June 23, 2017

Archives for March 2008

Gap Fade 23.1% YTD – Sectors Oversold

It as an interesting day. The market vacillated in a wide range today due to the uncertainties that surround the financial sector. The one positive, the January lows in the S&P (SPY) held. Could this mark an intermediate-term bounce? It looks plausible. The technicals continue to pile up for the bulls (that is right the bulls) for the short-to-intermediate-term. The push lower today left a few of the major sectors including Consumer Discretionary (XLY), Health Care (XLV) and of course the Financials (XLF) in an oversold state. Health Care remains the most oversold of the bunch with a RSI (2) reading close to 4. A move closer to 2 will most likely trigger a signal in the Paper Trade Extremes portfolio. Insiders, as always, I will have … [Read more...]

Could the VIX be telling us something?

Volatility reigns supreme once again. The VIX has moved back above the 30 level. In the recent past, a move to this level has led to an intermediate-term bottom. Will it happen again this time around? The comparison chart below (VIX vs. S&P) shows that indeed a case could be made. The market, more specifically the S&P, remains in a trading range and above strong support levels at the January lows. A move to the January lows would most likely push the S&P back into an “oversold” to “very oversold” state. The deeper the oversold level at the January lows (if the S&P even makes it there) the greater the probability a short-term bounce is near but I do not want to get ahead of myself. It was another good week for … [Read more...]

Another Successul Gap Fade Trade – Up 23.1% since its inception in February

Yes, we had another successful trade in the Gap Fade strategy today. The return - 6.7%. It was the third trade for the strategy since its inception and I am happy to say the third successful trade for a cumulative return of 23.1%. A win ratio of 100%. I admit, while I love the strategy it is just absolutely ridiculous to think that there isn’t a losing trade lingering right around the corner. Losses happens, it is how risk is managed in the strategy, whatever it may be, that keeps it profitable over the long-term.  When I say manage I am pointing mainly to stop-loss techniques. Basically, keep losses small. Also, always consider position-sizing with each trade. And, yes, follow the trading mantra, eliminate emotions out.  Implementing … [Read more...]

Oversold readings lead to profits in Financials (XLF) and Real Estate (XLV)

Several days ago I placed a trade in XLF and yesterday I placed a trade in XLV in the PaperTrade Sector Extremes strategy. Today after testing strong overhead resistance XLF began to move lower and my trailing stops were triggered. As you can see from the charts below XLF tested overhead resistance at $25.86 and then began to move sharply lower. I moved up my trailing stops to about $25.50 for XLF so once it moved to that level I decided to take my gains off the table. As for XLV, the bid/ask spread was not the greatest, but surprisingly I was able to get some decent prices. I mentioned when I initiated this trade that I was looking at a quick hitter and that is exactly what happened. As you can see in the image above I was able … [Read more...]

Extreme oversold levels prove too much after the news this morning – PT Extremes strategy benefits as a result

Yesterday I mentioned how 15 out of the 17 sectors I follow had moved into an “oversold” to “very oversold” state. As I always state when the major benchmarks reach an extreme “very oversold” state a short-term reprieve is right around the corner.  Well, the historical tendency lived up to its billing  once again today and as a result it put our two (one added today, details below) PaperTrade Extremes trades into positive territory. This is my wheelhouse. I love to trade extreme overbought/oversold conditions. The statistics are on my side and as long as I remain disciplined and limit my losses long-term success should follow. At least it has so far. As expected the rally carried all of the major indices back into a neutral state and … [Read more...]

Oversold, oversold, oversold

 Before I get started I wanted to apologize for the temporary template. We should have things back tp normal in the next day or so. Sorry! The market moved lower again today and now the major benchmarks have moved near a short-term oversold extreme. Several of the benchmarks we follow have been in an oversold state for numerous days, but have only recently moved into a “very oversold” state. Once a benchmark hits a “very oversold” state I start to watch some shorter-term overbought/oversold measures. Well, we haven’t had many of these over the past six months (as indicated on the performance page of the ETF Extremes), but we are very, very close to a signal this time aorund, but I digress. Anyway, as I stated, I like to watch … [Read more...]

16 out of 19 sectors I follow “oversold” to “very oversold”

I think the headline says it all. Sixteen out of the nineteen sectors I follow on the Insiders’ page have moved into an oversold to very oversold state. More importantly all of the major benchmarks that we follow have moved deeper into an oversold state after Friday’s selling. Typically, this type of market environment (extreme oversold readings) lead to a short-term reprieve or bounce and it certainly looks like the market plans to do just that (according to the pre-market futures), at least at the open on Monday. I still have the XLF position that I established last week and Friday’s low will most likely mark my stop-loss, but XLF’s ability to hold strong at current “very oversold” levels tells me that the probability of a short-term … [Read more...]

Long Weekend

It was a rather long weekend here in NewEngland. Snow has been piling up (already over 280 inches at my house) all winter, but on Saturday we experienced a "wicked" freezing rain, ice, snow mix eventually led to a loss of power. I am glad to say that power is back on, but unfortunately I will not have the PaperTrade Extremes guidelines nor the overbought/oversold measures tonight. I hope to have a post early tomorrow discussing the week ahead and the current oversold state of the market. I will also have the PaperTrade Extremes guidelines on the Insiders page tomorrow. Sorry for the delay. Hopefully Old Man Winter is starting to get tired. … [Read more...]

Check back Sunday

I will post the PaperTrade Extremes guidelines (Insiders Only) on the Insiders page and have a community blog post with the overbought/oversold measures and market insights Sunday. I apologize for the temporary site issues today. I am glad to say it was my first issue since the inception of the website and hopefully the last. See you Sunday! … [Read more...]

Short-term extremes throughout the market

During the premarket and mid-day report I spoke about my latest XLF trade in the New PaperTrade Extremesusing the ThinkorSwim papertrade platform. I am down slightly at the moment but as you can see in the chart below I anticipated a potential move to the $24.11 level. I took a small position only using 1.8% of the $100,000 allocated on the ThinkorSwim papertrade platform and what I obviously intend to use for the PaperTrade Extremes as well as other potential trades mentioned on the Insiders page. This will allow us to accurately account for all the trades and allow for endless discussions (i.e. position-sizing, various options strategies, charts, etc.) on various investment-related topics. I will have complete guidelines available on … [Read more...]