That’s right, next week is make or break time for our June trade. The theta (time decay) factor really kicks as expiration nears, so we don’t want to exit too early. But in this case, if we don’t get a significant down day next week, our SPY trade might exit flat or negative, so keep on the lookout for an exit signal from us.

In case you’re despairing already, the numbers below are worth noting. We use the 2-day RSI (Relative Strength Index) to measure technically overbought and oversold situations, and after this week’s gains all the major indexes are almost maxed out. The 2 day RSI numbers (0-100 scale) on the major indexes are as follows:

DJIA 93
OEX 89
SPX 95
RUT 96
MID 96
COMPQ 94
NDX 91

So next week should either see multiple churning distribution days (like we saw on Thursday), or a down day significant enough to give us a decent exit. The real question is, which will it be?