Condor Options

Our open DIA trade is currently very profitable – we stand to make a 24% return on capital risked when we close it out, which will probably be on Monday or Tuesday. The price might move against us a little if we see some selling off of these current overbought conditions; this has been a very strong (if tumultuous) week for the bulls. Of course, the longer term economic picture isn’t any better than it was last month.

Just for fun, check out the 2-day RSI numbers on the major indexes. (A reading below 30 is considered oversold; a reading above 70 is considered overbought):

DJIA: 97.1

SPX: 96.8

NDX: 99.3

RUT: 95.5

Obviously, things can always go from “overbought” to “extremely overbought,” but it’s worth noting that, except for the Nasdaq, all the indexes are now pushing right up against the choppy levels set on January 4 – 14, which in all likelihood will act as resistance.

And what about the VIX? Fell right down to its 50 MA today, which doesn’t necessarily mean anything, but again, a return of some volatility would make sense here. This is not a stable market. This is a market where the wild things are.