New Altitude For The Recent Rally

Broader Market Weekly Performance:

Dow +1.18%

S&P +1.35%

Nasdaq +1.45%

Russell +1.89%

www.BookingAlpha.com

Check out my latest interview on Benzinga and TraderInterviews.com

MARKET UPDATE:

Markets continued their advance this week posting new relative highs heading into February OpEx. The advance continues with the Dow and Nasdaq already reaching new relative highs but the S&P remains under 1370.

I expect the S&P to catch up in the next week or two ultimately reaching the 1370 mark and possibly rising to 1380. However, be advised that statistically, the last 2 weeks of February after Feb OpEx provide limited gains and typically result in weakness. Of course, with this market, who knows. We could be talking about S&P 1550 in next week's recap!

The rally since mid-December has been enormous and continues without hindrance. While I personally have been wrong on the altitude levels this market could reach, I have seen this before. The longer and further the market rises without a 1 day pullback >1%, the more fierce the pullback will be when it arrives.

What goes up does come down and while I have gotten burned lately underestimating this market, I would not be getting long or short at this juncture. I will instead deploy Bear Call Credit Spreads and Bear Put Debit Spreads above the market staying clear of the downside when it happens. It is not a question if, but when. It may be 3 months, but a pullback will come and will "surprise" everyone like a bolt from the blue.

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

Notice to Autotrade Subscribers:

TradeKing - Due to continued performance issues and misinformation communicated to account holders I have ended our autotrade relationshipwith TradeKing. They are the only Broker where repeated issues exist and I view their autotrade specifically as detrimental to BookingAlpha autotrade subscribers. It is quite unfortunate but we can no longer expose ourselves or our subscribers to their continued antics regarding autotrade with a clear conscious. I view Autotrading with TradeKing as simply too much of a liability and must sever ties.

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

February OpEx was not as profitable as I originally hoped it would be due to the unabated rally in the market. I had one SPX spread position expire for full profit of +14.94% in 17 days. The other 2 positions (QQQ and SPY) required roll adjustments.

This coming week I plan to take advantage of the continued float up in the market to reissue a more Bear Call Spreads on the S&P (north of 1400) as well as some other trades on the indexes as they continue to float higher. The markets continue to strecth higher which makes for nice deployment of Bear Call Spreads and Bear Put Spreads.

In summary, the QQQ positions got away from us moving very far fast. The SPY is positioned more strategically and is still comfortable. Additionally, rolls are plentiful and advantageous with the SPY. As long as those conditions exist I am content and comfortable with the position.

For reference, I still have an approx 40% stop loss threshold in both services but the explosion of the Q's higher simply got away from me. This insane rally has propelled the indexes to new relative highs without so much as a >1% down day all year (actually since mid December). This cannot and will not continue forever. However, that does negate the fact that I have been wrong, although I argue I have been early as strong correction will happen....someday, but nevertheless, my ass was handed to me on the Q's.

The Q adjustment trade opened Friday provides nothing but upside as there is no more to lose in the Q position; technically, there is $0.03 at risk. In an overall sense, I will be making a determination this week as to whether or not a new adjustment (same strategy and structure as executed this week) using March options is worth tying up the margin or whether to walk away and instead deploy the capital into a entirely new, more strategically opportunistic, position (see the trade heading below for overall calculations and further details about the trade's risk, etc).

While losses are unfortunate, they are a part of trading. Looking at past trading years you will see drawdowns like this do occur and ultimately, how I prevailed. This is not a justification, merely a reminder that this situation is still within the realm of normal portfolio gyration. While it may be uncomfortable and is surely no fun, my position sizing allows for these drawdowns providing enough capital to recover. See past year's results and let them speak for themselves.

The Monthly Advisory continues to outperform and deliver consistent Alpha:

+8.04% YTD BookingAlpha Monthly Advisory

vs.

+8.13% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

This week the RUT spread issued never triggered so no trade was placed. Some traders massaged the RUT trade to execute which ultimately expired worthless giving them a nice profit for the 2 day trade.

The existing IWM trade required a roll adjustment to March which was successfully executed for a net credit, thereby reducing the risk and increasing potential reward of the position while also providing additional time for the spread to work out.

As the market floats higher it provides additional opportunities for Bear Call Spreads and Bear Put Spreads to be deployed for nice scalps.

The Weekly Advisory continues to outperform and deliver Alpha:

+6.55% YTD BookingAlpha Weekly Advisory

vs.

+8.13% YTD S&P 500

See Trading Record