Condor Options

Not much action today. The consumer confidence index fell to a five-year low, consistent with the notion that everyone is now well aware of the recession.

The RSI(2) numbers on the majors:
DIA – 79
SPY – 91
QQQQ – 95
IWM – 94
EEM – 92
XLE – 84
XLF – 61
FXI – 95
EWZ – 92
XLV – 88
XLB – 92
EWA – 89

As you can see, today’s sideways action didn’t do much to digest these short-term overbought readings; on the other hand, underlyings can push right up to 100 before turning back down. Volume has been consistently drifting lower since March 14 and was lower again today. The volatility indexes ticked lower and are all now below their 50DMAs. If we had to guess we’d look for some action tomorrow morning, as we get reports on durable orders for Feb., new home sales for Feb., and crude inventories all by 10:30. After that, it’s anybody’s guess, although we’re looking for some selling by Thursday/Friday.

We sent two bonus trades this morning to subscribers, on RTH and IYR. The IYR position is a calendar spread, but is already up $0.10. The RTH position is up $0.15, for a one-day return of 3.5% on capital risked.