August 20, 2017

Archives for September 2007

Overbought/Oversold and Strategy Discussion

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 … [Read more...]

Rising in the face of overbought conditions – How much longer?

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 … [Read more...]

Back before the opening bell

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 … [Read more...]

No Post Tonight

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 … [Read more...]

Short-term Pullback in the QQQQ’s

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 … [Read more...]

Diagonal LEAPS Strategy Begins

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 … [Read more...]

Post Expiration Weakness Again?

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 … [Read more...]

Could we see a retest of the 1500 area in the S&P over the next 1-5 days?

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 … [Read more...]

Upside should be limited over the short-term

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 … [Read more...]

If history repeats itself the market could do well over the next few months.

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 … [Read more...]