Hold onto your hat; the battle continues between the bulls and the bears.
Volatility reigns this week; we saw sharp declines on Monday, only to rally Tuesday; followed by yesterday's drop that more than erased Tuesday's gains. The battle is raging to see which side may take control, and we could see this continue until the FOMC meeting next week. This sort of day-to-day volatility is usually indicative of a change in the market; but it's too early to say who will win.
SPX closed down yesterday 34 points at 2026, or 1.64%. This is a drop of 49 points since Friday's close at 2075.
SPX 6 month chart:
The 14-day Average True Range (ATR) is indicative of this week's volatility; and is currently trending up. Given this indicator, and the market action thus far this week, I am not recommending any new weekly trade entry for this week. With the forthcoming FOMC meeting, announcement at the conclusion of their meeting Wednesday along with Chair Yellen's press conference, I feel the water is not safe enough to risk a new trade entry until that event is behind us.
The volatility index (VIX) shot up over 24% yesterday, closing above 18.50 for the first time since the October market drop.
VIX 6 month chart:
This volatility pop did not help the open January SPY Iron Condor. Below is the current position as of the close yesterday:
SPY January Iron Condor:
The position is currently down ($-45), and now positive delta so a rally will help. We will continue to monitor the position; the target gain remains at 10% of the margin. The position will be closed at either short strike, or at the pre-set max loss of 15% (-63).
Trade carefully out there; and stay keen on your risk management. I feel these are precarious times in the market, so extra caution is advised.