Eurozone Provides A Friday Boost, Will It Last?

Broader Market Weekly Performance:

Dow +1.89%

S&P +2.03%

Nasdaq +1.47%

Russell +3.01%

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MARKET UPDATE:

The market exploded higher overnight on the latest Eurozone headline gapping higher at the open bell. The strength continued throughout the day but the bulk of the gains were made overnight, as has become so common this year.

The fact that SPY rallied all day right into the close tacking on +2.5% Friday alone is actually encouraging. If the SPY had given back some of the gains into the close it would mean the rally was being tested and digested. But a parabolic move is just that, parabolic, making the rally less strong and traders less confident in it. Friday's action was very indicative of a quarter end short squeeze. Heading into the Holiday week, volumes will dry up and trading will be volatile.

The gap-up-and-run on Friday may not be back-and-filled early next week due to the Holiday but it will be soon enough. SPY 136 (S&P 1360) is a heavy area of resistance and some chop around this area should be expected; especially after such a large move in just one day. This coming week, if any strength continues, we plan to initiate some SPY debit put spreads to take advantage of the market volatility and today's stretched rally. Long VIX calls or call spreads is also a way to play this parabolic rally in the short term.

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

BOOKINGALPHA UPDATE:

Monthly Trading Service Commentary:

The final June position expired for full profit this week:

Quarterly SPY Iron Condor 117/119/138/140 yielding +12.99% in 21 days

The Monthly Service closed a great June posting closed positions yielding a +10.53% gain for the month. This goes a long way to rebuilding after a tough start to the year. We have made some minor adjustments to our strategy which are paying off handsomely. we are very excited about the balance of the year.

The performance for the entire Monthly Trading Service portfolio has been +13.04% since May OpEx. After a rough start to the year, the Monthly Trading Service is performing well as a result of the strategy tweaks we implemented in response to the trading action. The Service currently has a July IWM Iron Condor & a July SPY Bull Put Credit Spread open with more positions slated for deployment during the upcoming Holiday trading week.

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 we 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. For more information please read: Generating Alpha Comes With Volatility

Monthly Trading Service YTD vs S&P 500:

-5.53% YTD BookingAlpha Monthly Advisory

vs.

+8.21% YTD S&P 500

See Trading Record

Weekly Trading Service Commentary:

Our weekly Iron Condor got into trouble today with the extreme market gap up requiring us to take action with the call spread side of the position. We successfully rolled the call spread side of the Iron Condor to next week's weekly options for a minor debit, thereby reducing our overall credit (profit potential) by about 20%.

The roll adjustment to the Weekly Iron Condor utilized the same strikes and was timely as the SPY rallied right into the close. The strikes were simply rolled out to next week's weekly Opex. With such an explosive market gap up, blowing past most Moving Averages and moving far from the short term 5, 10, and 13 Day MA's (meaning very overbought), our adjustment simply buys us time for the market to digest such a move.

The gap-up-and-run today may not be back-and-filled early next week due to the Holiday but it will be soon enough. This may require us to roll the Weekly SPY trade again which is fine with us. SPY 136 (S&P 1360) is a heavy area of resistance and some chop around this area should be expected; especially after such a large move in just one day. Next week, if any strength continues, we plan to initiate some SPY debit put spreads for the Weekly Service to take advantage of the market volatility and today's stretched rally.

We are using narrower width spreads (meaning they are 1-point wide vs. the typical 2-point wide structure) which allows us to position even further OTM. The skinnier spread widths results in higher commission costs due to more contracts being traded but risk is mitigated by moving further OTM. We would rather pay a little higher commission to provide us more safety with further OTM strikes than save some commission expense with higher risk lower strikes with 2-point wide trade structures.

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 we 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. For more information please read: Generating Alpha Comes With Volatility.

Weekly Trading Service YTD vs S&P 500:

-16.81% YTD BookingAlpha Weekly Advisory Portfolio

vs.

+8.21% YTD S&P 500

See Trading Record

Check out the BookingAlpha Trading Record

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