We are taking a "pause for the cause" after closing yet another weekly trade for target gain.
The SPX Weekly Iron Condor has been a very successful trade for the Couch Potato Trader newsletter this year; we exited our last position yesterday for target gain after entering on Friday. As we get closer to the Christmas Holiday and three day weekend, volume will be dropping off as investors think more about the Holiday than investing.
With such a good track record for the year on the weekly trade (average of 4% per week), I don't want to risk jeopardizing that record with one last trade for the year. The summary of results for our entire portfolio will be published later this week.
Jim Brown made a terrific comment in last evening's Premier Investor update: "We need to make smart decisions when trading. Emotional decisions like wanting to trade just because the market is open can be expensive."
Very well said, Jim and I think subscribers that have been trading the SPX Weekly Iron Condor will appreciate the fact that I do not feel comfortable risking our favorable record on the weekly play just to enter one last trade for the year.
SPX appears that it is entering a consolidation mode after the post-election rally. After such a lengthy run-up, a sharp selloff could be triggered by the slightest negative news. Or, on the other hand, this could just be consolidation before another leg up. In any event, a non-directional trade such as the weekly Iron Condor could be hurt by a sharp move in either direction, fueled further by the short time frame of the position and low volume.
SPX 6 month chart
We may, in fact, decide to refrain from entering next week as well and wait until the New Year before jumping back into the market with a short term trade. But for now, there will not be a new trade recommendation this Friday for the December 30 weekly cycle. I will review the overall market late next week and post an update on the next weekly trade entry. In the meantime, we have the SPY monthly Iron Condor on that we will continue to manage according to the guidelines. The weekend update on the SPY trade will be published as usual on Saturday.
As always, stay keen on your risk management and trade carefully,