Headed for Worst June Since Depression?

June is shaping up to be the worst June since the Depression era. Whenever the market dips this sharply this fast we often see a reversal in the following month. I do think that before that happens we could see a dip to close the gap in the NASDAQ 100 (QQQQ) that occurred back in mid-April (4/16): a level I think could act as an intermediate-term base.

The Dow (DIA) and the industrial sector (XLI) continue to lead the overall market lower. The two ETFs have moved to short-term oversold levels not seen in years. The RSI (2) (one of the short-term overbought/oversold indicators I prefer) for DIA and XLI are currently 0.4 and 0.8, respectively. Both are in short-term extremes which is often the precursor for a short-term bounce.

Again, patience is the key. I wanted to see support levels hold today or the 1275 in the S&P (SPX). This is the area that I am currently watching and I think the major benchmark proved itself today. My intent is to use this as a potential stop-loss area if trade occurs in the ETF Extremes or Sector Extremes during the early part of next week.

Remember, opportunities are made up easier than losses, so if you let a few pass you by don’t dwell on what could have been. There will always be more opportunities around the corner. Remember, trading is a marathon and not a sprint.

I will continue to patiently wait for opportunities to arise and only trade scenarios where the probability is overwhelmingly on my side. That means trading extremes. This certainly does not guarantee a successful trade, but it definitely makes for a favorable one. This is evident in the performance of the ETF Extremes strategy that I have been following in this service for over two years.

Overbought/Oversold Levels for June 27th, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) - 13.9 (very oversold)
* Dow Jones (DIA) - 7.5 (very oversold)
* Russell 2000 (IWM) - 24.6 (oversold)
* NASDAQ 100 (QQQQ) - 25.9 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 48.0 (neutral)
* Consumer Discretionary (XLY) - 18.5 (oversold)
* Health Care (XLV) - 44.3 (neutral)
* Financial (XLF) - 25.9 (oversold)
* Energy (XLE) - 50.8 (neutral)
* Industrial (XLI) - 9.9 (very oversold)
* Materials (XLB) - 24.1 (oversold)
* Real Estate (IYR) - 25.4 (oversold)
* Retail (RTH) - 29.0 (oversold)
* Utilities (XLU) - 31.7 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Short-term Oversold Extremes Hit the Market

First, I would like to point out that one of the two gaps in the tech-heavy NASDAQ 100 (QQQQ) closed today. The gap from 4/18 closed and now the gap from 4/16 will most likely be next. QQQQ will have to push lower to $44.32, or $1.33 to close the gap.

I have spoken about the aforementioned gaps for quite some time now. Now that one half of the move is complete, I would expect to see the other gap close soon. However, I do think that the major benchmarks are in a short-term extreme state we could see a bounce over the next few days.

The RSI (2) for the Dow (DIA) is currently 0.6 and the last time we witnessed a reading this low was back on 1/8/08. The Dow (DIA) bounced the following two days only to turn sharply lower afterwards.

Six out of the ten sectors I follow in the Sector ETF Extremes have moved to a short-term oversold to very oversold state with the financials (XLF) and industrials (XLI) leading the way.

Today we also witnessed a gap in the QQQQ, but fortunately the guidelines that make up the QQQQ Gap Fade strategy kept us out of the trade. As I always say, opportunities are made up easier than losses. The strategy is still up close to 8% for the year while the major benchmarks have moved decisively lower YTD.

The other two strategies that I follow are nearing a signal which could (and most likely will) be triggered tomorrow. In my opinion, this is what separates my strategies from other options services out there that have strategies that are exposed to the market every day. My strategies are only exposed to the market 10% to 15% of all trading days which eliminate much of the volatility and draw downs that typically occur throughout the course of the year. With a long-term perspective I can make just one to two trades every few months and come out well ahead of most other strategies over the same time frame. Iron condors, credit spreads, etc. just don’t work over the long haul, believe me I have tried. This is not to say that the aforementioned strategies are not viable strategies, but when traded month after month after month, a blow up in the market is bound to occur and blow up the strategy. Just look at the performance.

Overbought/Oversold Levels for June 26, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) - 14.9 (very oversold)
* Dow Jones (DIA) - 9.1 (very oversold)
* Russell 2000 (IWM) - 23.8 (oversold)
* NASDAQ 100 (QQQQ) - 25.9 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 43.7 (neutral)
* Consumer Discretionary (XLY) - 24.1 (oversold)
* Health Care (XLV) - 35.7 (neutral)
* Financial (XLF) - 19.3 (very oversold)
* Energy (XLE) - 44.2 (neutral)
* Industrial (XLI) - 15.3 (very oversold)
* Materials (XLB) - 20.4 (oversold)
* Real Estate (IYR) - 28.2 (oversold)
* Retail (RTH) - 29.0 (oversold)
* Utilities (XLU) - 31.7 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Late Post Tonight

I will be away shortly after the bell today so expect a late post tonight. If market levels stay where they are I expect to see a signal tomorrow in the ETF Extremes strategy and the Sector ETF Extremes. I will have more to discuss on this topic later tonight. Stay tuned.

Happy trading!

Andrew

Post Fed?

Oversold levels dominated the market coming into “fed day”, but I am never a fan of taking a position ahead of an event that can move the market against you (and your position) in a matter of seconds. In options trading such a quick move can be devastating to a position, which is why the risk/reward always prohibits me from placing a trade ahead of major market moving events.

Interestingly enough the DOW (DIA) and the Industrials (XLI) are still in an oversold state and with the post-fed reversal that typically occurs a day or two after the release we could see a short-term extreme reading in both of these ETFs over the coming days. My hope was to see a washout today so that I could place a few trades in our options extremes strategies, but the market just didn’t want to cooperate. Remember, opportunities are made up easier than losses.

Have a great night.

Andrew

Overbought/Oversold Levels for June 25, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) - 32.3 (neutral)
* Dow Jones (DIA) - 19.8 (oversold)
* Russell 2000 (IWM) - 37.3 (neutral)
* NASDAQ 100 (QQQQ) - 46.4 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 61.7 (neutral)
* Consumer Discretionary (XLY) - 34.6 (neutral)
* Health Care (XLV) - 58.1 (neutral)
* Financial (XLF) - 30.3 (neutral)
* Energy (XLE) - 49.3 (neutral)
* Industrial (XLI) - 21.8 (oversold)
* Materials (XLB) - 32.7 (neutral)
* Real Estate (IYR) - 35.7 (neutral)
* Retail (RTH) - 46.9 (neutral)
* Utilities (XLU) - 60.3 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Major Benchmarks Short-term Oversold

The four major market benchmarks are officially in a short-term oversold state with the market stalwart, S&P 500 (SPY) in an extreme short-term oversold state. The RSI (2) for SPY is currently 3.6. The last time the RSI (2) for SPY hit a level this low was 5/23 and 4/14/ Both instances witnessed a short-term rally in SPY immediately following the extreme reading.

Tomorrow brings the almighty Fed and surely a volatile market after the release at 2:15 EST. My hope is that we get a bit of a washout move which would not surprise me given the recent barrage by the bears.

Three of the sector ETFs I follow (IYR, XLB, XLI) have also moved into a short-term oversold state. Unfortunately for the Sector ETF Extremes strategy the shortest-term oversold readings that I follow are not quite in an extreme state.

The strategies and myself are quietly sitting on our hands waiting for an opportunity to take a position. It has been several weeks since our last trade so I am hoping to see a signal from the recent decline. Cross your fingers!

Have a great night!

Andrew

Overbought/Oversold Levels for June 24, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) - 18.9 (very oversold)
* Dow Jones (DIA) - 20.3 (oversold)
* Russell 2000 (IWM) - 22.1 (oversold)
* NASDAQ 100 (QQQQ) - 28.5 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 38.2 (neutral)
* Consumer Discretionary (XLY) - 31.7 (neutral)
* Health Care (XLV) - 42.2 (neutral)
* Financial (XLF) - 31.5 (neutral)
* Energy (XLE) - 52.8 (neutral)
* Industrial (XLI) - 24.8 (oversold)
* Materials (XLB) - 27.2 (oversold)
* Real Estate (IYR) - 28.5 (oversold)
* Retail (RTH) - 30.7 (neutral)
* Utilities (XLU) - 50.8 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Fed Annoucement Around the Corner

The major benchmarks are still an oversold to near oversold state. Unfortunately, I need to see the underlying ETFs push lower into a short-term very oversold state before I will take a position.

There are also quite a few sector ETFs that have moved into a short-term oversold state, but again I would like to see a very oversold or extreme reading before considering taking a position.

Now we have the highly anticipated Fed policy announcement to contend with on Wednesday at 2:15 EST. My hope is that we see the a further short-term decline so that a signal is triggered in our two extreme portfolios.

Sorry for the late post. Have a great night.

Overbought/Oversold Levels for June 23, 2008

ETF Extremes Options Strategy

• S&P 500 (SPY) -  20.5 (oversold)
• Dow Jones (DIA) - 22.1 (oversold)
• Russell 2000 (IWM) - 31.0 (neutral)
• NASDAQ 100 (QQQQ) - 31.4 (neutral)

Sector ETF Extremes Options Strategy

• Biotech (IBB) - 43.2 (neutral)
• Consumer Discretionary (XLY) - 26.6 (oversold)
• Health Care (XLV) - 31.2 (neutral)
• Financial (XLF) - 21.8 (oversold)
• Energy (XLE) - 65.4 (neutral)
• Industrial (XLI) - 28.5 (oversold)
• Materials (XLB) - 42.0 (neutral)
• Real Estate (IYR) - 28.1 (neutral)
• Retail (RTH) - 26.2 (oversold)
• Utilities (XLU) - 57.9 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Options Expiration Blues - SPY in Very Oversold State

What a way to end the week. The two unclosed gaps (4/16 and 4/18) in the NASDAQ 100 (QQQQ) that I have mentioned over the past several weeks are coming back in the picture. Amazingly, even with today’s sharp decline the QQQQ and IWM are still in a neutral state. However, the two major benchmarks, S&P 500 (SPY) and Dow (DIA) have pushed into a very oversold state and certainly a push lower Monday would trigger a signal in the ETF Extremes. We shall see soon enough.

As for the Secotr ETFs I am keeping a close eye on Health Care (XLV). It narrowly escaped a very oversold reading. The RSI (2) is still above 5 which is slightly above where I would like it to be before I feel comfortable sinking any capital into a position.

One thing is for certain, next week should be very interesting.

Have a wonderful weekend and be sure to tell all your friends about our new service. Hey, with a risk free trial what do you have to lose. Sorry, I had to say it.

Anyway, enjoy the weekend!

Andrew

Overbought/Oversold Levels for June 20th, 2008

ETF Extremes Options Strategy

• S&P 500 (SPY) - 18.9 (very oversold)
• Dow Jones (DIA) - 19.7 (very oversold)
• Russell 2000 (IWM) - 38.2 (neutral)
• NASDAQ 100 (QQQQ) - 34.8 (neutral)

Sector ETF Extremes Options Strategy

• Biotech (IBB) - 49.5 (neutral)
• Consumer Discretionary (XLY) - 26.6 (oversold)
• Health Care (XLV) - 20.3 (oversold)
• Financial (XLF) - 28.6 (oversold)
• Energy (XLE) - 38.9 (neutral)
• Industrial (XLI) - 28.5 (oversold)
• Materials (XLB) - 30.9 (neutral)
• Real Estate (IYR) - 35.4 (neutral)
• Retail (RTH) - 33.2 (neutral)
• Utilities (XLU) - 30.2 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

High-Beta Sectors Lead the Way - Overbought/Oversold as an Indicator

The tech-heavy NASDAQ 100 (QQQQ) and small-cap Russell 2000 led the led the oversold bounce today. It was the stereotypically volatile day that often occurs during the week of options expiration.

Today, along with many others, people ask or comment about how overbought/oversold indicators are no big deal and that overbought/oversold states can remain irrational for “longer than you can remain solvent”.

Well, I guess in a way that is true, but unfortunately it is a rather simplistic way to approach trading and unfortunately, a frame of mind that often displays the lack of experience needed to survive for a long period of time in this game  and livelihood we know as trading.

I use a few reasonably simple overbought/oversold indicators on various time frames to gauge overbought/oversold extremes in the market coupled with a few more advanced trading techniques. My performance speaks for itself.

Remember, I am not stating that my strategies are the “holy grail” of trading, there isn’t one, but I do know that when traded appropriately I have found a strategy with a high win ratio that works over the long-term and the long-term is what count. Remember, you can always make a quick buck trading, but having sustainable gains is something completely different. Remember, this is a marathon and not a sprint.

I am only exposed to the market 10% of all trading days using this method and the probability is always on my side. Of course, again, that does not guarantee winning trades, but it does increase my chances of success and therefore my win ratio. As traders probability is the name of the game. Also, I must always mention that with the success of any strategy, risk-management techniques (position-sizing, stop-loss) are imperative.

I use the overbought/oversold measure in different time frames and patiently waiting on the sidelines until a short-term oversold/overbought extreme hits the market. Once that occurs I will enter a trade in the respective oversold/overbought ETF (using options of course) and proceed to use position-sizing and other risk-management techniques (stop-loss, etc.) to keep strategies win ratios working in my favor.

Indeed a simple, yet very effective strategy that is actually ranked as one of the top options strategies by pro-trading-profits, a reliable third party resource that monitors hundreds of other strategies. So, you can join the big boys and marketing geniuses and their faltering strategies or you can join a trader in his quest to bring more money in his pocket and yours.

Give us a try, if you do not like the service for any reason we will refund your money immediately if you decide to cancel within 30 days. What do you have to lose?

Andrew Crowder, Chief Options Strategist, Crowder Investment Research, LLC, (www.crowderoptions.com)

Overbought/Oversold Levels for June 19th, 2008

ETF Extremes Options Strategy

• S&P 500 (SPY) - 34.0 (neutral)
• Dow Jones (DIA) - 32.1 (oversold)
• Russell 2000 (IWM) - 56.0 (neutral)
• NASDAQ 100 (QQQQ) - 55.6 (neutral)

Sector ETF Extremes Options Strategy

• Biotech (IBB) - 58.0 (neutral)
• Consumer Discretionary (XLY) - 42.6 (neutral)
• Health Care (XLV) - 33.4 (neutral)
• Financial (XLF) - 39.1 (neutral)
• Energy (XLE) - 44.8 (neutral)
• Industrial (XLI) - 43.2 (neutral)
• Materials (XLB) - 53.8 (neutral
• Real Estate (IYR) - 47.4 (neutral)
• Retail (RTH) - 48.5 (neutral)
• Utilities (XLU) - 59.1 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Gap Fade Options Strategy and Signal Nearing for New Sector ETF Extremes Options Strategy

The NASDAQ 100 (QQQQ) opened lower today for a gap lower. However, the gap was only $.21, which in most cases is a borderline signal. Had QQQQ been in a short-term oversold state a signal would have been triggered, but with the tech-heavy index firmly in a neutral state and the gap only $.20 a signal was not triggered and the strategy was better for it as we were able to avoid a loss for the trade.

The risk/reward just isn’t high enough when the gap is only $.20 while QQQQ is in a neutral state. I typically purchase an in-the-money option with a delta between .50 and .65 and when taking the bid/ask spread penalty in to account a gap close on a gap like today would have limited gains. As I said the strategy avoided a loss and who knows we could have a much better setup tomorrow as QQQQ closed near the lows of the session.

Several of the sector ETFs that I follow for the Sector ETF Extremes Options Strategy have moved into an short-term oversold state and are very close to a signal. Another decent push lower tomorrow will surely signal a trade in the new strategy and we can’t wait. The response has been outstanding so far so there is the potential that we might have to put a cap on subscribers soon. Don’t worry, you can always get on the waiting list if we run out of room.

Give the strategies a try. If you are not 100% thrilled then do not hesitate to email within 30 days and we will refund your money immediately. SUBSCRIBE

Andrew Crowder, Chief Options Strategist, Crowder Investment Research, LLC

Overbought/Oversold Levels for June 18th, 2008

ETF Extremes Options Strategy

• S&P 500 (SPY) - 31.3 (neutral)
• Dow Jones (DIA) - 27.6 (oversold)
• Russell 2000 (IWM) - 45.3 (neutral)
• NASDAQ 100 (QQQQ) - 39.6 (neutral)

Sector ETF Extremes Options Strategy

• Biotech (IBB) - 41.1 (neutral)
• Consumer Discretionary (XLY) - 29.8 (oversold)
• Health Care (XLV) - 30.9 (neutral)
• Financial (XLF) - 30.8 (neutral)
• Energy (XLE) - 66.1 (neutral)
• Industrial (XLI) - 24.4 (oversold)
• Materials (XLB) - 51.7 (neutral
• Real Estate (IYR) - 32.5 (neutral)
• Retail (RTH) - 34.3 (neutral)
• Utilities (XLU) - 57.0 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

Underlying ETF Options Still In A Neutal State

The NASDAQ 100 (QQQQ) Gap Fade options strategy was extremely close to a signal at the open this morning, but unfortunately, QQQQ opened slightly below yesterday’s high. The last few trading days have been close calls for the the Gap Fade strategy as QQQQ has closed near session lows and highs. Today was no different as QQQQ closed near the session lows at $48.54, with the low being $48.47 so a lower open tomorrow coutld trigger a signal if the initial decline is deep enough to warrant a good risk/reward and therefore a trade. Subscribers to the strategy, as always, will receive a real-time trade alert when and if one occurs. As for the rest of you, well, I will inform you here (at the daily options blog) of any trade and the success/failure of the trade.

As for the other sectors I follow in the overbought/oversold section below, every single one is in a neutral state so I will remain patiently on the sidelines, sitting on hands, until the Mr. Probability shifts in my favor.

I would like to thank all of you you have commented on the new format and the options strategies I follow. I hope to bring you more continued success in the future as I am in this for the long-term and I hope you are as well. We build wealth slowly here as I use a simple, yet effective options strategies that have proven the test of time. Hopefully, the new Sector ETF Extremes will folow in the footsteps of our flagship strategy the ETF Extremes which has made over 150% since its inception over two years ago. During that same time frame the S&P 500 has gained barely over 10%.

I do not claim to make outlandish gains and trade fairly infrequently which is why my strategies are so reasonably priced. Furthermore, like many of the other options strategies that are used by others, my strategies are not exposed to the market every day. Actually my strategies are typically only exposed to the market a few days a month. The performance of the ETF Extremes options strategy has proven that trading less often produces better results. Give the strategy a try. If you are not 100% thrilled then do not hesitate to email within 30 days and we will refund your money immediately.

Overbought/Oversold Levels for June 17th, 2008

ETF Extremes Options Strategy

• S&P 500 (SPY) - 41.5 (neutral)
• Dow Jones (DIA) - 38.6 (neutral)
• Russell 2000 (IWM) - 55.7 (neutral)
• NASDAQ 100 (QQQQ) - 49.5 (neutral)

Sector ETF Extremes Options Strategy

• Biotech (IBB) - 45.1 (neutral)
• Consumer Discretionary (XLY) - 43.6 (neutral)
• Health Care (XLV) - 42.1 (neutral)
• Financial (XLF) - 37.2 (neutral)
• Energy (XLE) - 63.8 (neutral)
• Industrial (XLI) - 34.8 (neutral)
• Materials (XLB) - 55.3 (neutral
• Real Estate (IYR) - 59.8 (neutral)
• Retail (RTH) - 45.1 (neutral)
• Utilities (XLU) - 65.6 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: SUBSCRIBE

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