Last day of November is always weak...

November 30th is usually a weak day for the markets. Today was no different. The RUT and SPX started strong, related most likely to news of the OPEC deal and the fact that they were technically due for a bounce. NDX had not shown recent weakness and got caught up today as it lead everything lower. In the end the NDX landed near 4810, a pretty incredible fall of 1.28% on the day! It now trades below its 50 day moving average after never making a new high as all the other major indexes did.

A couple of indicators really stood out today. First, short-term volatility (VXST) marked higher than VIX almost all day. It closed below it, however, unable to provide a bearish stance for the market. Second, the TRIN was extremely bullish today, trading below 0.5 and as low as 0.37, only to spike up on the last minutes of selling in the market. Such bullishness is impressive - and at some level worrisome for the bulls when it occurs on a down day. Finally, much like the TRIN, the TICK never hit low levels today either only twice marking below -600 during the whole trading day. All this shows that the NYSE stocks were strong while the tech sector got hammered.

Tomorrow being the first of the month, and a bullish month at that, should be a day for a rebound. However, the rebound maybe short-lived as many of the longer term indicators mark a peak in the market.

Today's trading was complicated due to the weakness in the NDX, where most all of my bull put spreads exist. I mentioned Monday that I added some put spreads to butterfly the 4810/4825 calls I have expiring Dec1. In addition to that butterfly, yesterday I added a 4820/4790 NDX Dec1 put spread. I had to close that today for a debit of $6.85 before it got ran over. Luckily so, as the market ended down at 4810 - right at the apex of my butterfly!

I sold some additional NDX 4880/4900 call spreads for a credit of $2.75. By day's end they were worth 55 cents. I also added some put spreads at 4780/4770 expiring Dec1 for 95 cents. They were worth $1.20 by day's end. All in all, it was an eventful day with the NDX, but overall profitable. We will see what tomorrow brings!

I will give a full monthly wrap up as overall the portfolios were off about 2% this month.

Same roles for the indexes

Today, again the RUT was the weakest, and the NDX was the strongest. It seems the roles have turned since this uptrend started. Before it was the RUT leading, and the NDx playing catch-up.

McMillan noticed that there has been some heavy put buying (the SKEW actually rose today to above 128) yesterday and today, and that has pushed the P/C ratio higher nad back on a sell signal. We noticed that the VIX is starting to move higher and the short term measures of volatility are coming close to crossing higher than the longer term VIX. With tomorrow being the last day of the month, I would expect to see some selling. This would set us up for a positive first of the month.

In any case, I moved the Nov30 3120/3130 RUT call spread up and out to the Dec09 1345/1355 calls for a debit of $3.20.

I also added a bull put spread on the NDX for Dec01 at 4810/4790 making a butterfly out of the call spreads we have on at 4810/4825. With this trade, we are actually neutral to bullish on the NDX over the next few days.

RUT leads down

Today, the RUT almost closed below the low of last Wednesday. It led to the downside, while the SPX pulled back below the high of last Wednesday, while the NDX was off only a bit.

The RSI and Double Smoothed Stochastics (DSS) - something I never mentioned before on this blog - have rolled over for both the RUT the SPX. This does not mean the price of these indexes will fall immediately, but it provides a basis to start trading more sideways price action in the future.

The pull back has helped our P&L and at the same time, gave me chance to add another put spread on the NDX. This time I just added a 4820/4790 for $3.10 credit that expires in two days. We still have the 4810/4825 call spread on that we have been rolling. The trade is neutralized now with the current put spread.

As we close out the month in the next two days the market might fit into its usual late November - early December weakness. This should be seen as a buying opportunity and set up for a strong finish into the end of the year.

McMillan's indicators are all on bullish signals, and the total Put/Call ratio has given a price target of nearly 2300 on the SPX. However, VIX has been trending higher, and today the VXST almost closed higher than the VIX. So some more weakness is possible.

Yesterday, Today, and Happy Thanksgiving

The SPX opened strongly yesterday, had an intraday sell-off and then closed at new highs. The RUT was again the most bullish for the last two days, while the NDX actually fell today about 0.4%. With volatility so low (VIX around 12) and the market only moving in one direction (RUT up 14 consecutive trading days!), trading has been difficult. I keep having to put on bull puts as the market moves up to counter the call spreads we have on. I will go through all trades below.

Yesterday, I added a SPX 2195/2190 bull put spread that would have expired today for a credit of $1.90. Early this morning, I bought it back for 90 cents. I used this to protect the 2200/2210 spread that we had on already from November 17 which we sold originally for $1.35. I closed that spread out for 1.45 debit early today also. In addition, I also added a SPX 2260/2270 Dec30 call spread for a $1.40 credit. 

I also entered some trades on the NDX yesterday. I had to add a Friday settling 4810/4780 put spread for $1.10. I need some protection against the losses in the NDX 2810/2825 call spread that we have expiring at the same time. I sold twice the number of puts as I have calls. 

Today, I rolled those 2810/2825 calls to next Friday for a debit of $2.90. I am going to sell more puts against this spread in the next few days. 

As for the market, its bullish - obviously. However, many indicators are stretched to the point of very overbought in the short-term. We will see how this bullish period of the next few days acts. 

Call it a dozen for the RUT, nevermind the others

Today was another (massively) bullish day! I was thinking it would open higher and give back the gains... it actually looked like that was going to happen. But the market marched higher and really never looked back. The SPX closed at an all-time high and above 2190 where the max gain on our 2180/2190 call spread was achieved. However, I got out as the market opened higher at only a credit of 7.25 (still doubling our money).

The RUT marked its 12th consecutive higher close. After hours, the markets are up again strongly. This creates lots of stress on our remaining bear call spreads, which we have on all the indexes.

One precarious item today was the VXST move. It actually bolted 13% higher, while all other volatility indexes fell. This may give us an opportunity to make some adjustments and add some bull put spreads tomorrow if we can get an intraday pullback.

The real question is when will the RUT register a down day?

Market gets a little soft

Finally, the market weakened today, but only after a higher open. We are bullish the SPX with our bull call spread at 2180/2190. At the same time, we are bearish the NDX and RUT with our bear call spreads.

In all, we are just managing winners, so anytime these trades can make us money, we will close them.

I added a NDX bull put spread at 4760/4750 on friday around mid-day. This spread will expire on Nov25. It will be interesting to see if we have to adjust it this week, if weakness come into the NDX in a bigger way than expected.

All indicators are bullish so any weakness will be met with more put selling.

Options expiration week - bullish!

Again today the market was bullish, led once more by the tech stocks. NDX almost closed up 1% again. The RUT and the SPX were up about half a percent each. Monthly options expired today, so we have two sets of bull puts on the NDX expiring worthless on tomorrow's open.

The VIX fell, SKEW was flat, and the Put/Call ratios are falling. Everything is bullish, except the SPX chart has not yet made a new high. Its previous high is about 7 points from where it stands now, so we may get the new high tomorrow.

I had to roll our NDX 4810/4820 expiring today to Nov23 for $2.40 credit. Most likely the market will pullback at the beginning of next.

Also, I add to our small bear call on the RUT by adding one further out of the money. Now we have the original one expiring on Nov30 at 1310/1320 and another I added today at 1335/1345 expiring Dec02 for $2,65. The RUT is up now 10 days in a row, any slow down will be welcome and will drop the price of these options.

Finally, we have an SPX bull call spread at 2180/2190 that we purchased for $3.60 a while back. It's worth almost $6.00 now. It expires on Nov21, so I put a 2200/2210 bear call spread expiring Nov23 on for $1.35 to give a little more premium to the trade if the market stalls out at these levels.

All in all, the market grinds higher. With one directional moves like we have seen since the Trump election, its hard to find moments to trade both sides of the market. I expect the extreme bullish move to be finished this week, and more two-way action to start soon.

NDX catching up, RUT also up

Nine days of consecutive gains for the RUT - NINE! Today it rose a mere 0.06 points, but still it was up. The big winner today was the NDX however, while the SPX fell abit. It seems that investors are rotating back into technology with XLK (the main technology ETF) rising nearly 1%.

We should have a slight pullback in the indexes tomorrow. At least, it seems timely. Short-term volatility fell drastically today, and actually is now back at the lowest levels we have seen in the last 6 months. VIX still has plenty of room to fall further, though.

I also notice that the number of stocks trading above their 50-day moving averages is stabilizing, like happens when market internals reach an extended bullish level. This does not mean the market is going to fall wildly, but rather further gains will be muted. 

As the NDX continued its uptrend today, I sold an additional put spread to expire tomorrow at the very low level of 4690/4670 (20-wide) for 60 cents. This is just really free money right now, as the NDX has to fall about 2.5% tomorrow for this spread to be in danger. I am hoping the NDX does not go higher tomorrow, as we have the call spread on at 4810/4820 also. 

NDX leads, but RUT does not fall

Today was a generally bullish day, with the NDX up 1.3% and closing just off its highs. The RUT landed its 8th up day in a row, with a small hanging man candle pattern. I suspect this could lead to at least a short-term halt of the massive bullish move in this index. Also both lines on the stochastics are at their max value - a rare moment - and the RSI line has extended into the overbought zone. With this in mind, I placed a bear call spread on the RUT (details below).

The SPX moved to 2180 today, mostly after trading sideways in the morning. It closed at its highs. All this is bullish after three days of sideways action.

I mentioned before that the P/C ratios were a bit stubborn in changing to a more bullish stance. Well, today that changed. All are in line with new bullishness. the SKEW fell below 120 today, which again is more bullish. VXST is below 11. This has been an area from which it usually rallies, but it can also just float around at these levels while the market drifts higher.

I had to add a few trades today as the market is coming into a favorable range for our previous trades. We have sold various put spreads over the last few days, and those are all just about worthless now (creating maximum gains). Also, I removed the large sized bear call spread on the SPX on Friday, so we could take advantage of this bullishness.

With the RUT up 8 days in a row, I figured its time to put a bear call spread on it for a few days. I sold the 1320/1330 call spread expiring Nov30 for $3.15.

I still have the NDX 4720/4710 put spread on that expires Nov17. With the big move in the NDX today, that spread is now worth about $1.70 - down from the $2.80 at the time it was rolled. This spread brought in a total of $2.12 over two additional roles, so I really would like to close it this week. To counter any potential weakness in the NDX, I sold a 4810/4825 call spread expiring also on Nov17 for a credit of $2.50.

So, in summary, I added RUT and NDX bear call spreads to the portfolio.

RUT killing it...

The RUT registered its 7th day up, while the USD jumped 1% against a mixed basket of currencies. The NDX continues to remain under pressure. The SPX is flat for a third-day. Financials are leading the market higher based on interest rate increases being priced in.

The SKEW remains low, providing support for the bulls. Volatility rose in the later dated months, but VXST fell.

The NDX put spread we have on at 4720/4710 is under a water, so we may need to move that out again tomorrow.  Meanwhile, I traded another SPX put spread expiring Nov21 at 2100/2090 for 65 cents. Our put spread expiring on Nov16 is already only worth 16 cents, so I needed to replace it.

This market is very bifurcated still, and when things start to even out, the market should be able to move higher.

Almost all clear for the bulls

After the big bullish move at the beginning of the week, the market has nicely consolidated its gains. The NDX and DOW closed with gains on Friday, while the SPX was only slightly down. The RUT is the real headliner almost hitting an all-time high on a weekly-closing basis.

Volatility fell and so did the SKEW - down to 121. These are more inline with a bullish market. The last standing pillar of negativity remains in the Put/Call ratios. However, that is changing quickly and they are rolling over to buy signals.

With all that happening, I was looking for some we morning weakness to close out the big bearish credit spread I put on Monday. Friday there was weakness for a few hours in the morning, so I bought back the Dec2 SPX 2200/2210 call spread for $1.70 - calling it a break even. Now I am less worried if the market continues to rise. In fact, I expect that we have another 10-15 trading days before we would really see weakness. Any short-term sell offs are chances to add put spreads.

With that in mind, I added another put spread on the weakness in the AM also, as we had one expire for max gain Friday. This time I sold the 2110/2100 SPX put spread that expires on Nov16 for 75 cents.

Bifurication

Today we saw a massive sell off in the tech-weighted NASDAQ , with the NDX down over 2% at one point. It closed down about 1.6% while the DOW registered an all time high, the RUT was up again (+1.5%), and the SPX rose! Investors seem to be re-positioning portfolios after the Trump victory. Defense companies and certain commodities are really moving higher. Someone tweeted that the Relative Strength Index on copper hit 99 today - the highest in 36 years. Meanwhile, technology is suffering as M&A deals (like AT&T/Time Warner) may get more scrutiny under Trump.

VXST finally closed below the VIX today, and was the only vol index down on the day. VIX can fall much further from here after its VIX spike buy signal. We may have a slow down in the uptrend on the SPX, but the market looks like it will go higher.

Put/Call Ratios have been high recently, as has the SKEW. When they fall, more bullishness in the stock indexes will follow. The RUT has been the most bullish and that is a good sign.

Some option traders are throwing on bear call spreads at this point, but I am not following that yet. I have the one 2210/2220 Dec2 SPX call spread on, and I may have to roll it over to a bull put spread if the market looks to go higher.

Meanwhile, I moved the NDX 4720/4710 put spread set to expire today out to Nov17 for an additional credit of 40 cents. I also added a put spread at 2155/2145 Nov14 SPX for 75 cents today. These are both rather small positions to hedge the one big call spread I mentioned above.

Still reaching for puts...

The SKEW still remains elevated. And VXST is still above VIX. Strange for such a bullish couple of days! Everything else seems rather bullish.

Today was a rodeo ride if you take into account the overnight market from the election. I don't need to rehash it here, but it was wild...

I closed the SPX 2060/2050 put spread expiring today for 30 cents (sold originally for 80 cents) in the first moments of trade this morning. I didn't want to take any risk after last night's follies.

I also sold a normal size position on the SPX Dec2 2200/2210 calls for $1.70. And because the market is very strong, I bought a 2180/2190 call spread for $3.20 that expires on Nov21.

I still have the small call spread at 2155/2165 that expires Nov30 - I moved this out Monday for 20 cents.

We still have the NDX 4720/4710 and the SPX 2100/2090 put spreads to expire this week, also.

With all these positions, we should be able to play just about any movement for some profit. We just need a bit of back and forth action.

SKEW still high...

Markets had a good day again today, and with mostly bull puts spreads left in the portfolio, so did our P&L.

Yesterdays trades were just small amounts to help offset the rally through the 2115/2125 call spread that expired yesterday. First, I sold a SPX 2115/2105 put spread for $1.90. Then I added an overlapping trade with the SPX 2125/2115 puts for another $1.20. Soon after, the market started pulling back, so I closed the now 2125/2105 for $1.60 debit - netting $1.50 out of the trades.

I let the call spread expire fully in the money.

Today, the market went up and tested the 2145 area, but fell back to 2140 at the close. We have a normal size bull put spread on at 2060/2050 which will expire tomorrow. With Trump ahead in the polls this could be a trade that needs some adjust at the open.

Too much of a good thing...

Today, the SPX had its best day since last March. It totally blew through my 2115/2125 call spread. I put on some small trades to defend it (I will detail them tomorrow in full), but the damage was severe enough to make the day only a breakeven! All this on my Birthday!!!

The market is still in a strange state - mainly because of the election, I suppose - the SKEW actually increased to 134 today, and although VIX fell more than 3 points, the term structure remains bearish.

I will wait to post-election to add any more trades, unless I need to defend the ones that expire this week.

Nine days down.... Monday marks the end!

Friday the SPX did a head fake again, but this time it was meaningful. The market ended up providing a nice bottoming candle... a gravestone doji. In addition, the MarketForecast for both the SPX and the NDX remain with a strong bullish cluster. Everything is in order for a bullish Monday. It should be easy after 9 down days and a VIX hitting 23 intraday. Futures support this now, with the E-minis up about 1.35% currently.

Less than 25% of stocks are currently above their 20-day moving average. This has been the case for the last 3 days without going lower. It looks like a bottom is very close here.

The VIX needs to close below 20 before we can get bullish. I also want to see the SKEW come in very low - below 115. 

On Friday, I rolled out the SPX 2100/2090 that was expiring Nov7 out to Nov11 for 20 cents. I also added a small SPX 2115/2125 exprining Nov7 for $1.25. The market can jump 1.5% tomorrow and that still would not lose money. We need to monitor how big the rebound will be. 

If the VIX does fall, and VXST closes lower than VIX, then we will get more bullish. With the election looming, it will be tough to get a huge jump unless the market feels the election is already decided in favor of Clinton. 

More of the same

Another sell off 'slow motion style', with an increasing VIX (upto 22.57 intraday). This is beginning to look like Christmas soon!

The big issue today was the SKEW hit 141.18! That is a huge jump showing every was reaching for out-of-the-money put options. This could signal an intense move in the near future, usually to the negative side. At least real blood shed may trigger a turn around.

I sold more call spreads.

First, about two hours into the trading day, I sold the SPX 2150/2160 call spread expiring Nov9 for $2.15.

Then, I shorted a small position on the NDX expiring today with a 4730/4750 call spread for $1.30 around about 2 hours before the close.

At about the same time, I sold the Nov4 SPX 2110/2120 for $1.20. I needed this to cover the 70 cent cost of rolling the Nov4 2100/2190 put spread to next Monday (Nov7), which I did at about the low of the day. I may need to roll this one again.

Now, everything we look at is getting ready to get bullish. Its just a matter of when!

The MarketForecast finally is buried in a bullish cluster on both the SPX and the NDX, and again on the RUT.

Put/call ratios are at extreme levels both short term and according to a longer term moving average. They can stay that way, but when the fall, it will mark the beginning of a trend we can trade.

With an inverted volatility term structure, and VIX spiking, we just wait for the VIX to fall to 19.57 and the term structure to straighten out, before we can get bullish.

I have time to wait for this on the NDX 4720/4710 put spread  (now in the money), as it expires on November 10th. I am not so lucky with the 2130 /2120 (mini-sized - thank you!) that expires tomorrow. I am tempted to roll that UP and out, for less of a debit, so that when the market does spring back, I can recapture most of the $10 wide spread. I will see tomorrow.

In the meantime, I will continue to collect premium on the call spreads until this market is ready to get over its long slow bearish spell.

Continued negativity for the markets

We are now below support at 2100 on the SPX. After hours, the futures are down even more substantially, trading 0.35% down from the close right now.

Today, I moved the SPX 2100/2090 put spread out until Friday, and got an extra credit of $2.30.

Looks like we will have to keep rolling things out, and putting on call spreads until this market rallies back. This could take a few more days, but the markets are already oversold on a number of measures.

First the short term volatility is very far above the longer term measures, which usually does not last long.

Second, the number of stocks below their 20 day moving averages is already at extreme levels. Usually, the rebound from these levels is sharp and quick.

However, until we see signs of a full rampant sell off and reversal, downside is possible. With 7 days of negativity already behind the market, a rebound could be very soon.

VIX Spikes and market sits on support

What happened today was not supposed to happen. We had all the signals for a bounce, yet we got a nasty breakdown. Now the SPX sits right on support after creating a long tail below it. MarketForecast rose out of the lower reversal zone, and the Stochastics seem to be starting to curl up. Will we get a rally tomorrow, now after six days of being down?

Without any doubt this time, VIX spiked today. It was up 3 points intraday at one point, but it fell from its highs by the days end. If the VIX closes below 17.43, we will have a VIX buy signal on the SPX.

The NDX fell today by 0.75% - but it also was down much further with less than 1 hour to trade. Our NDX puts are still about 1% lower than current prices.

Both the SPX and the NDX came close to touching their 4 standard deviation 20 period Bollinger Bands today. There is not much room to the downside before those get hit.

I added some call spreads on in the morning mainly to make Iron Condors our of our bull put spreads. The first was a SPX Nov4 2130/2140 for $2.85. This makes a butterfly with the 2130/2120 put spreads due to expire the same day. The second was a SPX Nov2 2125/2135 for $1.80 to complement the 2100/2090 put spread expiring tomorrow. Finally, I added a NDX Nov3 4820/4830 bear call spread for a credit of $2.00.

At the same time I moved the NDX Nov3 4720/4710 put spread out to Nov10 for a credit of $0.50. I want to take this off  before the election of course.

All in all, it was a stressful bad day for our trades as we were all in put spreads as we started the day. Everything now depends on if we can hold support and get a bounce in the next couple days. After all, this is supposed to be a bullish period!