picture, we still have a positive divergence on the MACD and the RSI is climbing nicely, If we can get through 1320, the 200 DMA becomes the target at around 1370.
Looking at the chart above, we may have seen one of the best buy points for the year in July. Having said that, September and October are notorious for dropping and if you investment funds on the side, that will probably provide the next great buy point for the year.
SPX Chart - Shorter Picture
The market is setting up nicely for a continued advance. We see an ascending triangle in the chart above with today's action not only piercing, but closing above the 1290 resistance level. Ascending triangles tend to be bullish patterns, and the bullish argument fits with what we've been discussing recently.
The only concern is that the market went higher on lower volume (possibly volumes will remain down the next couple weeks while the Olympics are on!), so a pull back of sorts is likely near term. Note, we're at the 50 DMA and this may act as resistance in the very short term. Overall though, with next week being options expiry week, the market is poised to get to the 1320 resistance level as well.
In relation to our open Put positions, with a week to expiry and over 110 point buffer, we're sitting very comfortably.
For next week, support is 1260 - 1270 and resistance is 1300 - 1320.
The quote this week is from Lee Iacocca, "What is it that you like doing? If you don't like it, get out of it, because you'll be lousy at it. You don't have to stay with a job for the rest of your life, because if you don't like it you'll never be successful in it."
Have a great weekend and email me at firstname.lastname@example.org with any questions or comments.