A roller-coaster ride as Greece and China rattle the markets.
The market rallied Friday after news that a Greek debt settlement was pending; the EU ministers will meet over the weekend to make a decision on the latest proposal.
We do not have any open positions on for the weekend; so can sit on the sidelines while the market digests whatever the weekend brings on the Greek debt settlement. To say it was a volatile week is putting it mildly; I will post a few charts below to give a visual of what the fear over the Chinese market plunge and Greece brought into the market.
SPX 6 month chart
SPX closed up 26 points yesterday at 2077, a gain of 1.25%. The index has recovered most of last Monday's gap, and back to the 20 day EMA.
The high/low ranges for SPX last week were enough to make most folks fearful or roller-coaster rides:
Monday: 21 points
Tuesday: 29 points
Wednesdsay: 33 points
Thursday: 24 points
Friday: 28 points
RUT 6 month chart
RUT also joined in the rally yesterday, closing up 17 points to 1252, +1.45%. RUT is now back above the 100 day EMA, and a continued rally would push it back above the 20.
VIX 6 month chart
The 'fear' index VIX dropped over 15% yesterday to close at 16.83, also filling in the gap from last Monday's spike.
The big event for Monday will be how the market reacts to the news from Greece. The pending settlement could have already been factored in yesterday's rally, but it's really anyone's "guess", or "opinion", on how the US market will react.
A recap of next week's economic news is below:
8:30 am Retail Sales
8:30 am Import & Export Prices
8:30 am Producer Price Index
8:30 am Empire Sate Manufacturing Index
9:15 am Industrial Production
10:00 am Fed Chair Janet Yellen Speaks
10:30 am EIA Petroleum Status Report
2:00 pm Beige Book
8:30 am Jobless Claims
10:00 am Philadelphia Fed Business Outlook
10:00 am Housing Market Index
8:30 am Consumer Price Index
8:30 am Housing Starts
10:00 am Consumer Sentiment
Next week is the planned entry for the SPY Iron Condor for the August monthly cycle. Monday will be 39 days to expiration; so we will plan to enter the position sometime next depending on market conditions and available credit. For those unfamiliar with the trade, the guidelines are below:
- Entry: Approximately 39 days to expiration.
- Wait at least the first hour after open before entering.
- If SPY has moved one standard deviation in either direction, do not enter the trade until SPY settles to less than a one standard deviataion move.
- Sell a short strike with a delta in the .15 - .20 range.
- Buy a long strike 5 points away from the short strike.
- Minimum credit (for both sides) should be at least .80, or it is not recommended to enter the position.
- Target gain is 10% of the actual margin/risk. This is calculated by the width of the wings (5 point in this case = $500), less the actual credit received. For a one-contract trade using the minimum credit of $.80, the margin/risk is $420. Target gain in this example is $42.
- Max loss is 15% of the margin, or $63 using this same example.
- This position will be traded as a "no touch"; it will remain open as long as SPY remains between the short strikes, until the garget gain is reached. The position will be exited at either short strike or the pre-set 15% max loss.
Trade updates will be posted as appropriate.
As always, stay keen on your risk management and trade carefully,