August 17, 2017

Archives for April 2007

SPX continues to roll. Short-term reprieve looks likely.

Another surprising move today in face the face overbought conditions and the February highs of 1460. While our ETF Extremes continues to chug along taking advantage of extreme scenarios in the market our SPX Short Iron Condor strategy is in a bit of a pickle, (to put it mildly). The gap up today and strong advance early in the day never gave us time to get out of our position. Typically, during expiration week if the underlying, in this case SPX, moves within 5 points of a our short strike (call or put) we immediately exit the position. www.kirkreport.com.   The one positive for our short call strike: there are quite a few technical indicators that have reached an extreme which typically signals that a short-term reprieve is in the near … [Read more...]

Will the S&P see 1460 next week

Mr. Market was once gain able to push the major indices higher today. Three out of the four major indices are now in an overbought state and another push higher will certainly drive them in an extreme state. The market should struggle with the 1453-1455 area and certainly at the February highs of 1460. Typically, the market fails during the initial retest of the recent high and without nary a pause during the recent rally I expect to see a pause at 1460 and a short-term correction shortly after. The recent move has no doubt been strong, but it has been on fairly low volume which is another reason why I think the market could see another correction in the near future. A move higher over the next week, especially towards expiration, will … [Read more...]

Will the market continue to push higher over the short-term?

I stated yesterday that "there seems to be decent support at the 1438-1440 area and strong resistance above at the 1450 level. I expect to see some chop in this range. Expiration week is next week which typically is flat to slightly bullish so we could see a retest of the 1450 area although I expect to see another failure at this level." Today the market opened lower and pushed down to 1434 where it immediately found support and bounced hard. So hard that it practically recovered the entire loss from yesterday. When I stated that we could see the 1450 area again I wasn't expecting it to occur in one day. Could today's action just be a dead cat bounce or will the market continue to push higher and retest the recent highs around 1460? The … [Read more...]

ETF Extremes and the Iron Condor

The market finally took the short-term reprieve that we expected. We were able to take advantage of the expectations mentioned over the last few posts in our ETF Extremes strategy.  After the sharp rally last week our many of the indicators we follow signaled a buy alert on Monday. As a result, we bought 10 Jun07 SPY 145 puts (SFBRO) shortly after the open on Monday for $2.85. The extreme overbought situation coupled with the gap up in the S&P on 4/3 (that has yet to close) increased the probability for success in the trade. We mentioned several others in the daily commentary (blog) section of the site.  Today our indicators signaled a sell and as a result we sold the Jun07 145 puts (SFBRO) for an average price of $3.01, resulting in … [Read more...]

A few reasons why a short-term correction looks highly probable

Not much has changed since my last post. The market trickled higher again today in the face of several short-term bearish indicators. The S&P has been higher for five straight sessions and the Dow has been higher for 8 straight sessions, a feat not seen since early 2003. I have included a portion of my post from yesterday as I think it is worth repeating. The following are just a few of the reasons for my short-term bearishness (1-5 days). 1. Upside gap on 4/3/07 in SPY that has yet to close. 2. Short-term proprietary indicators have reached an “extreme” state. 3. SPY has lived in “overbought” to “very overbought” the last five sessions. 4. Current rally has occurred on low volume. 5. Narrow trading range that often … [Read more...]

Current Low-Volume Rally Showing Short-Term Weakness

The S&P continued the slow and steady march upward today and is currently on a 5-day winning streak. Furthermore, the last six out of seven trading days have been positive. I spoke last week about the seasonal post holiday hangover that typically occurs the trading day after Good Friday. Obviously the seasonal bias did not live up to its historical billing today, but the market is still in an extreme territory so I remain steadfast with the expectation of short-term bearish move over the next few days. The probability of a short-term move lower is too high to ignore at this juncture.   The following are just a few of the reasons for my short-term bearishness (1-5 days). 1. Upside gap on 4/3/07 in SPY that has yet to close. 2. … [Read more...]

Extreme overbought levels often precede a short-term correction

This could cause a gap up to recent highs which if that scenario actually occurs I think will be quickly faded. Now that the gap from the last correction has closed I expect to see the gap from earlier this week close next week. Plus, our proprietary shorter-term overbought/oversold levels have reached an extreme overbought state which often precedes a short-term correction. Overbought/Oversold levels for April 5, 2007 SPY - 80.7 (very overbought) DIA - 79.6 (overbought) IWM - 70.3 (overbought) QQQQ - 77.6 (overbought) GLD - 80.2 (very overbought) OIH - 71.6 (overbought) 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 … [Read more...]

Short-term bearishness looms

All of the major indices managed to push slightly higher which pushed them closer to a "very overbought" state.  As I have mentioned over the past few posts the trading day prior to Good Friday is often bullish. However, I would not be surprised to see the seasonal tendency fail this time around. If the major indices do manage to move higher the gains should be limited by the strong overhead resistance that exists in all of the major benchmarks. Watch the 1440 level in the S&P (SPX). Additionally, the short-term bullishness should end (at least over the short-term) as the market moves into next week. Historically, the trading day following Good Friday has been overwhelmingly bearish with less than a 30% of the days ending … [Read more...]

Strong Overhead Resistance while in an Overbought State

After a rough few days I am finally back. I would like to thank all of you for the kind and thoughtful emails The gap higher today and the continued move higher has moved the major benchmarks into an overbought state. Furthermore, the S&P has reached a point of fairly strong overhead resistance at 1440. Since the spike higher on 3/21 (fed policy announcement) SPX  has struggled with this area. Given the positive seasonal tendencies this week (mentioned in several posts over the past week) I would not be surprised to see the market chop sideways for the next couple of days. However, I think the short-term bullishness should end (at least over the short-term) as the market moves into next week. Historically, the trading day following Good … [Read more...]

No posts for the next few days

There was an unexpected death in the family, so I will not be posting to the site for the next couple of days. We could have a decent set-up in the ETF Extremes strategy if the market lives up to its historical billing and advances throughout the week. As I have mentioned in prior posts this week is fairly bullish and the day before Good Friday is typically bullish. However, the day following the holiday is quite bearish so we will be watching to see if the market follows the historical seasonal trend. If so, we could see the major benchmarks move into a overbought to very overbought state which would create a perfect set-up for the ETF strategy.  Kindest regards,  Andrew   … [Read more...]