August 20, 2017

Archives for February 2008

Options expiration nears and so does overbought status

The market continued the trot upwards today. The three day advance has pushed the major benchmarks very close to an overbought state and if we see the 2/5 gap close over the next two days this would certainly push the market into a short-term overbought state. Couple the aforementioned with what would is strong overhead resistance (where the 2/5 gap occurred and the upcoming seasonal weakness that typically follows options expiration and you can see why I expect to see at least a short-term move to the downside. Furthermore, the days surrounding the upcoming holiday are also historically weak. Although I do not use seasonal tendencies as a sole reason to place a trade, I do like to pay close attention when seasonal weakness/strength … [Read more...]

Still Waiting…..

The market surged higher today only to fade late in the day. Buyers continue to show little conviction. As I stated yesterday, the gap from 2/5 is still lingering overhead and a push higher to close the gap will most likely cause the benchmarks to move into an overbought state. Again, this could trigger a signal in the ETF Extremes. On the other hand, a move to the downside testing the 1310-1320 area could also push the S&P into an extreme oversold condition. As the market nears options expiration I would prefer to see a move to the upside that pushed the market into a short-term overbought state. Typically the market experiences weakness the day following options expiration so stay tuned as we approach expiration. February 12, 2008 - … [Read more...]

Market Not Showing Cards

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Major Indices Inching Closer to Oversold

The market moved lower again today which pushed the major benchmarks we follow ever so closer to an oversold state. I would prefer to see a move near the 1310 area in the S&P which would most likely push our oversold/overbought into an extreme area. I would also like to see the RSI (2) (another short-term overbought/oversold indicator I use) follow suit and move into an extreme state. The week in general was very good for our service. The introduction of the Gap Fade was tremendous as the strategy gained over 16% for the week on two trades while the major benchmarks moved sharply lower. Every major index fell by more than 4% this week. Even with the move lower the market is still in somewhat of a limbo land. Volatility continues to … [Read more...]

Gap Fade Strategy Off to a Blazing Start – Up 16.4% After Two Trades

Yes, since its inception on Monday we have had two trades in the Gap Fade strategy for a cumulative profit of 16.4%. Our second trade came today with the large gap lower this morning. QQQQ opened at $42.35, down $.42 from Wednesday's low of $42.77. As a result I purchased QQQQ Mar08 calls (QQQCP) for $2.20 shortly after the open. Our profit target was met shortly after the opening bell so we decided to sell our calls for $2.40, which allowed the strategy to lock in profits of 9.1% (not including commissions) on the trade. As I stated earlier, since its inception just four days ago the Gap Fade strategy has made 16.4%. Compare that with the overall market performance for the week and I think you can see just how powerful the … [Read more...]

Sharp decline pushes Nasdaq 100 further into oversold territory.

The Nasdaq 100 (QQQQ) barely moved into oversold territory yesterday and pushed further into that state after the continuation of the sell-off today. However, the sharp declines, have yet to push the tech-heavy index or the other major benchmarks we follow into an extreme state. A RSI (2) reading below 5 (preferably below 3) often signals a short-term reprieve is near and none of the indices have dipped below that area. I would prefer to see a move below below the aforementioned area coupled with a retest of the recent lows before establishing a short-term long position, but I could a signal could pop up before that occurs. We are once again near a signal in the ETF, but I almost hate to say that because we have been near that state for … [Read more...]

Successful Gap Fade Trade in the Face of a Tanking Market

Today is just one example of how successful a Gap Fade strategy can be when implemented correctly. Stop-losses, reasonable profit targets, and a set of strict guidelines are what make a strategy successful over the long-term. In the face of a tanking market our Gap Fade strategy, in its first trade, made 7.3%. Yes, 7.3%. The market gapped substantially lower this morning on the back of a weak ISM report. The underlying that I use in the Gap Fade strategy is the NASDAQ 100 (QQQQ) for many reasons that I will mention in my upcoming report. QQQQ gapped lower to open at $44.12, or $.82 lower than the previous day's close of $44.94. As a result I placed an order to buy to open the Mar08 44 calls (QQQCR) for $2.05 shortly after the open. … [Read more...]

No Gap, New Gap Fade Strategy

We did get the gap to the upside that I was hoping for (mentioned in last Friday's post) and as a result a signal was not triggered in the ETF Extremes strategy. Many of you have already noticed the changes made to the website over the weekend. Yes, we have added a Gap Fade strategy using QQQQ as the underlying. It is officially available for auto-trade at Thinkorswim. I will be sending out the official guidelines to newsletter subscribers and those of you who have signed up for the Free strategy report. You will also notice that we took the SPX Iron Condor strategy off the site. We will continue to follow the strategy in the newsletter and continue to give our subscribers our trades much like we have in the past. However, as a … [Read more...]

Is a signal near?

Over the last few days I have written about the short-term overbought-state of the tech-heavy NASDAQ 100 (QQQQ) as indicated by the RSI Wilder (2). Several other short-term indicators I follow are also leaning towards the bearish camp. I wanted to see a lrge gap higher today and that looked like it was going to come to fruition after the Microsoft news, but then the negative jobs report came out an hour before the open and eliminated my chances of fading what would have been an extreme condition. After an early morning sell-off the market was able to slowly build some momentum into the close to finish near the highs of the day.  A gap higher Monday will most likely trigger a signal in the ETF Extremes strategy. Yes, I said it, a signal! … [Read more...]