Is "buying the dip" beginning to slow down?
As we head into the summer doldrums of August, it remains to be seen whether investors will continue to jump in at every pullback to take SPX to all-time highs once again. Friday's close at 1978.34, -9.64 or .5%, could have just been some Friday afternoon profit-taking ahead of the weekend. Next week's heavy economic news (outlined at the end of this article) could shake things up, but in the meantime, we will continue to manage the weekly Iron Condor as per the guidelines.
Below is the status of the August 1 weekly Iron Condor as of the close Friday:
SPX August 1 Weekly Iron Condor
This 6 month SPX chart shows our short strikes:
SPX 6 month Chart:
The position is currently +$32.53, a little over half way to the target gain of $60. The position will remain open until target gain is reached as long as SPX stays between the short strikes. The position will be exited at target gain, max loss (10%), or either short strike. However, it will be closed regardless before the FOMC meeting announcement on Wednesday afternoon.
With all the geo-political issues continuing to heat up, I recommend anyone trading this weekly position be extra-vigilant and nimble to exit if a severe market move negatively affects the position.
Next week is a very busy week for economic news:
10:00 am Pending Home Sales
10:30 am Dallas Fed Manufacturing Survey
FOMC meeting begins
9:00 am S & P Case-Schiller HPI
10:00 am Consumer Confidence Report
8:15 am ADP Employment Report
8:30 am GDP
2:00 pm FOMC Meeting Announcement
8:30 am Weekly Jobless Claims
9:45 am Chicago PMI Index
8:30 am Monthly Employment Situation Report
Please note that this monthly employment report (Non Farms Payroll) is, more often than not, a major market-mover. It is not recommended to have any open positions until after the market digests the news; so any new weekly trade entry for the following cycle (August 2) will be on Friday next week rather than Thursday.
A trade update on the open weekly position will be posted early next week.
As always, trade carefully and stay keen on your risk management,