As you may have heard from 50 different news sources by now, the Dow had its biggest day in four years yesterday, rising over 2% in the session. This was a broad-based move, as every other index participated and the Nasdaq in particular continued its record-setting rise.

One small worry

The NYSE TICK reading yesterday was not everything it could/should have been, so it may be that institutional buying programs were not kicking in as strongly. This is particularly true with regard to issues in the Russell 2000, which has really been lagging the other indexes recently. In the coming days, we expect to see either the Russell small caps (IWM) picking up to join the fun or to see them lead the markets back down into the recent range-bound areas. Obviously, we would actually prefer to see the latter happen.

Glad to be neutral?

On days like yesterday, a chimp with a dartboard could make good picks. And you might think that days like yesterday make it tough to be as perpetually market neutral as we are here at Condor Options.

The truth is, it takes guts to be perpetual contrarian. When the market tanks, we have to be willing to find the upside; when the market rallies, we have to remind everyone that gravity still exists. But that’s why we let our strategy dictate trades, not our guts or our sentiment. That’s why we do the analytical work up front, and adopt a “fire-and-forget” approach whenever possible.

And on days like yesterday we’re glad to be neutral, that is to say, we’re glad to be in iron condors, because we can benefit from the upside, without having to worry whether everything will come crashing down tomorrow. Both of our primary positions this month are still well within their protected range, and by sucking the volatility out the markets yesterday, this rally has positioned us to take in that last bit of theta over the weekend.

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