The sell-off continues with higher volume; is there a bottom in sight?
This has been a very ugly week in the market, with intensified selling accompanied by increasing volume. Some analysts are predicting the "correction" to continue; others are saying the buying opportunity is near. The intra-day moves have been parabolic; SPX had a 78 point swing between the high Tuesday and the low of yesterday. Earlier this week our stop loss was hit for the October weekly Iron Condor.
As of this writing, futures are down sharply once again. ES is minus 23 points so it's looking like it may be another brutal day.
Just glancing at the 6 month daily chart of SPX, and the volatility over the recent days; this just does not look comfortable to me for a new weekly trade entry for the next cycle (October 4).
SPX 6 month chart
As a full time trader, it is never easy for me to sit on the sidelines. However, I also value cash as a position at times. This week I will hold my cash, rather than putting it at risk for a potential whipsaw by jumping in to a new short-term position of a non-directional nature.
I have previously posted this quote given to me by a trading associate: " Infinite Wisdom Yields Immediate Results." I keep this quote on a post-it note next to my computer, and refer to it often. This is another week to heed that quote, in my opinion, and pass on a new trade for the next cycle.
The overall track record for the SPX weekly Iron Condor is decent; and I feel it is best to remain on safe territory rather than risk another loss.
SPX Iron Condor Results
In summary, it is not recommended to enter a new weekly position; but to practice patience, look forward to next week when I hope we will have a better entry signal for the weekly Iron Condor.
In the meantime, we will look to enter the November RUT Iron Butterfly next week; entry details will be posted when the order is submitted.
For those unfamiliar with this strategy, the trade management guidelines were updated on September 25, and can be found here:
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As always, stay keen on your risk management and trade carefully,