This strategy prepares you for a surprise in either direction

0.7% – 0.8% for the past four weeks, and yesterday, the daily range was only 3.4

points, taking SPX traders out of the game for the day in the major indices. The

SPX finished off less than a point to 1240.56 (-0.07%), while the Dow was +4

points to 10,683 (+0.04%), the
(
QQQQ |
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PowerRating) and Nasdaq
(
COMPQ |
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+0.3% to 39.73 and 2183. NYSE volume was in line with the current 10-day average

at 1.43 billion shares, while the volume ratio, 48, and breadth, -208, were

neutral, telling us nothing. The energy sector declined from obviously extended

levels as the
(
OIH |
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PowerRating) was -2.7% vs. last week’s total gain of +2.7%. Crude oil

was -0.3%. The
(
SMH |
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PowerRating) was -0.4% coming off a +2.9% week, while the RTH, which

was last week’s leader at +3.4%, tacked on +0.9% yesterday, led by
(
KSS |
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PowerRating),

+2.1%,
(
TGT |
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PowerRating), +1.9%, and
(
LOW |
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PowerRating), +1.1%. The
(
TLT |
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News |
PowerRating) was -0.7% and cash

last week above 7581 and closed yesterday at 7637.51, while the Bullish

Percentage index ($BPNYA) has declined to 68.73% from about 73% at the 7581

high. The SPX percentage is 70.4% as price pushes the 1245.86 high when the

percentage was above 75%. The Nasdaq 100 and Nasdaq Composite continue to be led

by fewer stocks with percentages of just 57% and 53%. These percentage numbers

are good to keep an eye on week to week, especially if there are any other

negative divergences starting to show up in some oscillators. The other side of

the spectrum is the 96.7% energy sector and 95.1% utility percentage, which have

dates from 09/14 – 09/16. There are some more time dates from 09/21 – 09/23.

This corner is ready for any surprise, up or down, with long synthetic straddles

put on into this rally, but I do expect any significant surprise to be to the

downside. By approaching it this way, the market makes a decision, and I can go

fishing until it develops to a point where delta neutral adjustments can be

made. These are low-implied-volatility positions, which is what you want when