The market pulled back over 2% across the board. The RUT was down over 3% in the morning, but eventually was able to recoup back some of its losses.
I used the opportunity to close my 520/530C spread . This spread was in the red during most of its life period.
After the close, I noticed that the volume for all the major indexes was not above the 50 period average. This is telling me that the big institutional players weren't participating in the selloff today.
I think that with housing start, PPI, and CPI (inflation) we should have a better idea of whether the RUT will come down more. Looking at a daily chart, I see that 480 level (horizontal line in chart above) will be the next potential area it can fall. This would be a fall of 6% from today's level. I don't see the RUT going much more below this level. A pullback is healthy for the market.
I think that if we pullback to this level, I may use this time to get into my July positions. I will also take a look at the volumes as the RUT pullback to the 480 level.
If this happens, I will use it as an opportunity to exit my 450 Put calendar and sell put credit spreads.
May and June has been a tough trading month for more delta neutral or bearish positions. The market has been rallying almost nonstop since the March lows.
Let's see if the rest of June and July will be a more range bound market. Trending markets are much more difficult to trade with delta netural strategies such as iron condors and calendars.
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