Market bounces, but will it last?

February 28, 2007

www.thekirkreport.com) said it best today, “when in doubt, stay out.” Everything tells me to jump in here, but I think I will wait to see if the market settles lower after the obvious jump today. I am certainly not in a hurry (i never am) to take a position and I plan on patiently waiting until another highly probable set-up rolls around. Stay patient and disciplined and always think in probabilities! Mark Douglas, author of Trading in the Zone states it best, “the best traders/investors stay in the flow because they don’t try to get anything from the market; they simply make themselves available so they can take advantage of whatever the market is offering at any given moment”. That pretty much sums up our ETF Extremes strategy and the performance speaks for itself.

Many of you probably think that the last line is an upsell. Well, in a way it is. We are proud of what we have accomplished since we first initiated our service and feel like our strategies are viable alternative investment strategies that are easy to learn and easy to incorporate in a diversified portfolio.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 27, 2007

SPY - 26.7 (oversold)
DIA - 23.8 (oversold)
IWM - 29.2 (oversold)
QQQQ - 24.4 (oversold)
OIH - 39.8 (neutral)
GLD - 49.2 (neutral)

We work hard to bring you our latest views, opinions and research on a daily basis. If you are a loyal reader and find our thoughts useful please show us your support by joining our newsletter service. We currently follow 3 stock option strategies and one stock-based strategy in our investment newsletter. All of our strategies use ETFs as the underlying. Check it out! You get two free months of our investment newsletter when you purchase our White Paper.

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

ETF Extremes looks good in this market. Could DIA bounce off of current levels?

February 27, 2007

Where to begin. Wow! The correction that I had been anticipating for several months finally came all at once today and who knows if there is more to come. SPY moved to lows not seen since 11/28. Three months of gains vanished in one day, amazing.

Once again, our ETF Extremes strategy proves that patience pays. The strategy has only been exposed to the market for 45 out of 286 trading days since it was initiated or 15.7% of all tradable days and is up 42.7%. During that same time frame SPY is higher 11.5%. This is an amazing statistic considering most investors think that they need to trade or be exposed to the market on a daily basis to be successful. However, i must say, if we knew that the market was going to be down this much today we would have never sold our puts yesterday. Sometimes I think a crystal ball would be handy.

If you look at the major indices that we follow below, you will notice that, for obvious reasons, the market is “oversold” to “very oversold”. I am somewhat hesitant to step in at this point, but I do think a short-term opportunity could be right around the corner. Typically, large moves like today make for wonderful buying opportunities, but first I would like to see a bit of confirmation that a short-term rally is indeed taking place. Certainly, our shortest-term overbought/oversold indicators are screaming buy right now, but given the risk/reward I think for the moment sitting on my hands is probably well advised.

One note of interest, DIA has not seen oversold levels like this since 3/11/04. Furthermore, our shortest-term indicators for DIA are near a historical low, which indicates that a short-term rally or small bounce is to be expected.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 27, 2007

SPY - 7.9 (very oversold)
DIA - 7.1 (very oversold)
IWM - 15.5 (very oversold)
QQQQ - 20.1 (oversold)
OIH - 39.0 (neutral)
GLD - 35.6 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Another Successful Trade in the ETF Extremes. DIA looks like it could bounce!

February 26, 2007

First, I would like to mention that our ETF Extremes strategy had another successful trade today. We made 6.2% on the trade. Our win ration since we initiated the strategy at the start of 2006 is over 91% (11 out of 12 trades) for a cumulative total return of 42.7%. Slow and steady. Patience coupled with proper money management is the key to the strategy’s success.

As for the current state of the market, the major benchmarks, DIA and the S&P are nearing oversold and the higher-beta IWM and QQQQ have pushed back to short-term oversold levels (not published below). Furthermore, it looks as though the high-beta indices bounced sharply off their support levels which has been the norm since the rally began back in mid-July. I would expect to see a retest of the recent highs and would not be surprised to see new highs.

My current focus is on the aforementioned DIA. DIA has moved back near oversold levels and another push lower could signal another potential opportunity. I will be keeping a close eye on this one as the probability of a short-term bounce looks very good.

Also, many of you have written in to me about the last two OIH calls that I have made. Several of you have reported some serious gains and have asked if I could start a strategy that centered around OIH. While I am always tempted to start a new strategy I want to keep my focus on my current strategies and the new Iron Condor Strategy that will begin after March expiration. I promise to keep reporting potential OIH scenarios in the blog and will ultimately leave the decision to my loyal readers. Obviously, many of you are doing just fine on your own and I am just glad I can help.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 26, 2007

SPY - 44.4 (neutral)
DIA - 32.8 (neutral)
IWM - 58.4 (neutral)
QQQQ - 58.0 (neutral)
OIH - 73.9 (overbought)
GLD - 77.8 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Short-term bearish signals

February 23, 2007

As expected IWM backed-off today. I stated yesterday how the high-beta index had reached overbought levels not seen in over a year. The move lower brought the index into a neutral state. However, the other high-beta index that I mentioned yesterday, QQQQ, remains in an overbought state. This indicator among other bearish signals could pose a problem for the bulls over the short-term (1-5 days).

The PHLX Semiconductor index (SOX), which consists of 19 stocks, 10 of which are listed in the tech-heavy Nasdaq 100 (QQQQ), could be the culprit in what I think will be a short-term decline over the next few trading days. If you look at the chart (SOX) you will notice that the index gapped higher two days in a row without closing either gap. Historically, this type of price action is quite bearish. The sample population is rather small (3 occurrences), but all four consecutive gaps in the SOX led to sharp declines over the short-term. Furthermore, SOX has reached overbought levels not seen since 8/17/06.

Certainly the market, particularly IWM, is gearing up for a sharp move outside of its current range. Which way? No one really knows for certain, but I can tell you that over the short-term Mr. Probability is siding with the bears.

Have a wonderful and safe weekend!

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 23, 2007

SPY - 46.2 (neutral)
DIA - 42.1 (neutral)
IWM - 66.3 (neutral)
QQQQ - 70.6 (overbought)
OIH - 65.9 (neutral)
GLD - 74.0 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

IWM at extreme levels

February 22, 2007

What is important is how you manage that trade.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 22, 2007

SPY - 66.5 (neutral)
DIA - 42.1 (neutral)
IWM - 87.1 (very overbought)
QQQQ - 80.9 (very overbought)
OIH - 66.8 (neutral)
GLD - 68.1 (neutral)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Higher-beta sectors in an overbought state. OIH bounces.

February 21, 2007

After a slow start the market managed to snap back again today. The higher-beta Nasdaq 100 (QQQQ) and Russell (IWM) led the way and finished near their respective highs for the day. The move pushed QQQQ into overbought territory and IWM further into a very overbought state. Typically, we see weakness over the short-term(1-5 days) when our indicators move into this type of extreme, but as we all know, in a momentum driven market the likelihood for a continued move to the upside is possible. This is why it is imperative to implement a stop-loss plan if you decide take a position at this juncture.

IWM has moved lower over the short-term (1-5 days) every time it has reached this level over the course of the last year. Hopefully, it will live up to the historical precedent once again. As we all know there are no certainties in trading, but we can certainly stack the odds in our favor if we stay diligent and patient with our strategies.

OIH bounced higher again today. As I reported yesterday, our indicators have been right on in predicting short-term bounces in the Oil Services sector. Many of you have taken advantage of the extreme situation that we have reported and have reaped handsome profits as a result. Congrats!

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 21, 2007

SPY - 71.4 (overbought)
DIA - 59.3 (neutral)
IWM - 84.8 (very overbought)
QQQQ - 77.1 (overbought)
OIH - 52.4 (oversold)
GLD - 71.0 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Is the Russell near a short-term top? OIH is back in oversold territory. Iron Condor Update.

February 20, 2007

After a nice snap-back move today in the market, notably the Russell (IWM), moved three out of the four major market indices into an overbought to very overbought state. A few more of our other proprietary indicators suggest that a short-term reprieve (1-5 days) should be expected. There is a chance that we could move slightly higher over the next day or two, but I think any rally will be quickly sold-off, at least of over the short-term.

OIH is back down to oversold levels. I will keep a close eye on how OIH reacts over the next day or two because if it can cycle down into a very oversold state I might be tempted to buy some calls. OIH can move substantially over the course of one trading day so I want to be patient at this juncture. Hopefully, OIH will cooperate much like it did on January 12, 2007.

Many of you wrote in to thank me for making you aware of the oversold levels and I certainly appreciate the gesture, but there is no need for thanking me. You, the individual trader/investor pull the trigger all I do is try to make you aware of extreme levels when they occur in the market. I am just glad that the blog is providing many of you with worthwhile advice.

I have also decided to try and talk about money management issues a little more in the blog and particularly in the newsletter and research section of the Insider’s page. I think this is a topic that often goes overlooked and in my opinion it is the most important aspect of becoming a successful investor/trader.

Furthermore, I would like to inform all of you interested in the New Short Iron Condor strategy that I will be sending out details about the service over the next week or two. I have been overwhelmed by the response. We can’t wait to make this strategy an integral part of our investment newsletter service.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 20, 2007

SPY - 73.8 (overbought)
DIA - 70.8 (overbought)
IWM - 82.6 (very overbought)
QQQQ - 64.3 (neutral)
OIH - 29.4 (oversold)
GLD - 39.6 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Another Successful Options Cycle - Short Iron Condor

February 16, 2007

Today’s range bound trading was typical for an option expiration. Most people associate option expiration with a widely vacillating environment and historically that can’t be further from the truth. The best thing about today is that it maintained our current short-term view on the market.

The trading day following President’s Day is overwhelmingly negative with roughly 30% of the days being positive. Moreover, the VIX is back down to 10 which in the recent past has triggered a quick sell-off. Also, don’t forget the seasonal weakness that typically occurs the day following options expiration. Combine the aforementioned conditions and I think a short-term play could be on my agenda for Tuesday.

SPX settled at roughly the 1452 area early at the open this morning. This makes our third straight month of gains that exceed 10%. Since we initiated the portfolio in our newsletter three option cycles ago we have made 12.2%, 14.8% and 17.6% per cycle. Not bad. We are ecstatic with the results and are extremely excited to open the strategy up for autotrade. We will place another trade in this strategy on Tuesday which gives you one more month to follow and learn the intricacies of this strategy before it goes live. We talk about it in great detail in our White Paper and on the insider’s page of our website.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 16, 2007

SPY - 69.1 (neutral)
DIA - 69.3 (neutral)
IWM - 72.9 (overbought)
QQQQ - 66.1 (neutral)
OIH - 35.2 (neutral)
GLD - 72.6 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Short-term bearish signals lining up

February 15, 2007

Volume was extremely slow today due to the upcoming market holiday. As a result the major indices traded in a fairly tight range. My guess is that volume should pick up tomorrow morning and taper off as the day progresses.

I mentioned yesterday how the days surrounding President’s Day overwhelmingly negative on a historical basis. I think this warrants some attention as the S&P, Dow, and Nasdaq 100 all sit in an overbought state. Moreover, the VIX is back down to 10 which in the recent past has triggered a quick sell-off. Also, don’t forget the seasonal weakness that typically occurs the day following options expiration. It is certainly worth looking a short-term play and if we get continue to trade at this current level tomorrow or move higher I might be tempted to take a position late in the day.

It is always tricky to trade on options expiration especially going into an extended weekend. Historically, the range during options expiration is fairly tight with a slight edge to the upside. I would love to see history repeat itself tomorrow.

One additional note, it looks as if our Iron Condor will once again expire worthless. This will make our third straight month of gains that exceed 10%. We are looking forward to offering our condor service for the first time next month. So far the response has been overwhelming. There will be a limited group of subscribers that are allowed in this service so please remember to email us if you wish to join. We will be sending out all of the details in the next couple of weeks.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 15, 2007

SPY - 71.7 (overbought)
DIA - 76.2 (overbought)
IWM - 64.1 (neutral)
QQQQ - 74.1 (overbought)
OIH - 38.6 (neutral)
GLD - 76.1 (overbought)

Watch and learn how we implement our strategies.

Have a great night!

www.crowderinvestments.com

Filed Under Crowder's Daily Market Commentary ·

Seasonal Bias Surrounding President’s Day

February 14, 2007

Immediately following Mr. Bernanke’s optimistic statement on the health of the economy was released at 10:00 EST the market surged and never looked back. The rally brought the S&P and Dow back into an overbought state and the tech-heavy NASDAQ and Russell are fast approaching. The bounce off the oversold conditions and strong support levels on Monday proves that the bulls are still in charge, at least for the moment.

I came across an interesting seasonal statistic that involves the days surrounding President’s day (five days before and after). I would never attribute a move like today’s to seasonality, but I do find it interesting that the third trading day before President’s day is overwhelmingly higher on average. The third day is positive roughly 75% of the time with an average return that exceeds 0.3%. The other days are noticeably weaker with the day before and the day after being the weakest. That means, according to the seasonal stats, that Friday (option expiration) and Tuesday will be lower. If it was only that easy. I do like to look at the seasonal picture to see if it lines up with an anticipated move. I would never trade solely on seasonality, but I do find that it is a wonderful aid.

Could the market possibly follow the historical seasonal precedent? With the indices sitting in an overbought state and QQQQ near an area of strong overhead resistance I think a short-term reprieve is in order. Moreover, we had a small gap higher today that was never closed so that always adds some extra weight as well. If the market struggles to move higher early tomorrow I might be tempted to take a short-term position.

Have a wonderful Valentine’s Day!

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 14, 2007