The Stock Market started the week falling from the weight of being overbought, while Oil bounced up from being oversold. In the  end, not much happened with stocks being slightly down and oil ending slightly up.

The DJIA and SP 500 ended the week with a lower high than each of the last couple of weeks, a sign that stocks are now just drifting lower along their 50 day MA. It looked like the Nasdaq had a shot to break out over the resistance of its 200 day MA, but that line of demarcation continues to hold technology stocks back.

Not a lot to write about this week, as the financial markets continue to exhibit trading range behavior.

JD

The Iron Condor we suggested in late July expired worthless, so if you put that one on, you were able to keep all of the premium. The problem with that trade though, was the fact that the DJX was actually above 118 this week on an intraday basis, but never closed above that resistance level. While holding on would have produced a profitable trade, it is possible that you could have been stopped out at the break even level depending on the amount of risk you decided to take.

The 20% fall in the price of oil in the last month has certainly helped the stock market, but the DJIA is still showing signs that it is in a trading range, as it has had trouble trying to break out above resistance at 11,800. The SP 500 has looked a little better, closing the week above its 50 day MA. The Nasdaq, on the other hand has been strong in the last month, picking up 10 % since the July lows. It is now above both its 50 day MA and 200 day MA. Thats a sign that institutional investors are moving into Technology stocks.

The financial markets appear to be a little overbought at this time, but if oil continues to fall, they could continue that way for a while. On the other hand, it would not take much in the way of news to push the stock market back down again. This week could go a long way toward letting us know if it is time to start buying. Bullish Option Strategies like the Bull Call Spread or the Bull Put Spread will let you participate if a market rally comes to fruition, without you having to risk a large amount of capital.

JD

Yesterday the DJIA and the SP 500 tried to breakout of their trading ranges, but their July highs and falling 50 day MA stopped them dead in their tracks. That failure, a poor jobs report, and the first day of rising oil prices in a week (now how strange is that to read given the historic rise over the last year), combined to knock the stock market back into the middle of its range of the past month.  Every time the market has a triple digit up day, it seems to be followed in a day or two with a triple digit fall. No different this week.

If you tried the Iron Condor we suggested about 10 days ago, yesterday’s move may have sent you scrambling to look into how to get out of it without getting into too much trouble. As it turned out, the DJX once again did not break through resistance. A better idea may have been to use that opportunity to take some profits off the table by buying back the Put half of the spread for very little money.

Eventually, this market will breakout in one direction or the other.  I just do not think it will happen until everyone gets back from summer vacation.

JD

The market tried to break out on both sides of its current consolidation and failed to do either. The stock market finished this week almost exactly where it ended last week. We could not have asked for a better finish to the week for the Iron Condor we suggested last week. That being said, both sides of the trade looked like they could have been in trouble at times during the middle of the week. An active trader with good timing could have bought back both sides (at different times) for a small profit, whereas those planning to hold the trade until expiration to capture the premium are still looking food. Unless some big news hits the wires in the next couple of weeks, I expect the market to continue in this trading range for a while.

JD