Weekly: Market looks tired

The stock market had a decent up week, but seemed to be running out of gas by Friday. There are more signs of a top, that include the lagging transports (IYT is a good proxy), sentiment at AAII (link) finally at a high bullish reading (46.1% for this week). Confounding most is the continued strength in bonds (TLT). Transports had a deeper correction and have not quite recovered the highs. High yield bonds saw a V-shaped chart (JNK, HYG) with a short sharp decline followed by a sharp rally. However, these are not back to the highs either.

I was not well positioned for the continuing stock rally. So while I made money, it could have been so much better. I added long exposure with each rally day. I am thinking the market needs time to digest the gains before any uptrend continues. Here are the trades:

Thu Sell SPY 194 puts @199.6. New highs for the S&P 500 etf. The chart sets up for a short sale, however, the sentiment and macro picture are not confirming that. I am thinking cover my short calls on a close above 201. Every day this week I have added long delta in the index etfs, but the rally has been so strong, I have barely kept up.

Sell BRKB 135 puts @136.2. The rally in Berkshire Hathaway is causing me some consternation. I had a limit order to close the short BRKB 135 Sep calls, but I cancelled that order as the stock kept climbing. I am going near delta neutral by selling these puts.

Wed Sell IWM Sep 109 puts @115.2. I add longs for the Russell 2000 etf. We are at the highs of 199 for SPY, on lower volume. I am short calls on many stocks so this is a bit of a hedging move.

Tue Sell SPY Sep 190 puts @198.3. I sell another layer of the 190 puts on the S&P 500 as the stock market rally rolls on. The 190 level is below the recent spike low. I expect some resistance at the highs of 199 and at the round number of 200. One negative is that I am burning buying power at a rapid rate selling these layers of SPY puts.

Mon Option expiration frees up a lot of buying power. The gap up open has me scrambling to rebalance my positions. I am short strangles (puts and calls) on many products and the sharp rally means many positions are now net short.

Sell SPY Sep 188 puts @196.8. Rebalance short strangles in the S&P 500 etf to net neutral. Later in the day, I sell a layer of SPY Sep 190 puts @197.3 now net long. My thinking is that SPY seems likely to retest the old highs around 199.

Sell DIS Sep 87.5 puts @90.1. Rebalance short strangles to net long on Disney.

Sell ASH Oct 95 puts @105.8. Rebalance my position on Ashland by selling October puts.

Sell MRK Oct 55 puts @58.6. Ditto for Merck, rebalance by selling October puts.Position Summary:

Position Summary:

long GLD

net long BRKB DIS IWM SPY

net short AMGN ASH JWN MRK MSFT SWK

net neutral APC FB FDX HON SLB VRSN XLU