Nasdaq Continues Its Rise While S&P Goes Flat and Russell Breaks Down

Broader Market Weekly Performance:

Dow -0.46%

S&P -0.12%

Nasdaq +0.39%

Russell -1.71%

www.BookingAlpha.com

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MARKET UPDATE:

Markets rose through the week to new highs but gave up the week's gains on Friday. The Nasdaq continued to rock and roll as AAPL reached the ozone layer. Conversely, the Russell broke down hard posting the largest dive of the major indexes.

Eurozone headlines were back in the forefront as confidence in Greece's ability to follow through on austerity measures. This disbelief coupled with weak Consumer Confidence produced the largest down day of 2012 thus far.

The 4 major indexes gave up their 5 day moving averages during Friday's decline for the first time in well over a week but air pockets still remain down to their other short term moving averages (10, 13, 20). Additionally, gaps located at the same level as these short term moving averages remain unfilled on the charts. I expect these gaps to be filled this week and the market to be supported. Volatility should increase the first part of the week as position squaring takes place heading into OpEx.

Markets recovered slightly into the close Friday so Monday will be an interesting day. Markets are still extremely overbought and the S&P was unable to advance beyond the mid-1350's multi year resistance level. The S&P could stay within a 30 point range between 1320 and 1350 for a couple weeks to work off the very overbought conditions.

Navigate wisely and stay profitable, my friends. Happy trading!

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

It was a quiet week for the Monthly Trading Service until Friday when a pullback finally occurred and I sprung into action.

I executed an opportunistic QQQ Bull Put Spread creating an Iron Condor to compliment the existing QQQ Bear Call Spread. This quick little trade will allow for the generation of some income this coming week while we wait to adjust the Bear Call Spread to March strikes closer to Friday's expiration.

I also attempted the first March spread using SPY options Friday but received no fills. Right after I issued the trade the market reversed course and strengthened into the close. I will leave the order open GTC to marinate and see if any fills trigger on Monday. I am in no rush for the trade to trigger since it uses March options so no worries here.

The Monthly Advisory Portfolio remains 60% invested, with the SPY order remaining unfilled so far, and 40% in cash. Here are some specifics about the open trades:

The SPX spread looks good going into OpEx but I will be watching closely in case the bulls get a little too ancy and push higher above 1355 this coming week.

The existing SPY Bear Debit Spread got into much more comfortable territory thanks to Friday's anticipated and long overdue pullback. I anticipate the spread to be profitable and not require a roll to March but too early to tell right now. A roll to March would not bother me due to the circumstances of the market right now (overbought).

The QQQ Bear Call Spread also recovered somewhat during Friday's pullback. The opportunistic Bull Put Spread deployed (to create the Iron Condor) during Friday's action will offset some of the current ugliness in the call position and produce some gains while I wait to adjust the calls.

The calls will most likely definitely require an adjustment. The adjustment will require multiple steps that will look something like this:

Step 1.) Close the put spread opened Friday.

Step 2.) Roll adjust the call spread to new March strikes

Step 3.) Possibly open March puts to create an Iron Condor or Butterfly. This step will be done but the question remains whether it will be done immediately upon rolling or later, the market action will dictate when this is executed.

*Autotraders: Autotrade will administer all these steps for you as normal. There should be no problems like encountered with Friday's put spread where eOption would not execute the trade due to the overlapping strikes, although none of the other brokers had a problem with the trade. The strikes of the new puts will not overlap the calls.

I had a RUT trade slated for execution this week but elected to hold enough as I could not get the trade to pan out the way I wanted so I could trigger a Trade Alert.

The Monthly Advisory continues to outperform and deliver consistent Alpha:

+4.60% YTD BookingAlpha Monthly Advisory

vs.

+6.65% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

This week I went fishing with a SPX 1370/1375 Bear Call Spread trade Thursday that would have expired on Friday. I got no fills and ultimately canceled the order.

I stuck to my analysis and strategy and let the trade go unfilled as I was not willing to click the strikes down as this market is too zany and there isn't much room for error anywhere. In the end, if I had indeed clicked the trade 1 strike it would have triggered and ultimately expired for full profit due to Friday's pullback. But, that would have exposed us to undue risk and therefore, would not have been a smart trade.

An unfilled order is very rare for BookingAlpha. However, it does happen. With Weekly options it is typically not a good idea to chase them to get them to trigger. Weekly options are extremely Gamma sensitive and can go from comfortable to uncomfortable very quickly.

Missing a trade is not the end of the word and not worth jeopardizing a portfolio. Just reset your sights to the next week. Remember, sometimes the best trade may be the one you didn't make

The IWM Bear Put Debit Spread remains open and had a nice showing Friday as a result of the sell-off. The IWM trade expires this coming Friday with Feb OpEx so I will keeping a close eye the action. If the trade does indeed require a roll adjustment to March strikes I am not worried about it as IWM has been screaming higher and needs to consolidate.

The IWM position will benefit very quickly on any pullback. With 1 week left in the trade premiums are low. The Greeks Delta and Gamma are high due the proximity of the underlying to our spread. This will cause the spread value to mirror the markets volatility more closely and recoup the marginal loss currently reflected quickly on any pullback.

The Weekly Advisory continues to outperform and deliver Alpha:

+6.55% YTD BookingAlpha Weekly Advisory

vs.

+6.65% YTD S&P 500

See Trading Record