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Markets digesting Thanksgiving turkey

Today, the markets closed early after the Thanksgiving holiday. It was a slow moving (non-moving) day perfect for Iron Condors. Today, we will see how shoppers will deal with the Black Friday deals and how it impacts the markets in the coming weeks.

The markets didn’t move much and we are seeing the momentum slowing. That can be a concern. The trend is still firmly bullish but the markets are overbought and the momentum is losing steam:


This can change in the coming weeks depending on how the markets react to Black Friday shopping. Retailers are signalling their worries over consumers’ spending. They are expecting lower sales this season but they were worried many times in the past too and their worries never materialized. Though, this can be different this holidays. Student loans repayments kick in and consumers may have less cash on hand to spend.

The next question is how would Wall Street react? If spending this holidays comes hot, will they freak out over fears that the FED may keep interest rates high to curb spending more, or will they cheer great and resilient economy (and consumer)? If it comes back down and disappointing, will the Wall Street see it as good news that the FED may start cutting the rates or will they freak out that the economy is crumbling (and recession coming)? Pick your side.

Nevertheless, this calm holiday time was great for our Iron Condor. We had SPX 4510/4500 puts and 4605/4615 calls which expired worthless for the full profit delivering 3.43% return in 2 days (101.93% annualized return).

I expect the next week, at least early days next week, to be still slow. We have another trade (Iron Condor) we opened on Wednesday and today, before the market closed, we opened another Iron Condor, both with Monday’s expiration. I think, as the markets stay calm on Monday and maybe Tuesday, that these trades will also expire worthless.

This is good for our Crumbs trading. So far we opened 41 trades and we only had 3 losers, that is 93% win ratio. I like this strategy!


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