July 21, 2017

Archives for February 2008

Market: Short-term Overbought to Short-term Oversold – Successful First Month for the Gap Fade Strategy

Before I get started I just wanted to thank all of the subscribers’ who have commented about the New Insiders page. It seems to be going very well (at least according to your feedback). I have to admit I was a little hesitant to commit to writing two to three times a day and keeping track of so many sectors, but so far it has been wonderful and following the various overbought/oversold sectors has brought new life to the service and what it offers. Please keep writing me and letting me know what works and what doesn’t. This morning in the premarket report on the Insiders page I warned of the potential for runaway gap. Everything was setting up for that type of play (i.e. Friday gaps, etc.) so I told subscribers of the Gap Fade strategy … [Read more...]

Most of the sectors back to a neutral state

Yesterday several of the ETFs that we follow on the Insiders page moved into a “overbought” to “very overbought” state. Today, most of them sold off, inclusing some of the major market benchmarks DIA and SPY. I also mentioned EEM as a potential move lowr over the short-term and that came to fruition today. However, Brazil (EWZ) continues to defy its extreme overbought status. It has yet pullback in the face of its extreme overbought status and an RSI(2) that pierced 99. It move slightly lower today, a whopping $0.06. Could this be the top? The other ETF that has moved back into an overbought state (but not extreme yet) is the XLE (Energy). As I stated above I will be watching XLE and EWZ closely tomorrow to see if the overbought … [Read more...]

Major Benchmarks Remain in an Overbought State. Potential Gap Fade Ahead?

The Dow and SPY remain in an overbought state and the Russell and Nasdaq 100 are not far behind. It seems as though the market has hit some decent resisitance at current levels so it will be interesting to see if we see a short-term reprieve over the coming days. As I stated yesterday I would like to see the S&P push into the 1400 area as this would certainly move the major benchmark into an extreme overbought state. The Dow actually moved close to a trigger today. The intraday high for the RSI (2) was 96.4, only 1.6 away from what would have been a signal in the ETF Extremes. One other note of interest is the International sector. The three ETFs that I follow are now all in a near extreme to extreme overbought state. Brazil continues … [Read more...]

Major Indices Nearing Extreme Overbought State

Both, Brazil (EWZ) and now Water (PHO) are in an extreme overbought state with RSI (2) of 99.1 and 98.3, respectively. I will be keeping a close eye on both over the next few days. The only concern for PHO is the large bid-ask spreads. When the bid-ask spread on $20 stock is $.20 to $.30 for the current month at-the-money strike I prefer to stay away and concentrate when more liquid issues hit extremes. I typically use oversold extremes on a less liquid issue if I am trying to build a position in stock for the intermediate to long-term. The Dow (DIA), S&P 500 (SPY), Emerging Markets (EEM), Materials (XLB) and Energy (XLE) are all very close to an extreme overbought state. If the Dow (DIA) or S&P (SPY) can move higher over the next day … [Read more...]

Brazil (EWZ), DOW (DIA) and the gap closure from 2/5.

Seven of the ETFs I follow have moved into an overbought to very overbought state. (Listed on the Insiders page) Recently I mentioned XLE and IBB, in which both faded the extreme. I have been keeping a close eye on Brazil (EWZ) over the past few days to see if the RSI (2) could push up towards the 98 level, which in most cases would signal a trigger for me to fade the extreme. Well, at the end of the day EWZ had pushed higher and the RSI (2) moved to 97.5 and it actually hit 98.0 intraday, so an open higher tomorrow and I might step in. I will keep you informed. As for our other strategies, particularly the ETF Extremes, we are once again nearing a signal. The Dow (DIA) and S&P 500(SPY) are in an overbought state (S&P almost) but … [Read more...]

Energy, Brazil and Biotech

The Energy sector (XLE) came tumbling down today as the underlying XLE moved lower $2.06 and back into a neutral state. Those of you who were fortunate enough to step in today were rewarded handsomely. I will continue to inform subscribers' on the Insiders page of the site of extremes that develop in the various ETFs I follow. I follow approximately 15-20 more ETFs on the Insiders page and hope to contonue to add more as the Insiders page evolves. Anyway, I digress... Brazil (EWZ) still looks ripefor a fade with an overbought reading above 80 and a RSI (2) of 91.7. I would prefer to see the RSI (2) a little higher before placing a trade. Anothe test of the 85 level and I just might do that. I actually looked at it today, but the bid-ask … [Read more...]

More sectors move into an Extreme State

I just wanted to remind all of you that I will be going over the SPX and RUT Iron Condor positions over the weekend. As I stated in the Expiration Report the March expiration cycle is five weeks. I wait out the first week as I only trade Iron Condors four weeks out. Remember, the Iron Condor strategies are available to all newsletter subscribers. Back to the market… The Energy sector (XLE) pushed further into an extreme overbought state and the RSI (2) has now made its way up to 96.4. As I stated yesterday, I like to see a reading above 98. An intraday push to the upside will certainly move the RSI (2) above 98 and will most likely trigger a trade. I will inform you (on the Insiders page) intraday if I make a move. I have been thinking … [Read more...]

Seasonal Weakness Prevails (Subscribers Please Read)

Daily Market Summary Subscribers check out the intraday article on Gap Fade entries. The seasonal weakness that I reported in the premarket statement lived up to its historical billing today (at least in a few of the major benchmarks). All of the major benchmarks gapped significantly higher at the open and immediately sold off from that point forward to close near the lows of the day. The price action didn’t change the short-term outlook very much as the major benchmarks continue to sit in a neutral state. The notable extreme is in the Energy sector (as seen on the Insiders’ page). The XLE is now officially in a very overbought state with an RSI (2) reading of 94.1. I would prefer to see a number above 98, but anytime an … [Read more...]

Seasonal Weakness Typically Follows President’s Day

Seasonal Awareness Historically the trading day the follows options expiration is weak. Compound this short-term seasonal tendency with weakness that typically follows President's Day and you now have my attention. However, as I always state, I never base a trade solely on seasonal tendencies. The seasonal tendency following President's Day is a bit more extreme then most holidays with the Dow and S&P only finishing the day higher only 33% of the time. Daily Market Comments Not much to say here. Today's trading did not do much for our short-term overbought/oversold measures. The benchmarks we follow are still firmly in a neutral state. I will be adding a few other benchmarks to the overbought/oversold measure next week … [Read more...]

Options Expiration: Will we see a gap lower?

The indices did not quite hit the extremes we were looking for (close of the 2/5 gap) today. The market drifted higher early and retested thehighs from yesterday. Unfortunately, the overhead resistance was too strong and the indices pulled back. Bernanke's comments were just too much for the bulls to overcome today. As a result the indices closed near the lows of the day. What does that mean? Well, for our Gap Fade strategy it means we will be paying close attention to how the futures react  before the opening bell. A smallish gap would probably not warrant a trade, but a large one certainly would. Tomorrow is options expiration so I expect to see a volatile intra-day session which is another plus for a Gap Fade. As for the ETF … [Read more...]