Market looks like oversold, but a dip is not ruled out, followed by compensatory bounce.
Corporate earnings are expected to be weak, which will begin pouring in next week. We look forward to opening put spreads for June and hedging those positions with back dated call spreads.
Home builders, retailers, global market ETFs, look oversold. A drop in the market should give an opportunity to open back dated call spreads. VXX will become attractive if market bounces back.
More, FAZ and FAS always move in opposite direction 3 times the movement of banking index. I may open both positions in conservative portfolio.
S&P Support: 1390, 1377
S&P Resistance: 1401, 1418
Two open positions:
Job numbers was a disappointment on Friday. Traders may panic sell in the Morning on Monday causing both VXX and TLT to rise. If supports kick in at 1390, market will show compensatory bounce as it will coincide with the oversold conditions giving additional momentum.
Target: 1.50
VXX Calendar Spread
(Sell APR 13 '12 18 Call
Buy may 19 '12 18 Call)
Target: 0.50 (I will watch this position closely; this may double the position if TLT stays within 112-115 range)
TLT Calendar Spread
(Sell APR 13 '12 113 Call
Buy APR 20 '12 113 Call)
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