Overbought/Oversold and Strategy Discussion
September 29, 2007
Daily Commentary
Two weeks ago I began following the overbought/oversold levels of 21 new ETFs. As reported at months end I would move all them besides the major market indices (SPY, QQQQ, IWM, and DIA) into the insider’s page page for paid subscribers only. Paid subscribers will now have daily access to these numbers, so check the insider’s page daily for the overbought/oversold numbers.
We will also post how we use these numbers in our trading and this will be archived in the Insider’s page for easy reference.
SPX Iron Condor Strategy
The SPX Iron Condor strategy made 9.3% during the September expiration period and if all goes well we should make around 7.5% during the October expiration period.
The recent market volatility has led to a few losing trades, but with a few adjustments (wider range, mandatory rolling guidelines) we are certain that the strategy will once again be back in the positive. If anything, now is a great time to learn the strategy. Market volatility has declined a bit and the VIX remains above 15. As long as the VIX stays above 15 we should have the opportunity to have an extremely wide range (roughly 200 or more points) which allows for a 6.5% swing up/down over a four week period. As long as the indice finishes/settles the four week period within our wide range we should make anywhere from 5% to 10% a month. The win ratio in the strategy so far is 70% and if all goes well we should be able to increase that percentage to 75% by years end. The downfall so far this year have been the drawdowns. We have worked diligently to hopefully alleviate the magnitude of the drawdowns. Losses are inevitable, but appropriate risk management techniques should help to ease the drawdowns. Of course in trading nothing is guaranteed, but a move to widen our range to accomodate largeer swings coupled with new rolling guidelines should ceratinly help going forward. Only time will tell. Stay tuned.
ETF Extremes Strategy
I know to many of you I am beginning to sound like a broken record, but this strategy is all about patience. With only two losses in almost a two year period (win ratio – 86%) how can you not be patient. As I stated ealier this week and in the expiration report I expect to see signals pick up as we move into the fourth quarter, the busiest time of the year. Last year the strategy made over 30% during the last three months and we are hoping to do the same again this year. Again, nothing is guaranteed in trading, so all we can do is go with the probabilities and in the ETF Extremes stratetgy probabilities are always on our side. We patiently wait for a high-probability set-up and pounce. Yes, this leads to less frequent trading, but you must remember each strategy is like a stock, they can and should be diversified to take advantage of different market scenarios.
New SPY Diagonal LEAPS Strategy
We initiated our positions in the strategy on Monday, the beginning of the October expiration period. Our hope is that after we educate you on how this strategy works we can make the strategy live in a month or so. We wanted to try something new on the blog. Introducing a new strategy for the public to learn and follow made sense. Hopefully, we can educate you on the advantages/disadvantages of the strategy over the next month or so.
The following trades were placed on our test account on Monday September 24th..
Sell to open 2 SPY Oct07 152 calls
Buy to open 2 SPY Dec09 125 calls for $35.70 or $7,140.00
Sell to open 1 SPY Oct07 154 calls
Buy to open 1 SPY Dec09 125 calls for $36.88 or $3,688.00
Sell to open 1 SPY Oct07 151 calls
Buy to open 1 SPY Dec09 130 calls for $31.55 or $3,155.00
Buy to open 1 SPY Dec09 130 calls for $35.35 or $3,535.00
For a total capital outlay of $17,518.00 + $26.55 (commissions) = $17,544.55
Not much to talk about this week. SPY ended the week a few cents higher so the strategies value reamined flat. Typically during the first week of an expiration period, time decay (theta) does not factor in the equation. If SPY continues to remain fairly flat, you will begin to see how time decay (theta) starts to benefit the strategy. Next week, theta should take hold and as we move closer towards October expiration you will see the phenomenon of time decay play out. This is what you want to concentrate on the next four weeks, learning how time decay works and reacts in this strategy. It is the dominate factor and what makes the strategy tick. I will be back with a lengthier discussion next week once we start to see the Greeks, particularly delta, gamma and theta unfold.
Overbought/Oversold for September 28, 2007
S&P (SPY) - 63.3 (neutral)
Russell 2000 (IWM) - 48.2 (neutral)
Dow (DIA) - 76.3 (overbought)
Nasdaq 100 (QQQQ) - 78.3 (very overbought)
Oil Services (OIH) - 53.7 (neutral)
Newly added ETF’s – Will only be available to paid subscribers starting 10/1. Subscribers please check the Insider’s page if you wish to check the numbers on a daily basis.
Core Sector List
Financials (XLF) - 52.8 (neutral)
Energy (XLE) - 54.3 (neutral)
Cons. Cyclicals (XLY) - 50.7 (neutral)
Technology (XLK) - 70.5 (overbought)
Health Care (XLV) - 52.6 (neutral)
Materials (XLB) - 68.7 (neutral)
Industrials (XLI) - 75.1 (overbought)
Cons. Staples (XLP) - 79.9 (overbought)
Telecom (TTH) - 78.9 (overbought)
Utilities (XLU) - 59.7 (neutral)
Gold (GLD) - 82.2 (very overbought)
International
FTSE/XINHUA China 25 (FXI) - 81.9 (very overbought)
Latin America (ILF) - 89.5 (very overbought)
MSCI EMU (EZU) - 84.5 (overbought)
Australia (EWA) - 91.0 (very overbought)
India (INP) - 80.1 (very overbought)
Commodities
Natural Gas (UNG) - 40.4 (neutral)
Agriculture (DBA) - 71.6 (overbought)
Base Metal (DBB) - 70.6 (overbought)
Energy (DBE) - 57.5 (neutral)
Prec Metal (DBP) - 86.3 (overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Rising in the face of overbought conditions – How much longer?
September 27, 2007
Daiy Commentary
The market continues to rally in the face of overbought conditions. This is why fading overbought levels is far less reliable than fading oversold levels. The market can extend itself during a particularly strong rally which makes timing a fade extremely difficult at times. This is where position sizing comes in. Typically when an indice hit a very overbought state I like to step in with a small position and if the position starts to move in my favor I will add more. At all times I have a defined risk involved, never more. Sounds easy, but of course it isn’t.
There are so many variables at play, i.e. what if the market whipsaws after you have added on to your first position. Well, this is where sound money management comes into play. If the indice moves against you always have a defined stop established so that you do not have o play mind games with yourself. Stay disciplined, get out and move on. Losing trades happen. Our ETF Extremes portfolio uses this technique religously as is evident on the performance page.
We have decided that is is probably best to report how the SPY Diagonal LEAPS strategy performed at teh end of each week. Rather than discussing it on a daily basis it is more appropriate to look at it on a wider time frame, particularly in a low-volatility environment like we are currently experiencing. Of course, if adjustments are needed we will mention what are tactic is and adjust accordingly.
Overbought/Oversold for September 27, 2007
S&P (SPY) - 72.8 (overbought)
Russell 2000 (IWM) - 64.4 (neutral)
Dow (DIA) - 82.8 (very overbought)
Nasdaq 100 (QQQQ) - 88.5 (very overbought)
Oil Services (OIH) - 68.5 (neutral)
Newly added ETF’s – We have decided to extend the following overbought/oversold reading on the community blog until next week. We will follow the readings in the Insiders’ page (subscriber’s only) starting 10/1.
Core Sector List
Financials (XLF) - 59.2 (neutral)
Energy (XLE) - 69.1 (neutral)
Cons. Cyclicals (XLY) - 45.1 (neutral)
Technology (XLK) - 82.9 (very overbought)
Health Care (XLV) - 75.1 (overbought)
Materials (XLB) - 86.4 (very overbought)
Industrials (XLI) - 70.4 (overbought)
Cons. Staples (XLP) - 76.1 (overbought)
Telecom (TTH) - 78.9 (overbought)
Utilities (XLU) - 52.9 (neutral)
Gold (GLD) - 74.0 (overbought)
International
FTSE/XINHUA China 25 (FXI) - 94.8 (very overbought)
Latin America (ILF) - 89.2 (very overbought)
MSCI EMU (EZU) - 82.6 (overbought)
Australia (EWA) - 89.5 (very overbought)
India (INP) - 90.2 (very overbought)
Commodities
Natural Gas (UNG) - 42.8 (neutral)
Agriculture (DBA) - 94.4 (very overbought)
Base Metal (DBB) - 76.3 (overbought)
Energy (DBE) - 70.4 (overbought)
Prec Metal (DBP) - 77.9 (overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Back before the opening bell
September 27, 2007
I apologize for the tardiness of the post. As I stated in the post earlier today there was an unforeseen circumstance that arose, but I am up early this morning so hopefully this makes it to you before the opening bell today.
I will be back with the SPY Diagonal LEAPS discussion later this afternoon.
Daily Commentary
Taking a look at the broader market the tech heavy QQQQ is still in a very overbought condition and coupled with weak seasonality ahead (end of September blues) probability still says that the upside is limited over the short-term and that a move lower is the more likely scenario.
As I take a look at the overbought/oversold levels below there are quite a few glaring overbought readings particularly in the internationals. Every international that we follow is in an overbought stage and 4 out of the 5 are sitting on the high end of a very overbought level. As I stated above for the QQQQ’s when readings hit this type very overbought state this often spells trouble for the upside over the short-term (1-5 days).
Overbought/Oversold for September 26, 2007
S&P (SPY) - 65.5 (neutral)
Russell 2000 (IWM) - 59.3 (neutral)
Dow (DIA) - 78.9 (overbought)
Nasdaq 100 (QQQQ) - 86.3 (very overbought)
Oil Services (OIH) - 53.7 (neutral)
Newly added ETF’s – We have decided to extend the following overbought/oversold reading on the community blog until next week. We will follow the readings in the Insiders’ page (subscriber’s only) starting 10/1.
Core Sector List
Financials (XLF) - 43.7 (neutral)
Energy (XLE) - 55.8 (neutral)
Cons. Cyclicals (XLY) - 49.7 (neutral)
Technology (XLK) - 85.3 (very overbought)
Health Care (XLV) - 69.2 (neutral)
Materials (XLB) - 81.4 (very overbought)
Industrials (XLI) - 66.3 (neutral)
Cons. Staples (XLP) - 71.3 (overbought)
Telecom (TTH) - 78.6 (overbought)
Utilities (XLU) - 68.6 (neutral)
Gold (GLD) - 62.1 (neutral)
International
FTSE/XINHUA China 25 (FXI) - 91.8 (very overbought)
Latin America (ILF) - 85.9 (very overbought)
MSCI EMU (EZU) - 77.2 (overbought)
Australia (EWA) - 87.8 (very overbought)
India (INP) - 87.2 (very overbought)
Commodities
Natural Gas (UNG) - 53.6 (neutral)
Agriculture (DBA) - 88.8 (very overbought)
Base Metal (DBB) - 67.6 (neutral)
Energy (DBE) - 42.7 (neutral)
Prec Metal (DBP) - 68.7 (neutral)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
No Post Tonight
September 26, 2007
Unfortunately, due to unforeseen circumstances I will not be able to create a post tonight. I apologize to those of you who were looking forward to tonight’s Diagonal LEAPs discussion and I if all goes well I should be back in action with that discussion at the top of the agenda tomorrow.
Kindest,
Andrew
Short-term Pullback in the QQQQ’s
September 25, 2007
The tech heavy Nasdaq 100 (QQQQ) continued the strong advance today and has now reached an extremely overbought state. Our shortest-term overbought/oversold measures (not mentioned below) are pegged which typically means that the advance should stall and pull back at least over the next day or so. This could be advantageous for our ETF Extremes strategy. It has been quite some time since a signal has been triggered, but if all goes well and the indice does not gap down overnight we could see a signal as early as tomorrow.
Furthermore, I would not be surprised to see a test of the 1500 area in the S&P sometime this week. This looks to be a strong area of support which could bring some bulls back into the game. Watch this area closely over the coming days.
As for our Iron Condor strategy, we made 9.3% last expiration period and if all goes well we should make around 7.5% during the October this expiration period.
Also, for those of you who have not been able to read the recent newsletter issue, please go to the Insider’s page on the site (paid subscribers only) and check it out. In this issue we have layed out the guidelines for our new SPY Diagonal LEAPS strategy.
Tomorrow we will discuss time premium and the Greeks and how they relate to the new strategy. Also, if you didn’t catch the post yesterday check it out as it has the established postions in the new strategy that we will be following in our test account.
Overbought/Oversold for September 25, 2007
S&P (SPY) - 57.3 (neutral)
Russell 2000 (IWM) - 49.9 (neutral)
Dow (DIA) - 72.1 (overbought)
Nasdaq 100 (QQQQ) - 84.0 (very overbought)
Oil Services (OIH) - 60.2 (neutral)
Newly added ETF’s – We have decided to extend the following overbought/oversold reading on the community blog until next week. We will follow the readings in the Insiders’ page (subscriber’s only) starting 10/1.
Core Sector List
Financials (XLF) - 52.2 (neutral)
Energy (XLE) - 84.2 (very overbought)
Cons. Cyclicals (XLY) - 34.3 (neutral)
Technology (XLK) - 81.7 (very overbought)
Health Care (XLV) - 57.8 (neutral)
Materials (XLB) - 73.2 (overbought)
Industrials (XLI) - 59.1 (neutral)
Cons. Staples (XLP) - 58.4 (neutral)
Telecom (TTH) - 75.0 (overbought)
Utilities (XLU) - 62.5(neutral)
Gold (GLD) - 75.1 (overbought)
International
FTSE/XINHUA China 25 (FXI) - 90.5 (very overbought)
Latin America (ILF) - 80.3(very overbought)
MSCI EMU (EZU) - 73.2 (overbought)
Australia (EWA) - 85.2 (very overbought)
India (INP) - 86.8 (very overbought)
Commodities
Natural Gas (UNG) - 56.0 (neutral)
Agriculture (DBA) - 84.6 (very overbought)
Base Metal (DBB) - 62.7 (neutral)
Energy (DBE) - 53.6 (neutral)
Prec Metal (DBP) - 82.1 (very overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Diagonal LEAPS Strategy Begins
September 24, 2007
We added our intial positions in the SPY Diagonal LEAPS strategy today in our test account (paper trading). We plan on following this strategy for most likely several months until our subscribers and community blog participants can gain a better understanding of how the strategy works. We hope this will be as educational as it is profitable. We sent out to our subscribers the basic trading rules and how and why we chose our positions. For the most part, our guidelines can carry over for use with any ETF. Our official trading guidelines will only be privy to paid newsletter subscribers. All totals reflect commissions through the standard Thinkorswim commission schedule.
Sell to open 2 SPY Oct07 152 calls
Buy to open 2 SPY Dec09 125 calls for $35.70 or $7,140.00
Sell to open 1 SPY Oct07 154 calls
Buy to open 1 SPY Dec09 125 calls for $36.88 or $3,688.00
Sell to open 1 SPY Oct07 151 calls
Buy to open 1 SPY Dec09 130 calls for $31.55 or $3,155.00
Buy to open 1 SPY Dec09 130 calls for $35.35 or $3,535.00
For a total capital outlay of $17,518.00 + $26.55 (commissions) = $17,544.55
We will discuss the positions in great detail over the coming days. This includes the Greeks, risk profile, adjustments, etc.
Overbought/Oversold for September 24, 2007
S&P (SPY) - 61.7 (neutral)
Russell 2000 (IWM) - 57.5 (neutral)
Dow (DIA) - 70.5 (overbought)
Nasdaq 100 (QQQQ) - 78.3 (overbought)
Oil Services (OIH) - 71.4 (overbought)
Newly added ETF’s – We have decided to extend the following overbought/oversold reading on the community blog until next week. We will follow the readings in the Insiders’ page (subscriber’s only) starting 10/1.
Core Sector List
Financials (XLF) - 45.2 (neutral)
Energy (XLE) - 84.2 (very overbought)
Cons. Cyclicals (XLY) - 44.3 (neutral)
Technology (XLK) - 73.4 (overbought)
Health Care (XLV) - 70.3 (overbought)
Materials (XLB) - 80.9 (very overbought)
Industrials (XLI) - 54.9 (neutral)
Cons. Staples (XLP) - 63.1 (neutral)
Telecom (TTH) - 71.7 (overbought)
Utilities (XLU) - 61.0 (neutral)
Gold (GLD) - 74.4 (overbought)
International
FTSE/XINHUA China 25 (FXI) - 90.0 (very overbought)
Latin America (ILF) - 79.6 (overbought)
MSCI EMU (EZU) - 72.6 (overbought)
Australia (EWA) - 81.2 (very overbought)
India (INP) - 85.4 (very overbought)
Commodities
Natural Gas (UNG) - 62.3 (neutral)
Agriculture (DBA) - 90.9 (very overbought)
Base Metal (DBB) - 63.9 (neutral)
Energy (DBE) - 81.4 (very overbought)
Prec Metal (DBP) - 81.6 (very overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Post Expiration Weakness Again?
September 21, 2007
Post options expiration is historically a difficult time for the bulls and this time around is no different.
As I have stated the last two days, the week after September triple witching has seen the Dow lower 13 out of the last 16 years given the recent surge a short-term move lower is certainly not out of the question. Furthermore, September is notorious for having a weak close.
Typically the bulk of post expiration weakness occurs the day following options expiration, however, I think we could see more weakness as the week progresses particularly in the tech heavy sectors.
Also, when looking at the Overbought/Oversold levels in the Commodities section below for the Agriculture (DBA) and Energy DBE) I expect to see some short-term weakness over the short-term (1-5 days). Both ETF’s have reached an extreme overbought state and the indicators are pegged.
As for our SPX Short Iron Condor strategy, we were able to make over 9% over a four week period. With implied volatility up in the SPX we were able to choose a 225 point range. Not bad over a four week period, expecially given the fact that the market vacillated so widely this past expiration period.
Have a wonderful weekend and subscribers look for the Expiration Report this weekend with the trading guidelines for our new Diagonal LEAPS strategy and a discussion on the new and improved Insider’s page.
Overbought/Oversold for September 21, 2007
S&P (SPY) - 65.5 (neutral)
Russell 2000 (IWM) - 67.2 (neutral)
Dow (DIA) - 77.8 (overbought)
Nasdaq 100 (QQQQ) - 75.0 (overbought)
Oil Services (OIH) - 88.7 (very overbought)
Newly added ETF’s (will follow in the Insiders’ page (subscriber’s only) starting 9/24)
Core Sector List
Financials (XLF) - 59.8 (neutral)
Energy (XLE) - 89.2 (very overbought)
Cons. Cyclicals (XLY) - 52.2 (neutral)
Technology (XLK) - 81.0 (very overbought)
Health Care (XLV) - 78.2 (overbought)
Materials (XLB) - 80.3 (very overbought)
Industrials (XLI) - 69.3 (neutral)
Cons. Staples (XLP) - 65.3 (neutral)
Telecom (TTH) - 83.6 (very overbought)
Utilities (XLU) - 56.8 (neutral)
Gold (GLD) - 76.4 (overbought)
International
FTSE/XINHUA China 25 (FXI) - 85.9 (very overbought)
Latin America (ILF) - 75.3 (overbought)
MSCI EMU (EZU) - 79.6 (overbought)
Australia (EWA) - 77.3 (overbought)
India (INP) - 81.7 (very overbought)
Commodities
Natural Gas (UNG) - 49.5 (neutral)
Agriculture (DBA) - 90.5 (very overbought)
Base Metal (DBB) - 56.1 (neutral)
Energy (DBE) - 92.9 (very overbought)
Prec Metal (DBP) - 85.5 (very overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Could we see a retest of the 1500 area in the S&P over the next 1-5 days?
September 20, 2007
As expected (per my post yesterday), after the huge rally earlier this week the market decided to take a pause today. I would not be surprised to see the 1500 level tested again before buyers step back in with conviction. Those who missed the rally the first time around want to get in and by the looks of it the 1500 area seems the most logical. TYpically the first move back towards a major breakout area, in this case the 1500 level in the S&P, is met with a bullish response. Those who missed the train want to make certain it doesn’t happen a second time.
With options expiration tomorrow, I expect to see a volatile day and would not be surprised to see the day finish flat. As I stated yesterday, the week after September triple witching has seen the Dow lower 13 out of the last 16 years and given the recent surge a short-term move lower is certainly not out of the question. Furthermore, September is notorious for having a weak close.
If you look below most of the sectors are still in an overbought to very overbought. This is just another reason why I expect to see the eventual retest of 1500 (or close to it) before the market begins an attempt towards the year-to-date highs. Who knows we could just roll over here and continue to descend, but given the recent bullishishness and the close proximity to YTD highs a move back to 1550 area in the S&P looks likely, especially after overbought conditions wear off.
As for the Diagonal LEAPS Strategy – we have decided to discuss it in full with our paid subscribers in this weekends Expiration report/newsletter. We will bring you an abridged verion next week once we add the positions next Monday. So, those of you who are subscribers please make it a point to read the newsletter this weekend as there are going to be quite a few new additions to talk about, including the new and improved Insiders’ page and how to utilize it to enhance your trading.
Overbought/Oversold for September 20, 2007
S&P (SPY) - 69.2 (neutral)
Russell 2000 (IWM) - 65.9 (neutral)
Dow (DIA) - 76.7 (overbought)
Nasdaq 100 (QQQQ) - 69.6 (neutral)
Oil Services (OIH) - 85.8 (very overbought)
Newly added ETF’s (will follow in the Insiders’ page (subscriber’s only) starting 9/24)
Core Sector List
Financials (XLF) - 64.1 (neutral)
Energy (XLE) - 88.2 (very overbought)
Cons. Cyclicals (XLY) - 53.6 (neutral)
Technology (XLK) - 76.9 (overbought)
Health Care (XLV) - 76.7 (overbought)
Materials (XLB) - 83.2 (very overbought)
Industrials (XLI) - 68.1 (neutral)
Cons. Staples (XLP) - 80.5 (very overbought)
Telecom (TTH) - 78.4 (overbought)
Utilities (XLU) - 65.0 (neutral)
Gold (GLD) - 87.7 (very overbought)
International
FTSE/XINHUA China 25 (FXI) - 79.2 (overbought)
Latin America (ILF) - 70.7 (overbought)
MSCI EMU (EZU) - 76.5 (overbought)
Australia (EWA) - 75.1 (overbought)
India (INP) - 75.1 (very overbought)
Commodities
Natural Gas (UNG) - 55.4 (neutral)
Agriculture (DBA) - 89.3 (very overbought)
Base Metal (DBB) - 65.1 (neutral)
Energy (DBE) - 93.0 (very overbought)
Prec Metal (DBP) - 93.8 (very overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Upside should be limited over the short-term
September 19, 2007
The last two days have been witness to the largest point gain in the S&P in over four years. As is often the case after large moves upside momentum is limited over the short-term. I would expect to see a pause here and most likely a move back to 1500 before the bulls step back in.
If the market is able to hold up over the next two days I would expect to see some weakness going into next week. The week after September triple witching has seen the Dow lower 13 out of the last 16 years and given the recent surge a short-term move lower is certainly not out of the question. Furthermore, September is notorious for having a weak close.
With that said I think a move back to the 1500 area should bring buyers back in, particularly the ones that missed the boat after the initial launch. This is typically the case when the market surges and I would not expect to see anything different this time around.
Remember what I stated yesterday, “volume in advancing versus declining stocks was a tremendous 25-to-1 today. The last time the market experienced such a huge discrepancy was 25 years ago. Furthermore over the last 50 years the market has only witnessed this type of situation 7 other times, in which all instances were higher three months later with an average return that exceeded 9%.”
Keep this in mind as we move into one of the strongest periods of the year.
I know many of you are here for the Diagonal LEAPS Stratetgy that I plan to start next Monday. I know I mentioned going over the basics tonight, but again due to time constraints the strategy discussion will have to wait until tomorrow.
The week has been hectic with emails and the like. The service (and traffic) is growing exponentially and interest in the new SPY Diagonal LEAPS Strategy has sparked quite a bit of interest. We can’t wait to get started! Thanks for your patience!
Overbought/Oversold for September 19, 2007
S&P (SPY) - 82.2 (very overbought)
Russell 2000 (IWM) - 77.4 (overbought)
Dow (DIA) - 84.5 (very overbought)
Nasdaq 100 (QQQQ) - 75.1 (overbought)
Oil Services (OIH) - 83.1 (very overbought)
Newly added ETF’s (will follow in the Insiders’ page (subscriber’s only) starting 9/24)
Core Sector List
Financials (XLF) - 79.9 (overbought)
Energy (XLE) - 89.5 (very overbought)
Cons. Cyclicals (XLY) - 74.7 (overbought)
Technology (XLK) - 73.9 (overbought)
Health Care (XLV) - 80.2 (very overbought)
Materials (XLB) - 87.9 (very overbought)
Industrials (XLI) - 80.3 (very overbought)
Cons. Staples (XLP) - 79.7 (overbought)
Telecom (TTH) - 76.0 (overbought)
Utilities (XLU) - 92.1 (very overbought)
Gold (GLD) - 80.0 (very overbought)
International
FTSE/XINHUA China 25 (FXI) - 83.5 (very overbought)
Latin America (ILF) - 77.1 (overbought)
MSCI EMU (EZU) - 75.1 (overbought)
Australia (EWA) - 74.8 (overbought)
India (INP) - 83.6 (very overbought)
Commodities
Natural Gas (UNG) - 50.7 (neutral)
Agriculture (DBA) - 80.0 (very overbought)
Base Metal (DBB) - 72.3 (overbought)
Energy (DBE) - 88.2 (very overbought)
Prec Metal (DBP) - 88.5 (very overbought)
Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
If history repeats itself the market could do well over the next few months.
September 18, 2007
What a day for the market. Bernanke certainly did not disappoint the market with the more than anticipated one-half point rate cute to the fed funds rate. History tells us that over the short-term (1-5 days) we should see a decline although as we go further out (three months) the market typically performs quite well.
Volume in advancing versus declining stocks was a tremendous 25-to-1 today. The last time the market experienced such a huge discrepancy was 25 years ago. Furthermore over the last 50 years the market has only witnessed this type of situation 7 other times, in which all instances were higher three months later with an average return that exceeded 9%.
I know many of you are here for the Diagonal LEAPS Stratetgy that I plan to start next Monday. I know I mentioned going over the basics tonight, but due to time constraints the first installment (and the second) will have to wait until tomorrow.
Overbought/Oversold for September 18, 2007
S&P (SPY) - 79.6 (overbought)
Russell 2000 (IWM) - 72.3 (overbought)
Dow (DIA) - 81.9 (very overbought)
Nasdaq 100 (QQQQ) - 73.5 (overbought)
Oil Services (OIH) - 76.3 (overbought)
Newly added ETF’s (will follow in the Insiders’ page (subscriber’s only) starting 9/24)
Core Sector List
Financials (XLF) - 77.6 (overbought)
Energy (XLE) - 87.6 (very overbought)
Cons. Cyclicals (XLY) - 73.9 (overbought)
Technology (XLK) - 70.9 (overbought)
Health Care (XLV) - 77.3 (overbought)
Materials (XLB) - 85.6 (very overbought)
Industrials (XLI) - 75.9 (overbought)
Cons. Staples (XLP) - 79.3 (overbought)
Telecom (TTH) - 68.8 (neutral)
Utilities (XLU) - 89.2 (very overbought)
Gold (GLD) - 83.5 (very overbought)
I will be adding the overbought/oversold levels for leveraged and international ETF’s tomorrow. Stay tuned! My plain is to follow a total of at least 25 major ETF’s. Again, in the near future this list will only be available to subscribers to the newsletter ot strategies on the Insiders’ page.
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 options strategies in our investment newsletter, the ETF Extremes, SPX Short Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
