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Thursday, October 14, 2010

Overall Market Meter Rating Remains "Slightly Bullish"

Each month during expiration week, the Covered Calls Advisor re-calculates each of the current values for the nine factors used to determine the "Overall Market Meter" rating. As shown in the chart below, the new Overall Market Meter Average rating (blue bar at the bottom of the chart) remains unchanged at "Slightly Bullish":

The current Market Meter Average of 3.89 is lower than the 4.22 of last month, but nevertheless remains at Slightly Bullish (Note: the range for Slightly Bullish is from 3.5 to 4.5) for establishing covered calls investing positions for the next options expiration month of November 2010. Of the nine factors used, six remained unchanged from last month and three declined by one rating category. The three that changed were:
- Baltic Dry Index factor declined from Bullish to Slightly Bullish
- Total Market Index-to-GDP Ratio factor declined from Neutral to Slightly Bearish
- Future Earnings Growth factor deteriorated from Bullish to Slightly Bullish

As shown in the right sidebar, the covered calls investing strategy corresponding to this overall Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So with the October 2010 options expiration this week, new positions for Nov2010 expiration will be established in accordance with this guideline.

For a more detailed explanation of each of the Covered Calls Advisor's nine indicators, please refer to this prior blog post on that topic -- link.

Your comments or questions regarding this post are welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.

Regards and Godspeed,

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