Could We See A Sector ETF Extremes Signal Tomorrow?

Just some short snippets today, but first I would like to point out that the strategies are filling up and quickly. I limit my subscribers to 75 per strategy to keep things manageable on all levels. If you have any questions about the service or the strategies please do not hesitate to email me at andy(at)crowderinvestments.com.

Will the bears reign supreme in early August? Possibly. Recent market history shows that over the last ten years the first few weeks of August have only finished positive 3 times.

After the plunge in the market today all of the major benchmark ETFs that I follow are back in a neutral state. However, with the release of the employment report tomorrow that could quickly change.

Biotech (IBB) and now Health Care (XLV) are on my radar with IBB officailly in a short-term extreme overbought state. Depending on the price action in the aforementioned sector we could see a signal early in the trading day tomorrow. I would have placed a trade, but the market-moving capabilities of tomorrow’s employment report I decided it was best to wait patienty on the sidelines to see how the market would interpret the release. Remember, opportunities are made up easier than losses. The strategy is already up 9.8% since it was initiated back in mid-June so I do not want to take any unnecessary risks that could jeopardize the return.

Just one more tidbit of info on the Biotech sector (IBB). The sector has pushed into an extreme overbought state that has not been seen in years and across many time frames.

I will be back tomorrow (maybe later tonight) with a post regarding position-sizing and the strategies.

Have a great night!

Andy

Overbought/Oversold levels for July 31, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 53.7 (neutral)
* Dow Jones (DIA) – 48.6 (neutral)
* Russell 2000 (IWM) – 61.2 (neutral)
* NASDAQ 100 (QQQQ) – 57.4 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 94.7 (very overbought)
* Consumer Discretionary (XLY) – 48.8 (neutral)
* Health Care (XLV) – 72.6 (overbought)
* Financial (XLF) – 58.3 (neutral)
* Energy (XLE) – 43.4 (neutral)
* Industrial (XLI) – 49.4 (neutral)
* Materials (XLB) – 60.4 (neutral)
* Real Estate (IYR) – 52.7 (neutral)
* Retail (RTH) – 49.4 (neutral)
* Utilities (XLU) – 42.7 (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! Try our strategies for a 30 day risk-free trial!

Will We See Short-Term Reprieve In Early August?

I mentioned yesterday about the market’s bullish tendency for the end/beginning of the month . I should point out that I typically, actually I should say, almost never trade based on seasonal tendencies. However, I do like to use seasonal biases as a tool to push the probability of a potential position on my side.

That being said, according to my overbought/oversold screen below, the major benchmarks have pushed close to a short-term overbought state. While I do not use the numbers bloew to place a trade I do use htem as the initial screen for potential trades.

Okay, now back to the current market. Tomorrow brings the highly anticipated GDP which many expect will be a market moving report. Friday is also a big day for market moving economic reports as the Nonfarm Payroll report is out.

My guess (but an educated one) is that any short-term gains, if any, will be given back in early August. Typically, when the market advances this quickly off of oversold levels we will see at least a short-term reprieve going forward.

All four of the major benchmarks are still below the recent highs so their is still some decent overhead resistance in play coupled with near overbought levels. Just another reason why I think any short-term move to the upside will be not be sustainable.

Have a wonderful night!

Andy

The Strategies

My hope is to see an inital push to the upside tomorrow morning that could (depending on the size of the move) lead to a potential Gap and consequently a Gap Fade signal in the QQQ Gap Fade strategy. I have my fingers crossed.

As for the sectors I currently have on my radar the Biotech (IBB) and Materials (XLB) are the chosen few with my trigger finger on IBB. The Biotech (IBB) sector has pushed into an extreme over many time frames, but the shortest time frame I use and my proprietary overbought/oversold indicator are screaming right now so a signal in the Sector ETF Extremes strategy could be near.

I will be covering position-sizing for the three portfolios (mainly the ETF Extremes and the Gap Fade) since they have a longer track record to see how commissions, my monthly subsciption cost and several other factors affect the overall return of the portfolio. Stay tuned.

Overbought/Oversold levels for July 30, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 67.2 (neutral)
* Dow Jones (DIA) – 64.9 (neutral)
* Russell 2000 (IWM) – 65.5 (neutral)
* NASDAQ 100 (QQQQ) – 60.2 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 90.5 (very overbought)
* Consumer Discretionary (XLY) – 55.8 (neutral)
* Health Care (XLV) – 64.7 (neutral)
* Financial (XLF) – 62.6 (neutral)
* Energy (XLE) – 62.5 (neutral)
* Industrial (XLI) – 67.1 (neutral)
* Materials (XLB) – 71.3 (overbought)
* Real Estate (IYR) – 58.9 (neutral)
* Retail (RTH) – 60.8 (neutral)
* Utilities (XLU) – 54.3 (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! Try our strategies for a 30 day risk-free trial!

The Talking Heads Are At It Again!

The seasonal end/beginning of the month bullish tendencies coupled with some short-term oversold levels helped to push the market higher today. The news out surely could not perceived as good or could it. I think any sane person can see that the economy still has some struggles to work through.

I typically never watch or listen to the talking heads, but today’s advance caught my curiosity so I decided to use the CNBC tab on the Thinkorswim software. What did I hear? Well, what a surprise the sentiment was slanted to the bullish camp. The bottom is in, buy now. Really? One day of trading and this is what the bright minds of the financial media conclude? Of course they (and many of the analysts they interviews) could be right in their conclusion but before we make any such statements should we not see what the most anticipated economic news of the week states? I certainly think so.

Anyway, I was hoping for a gap lower today to that I could see another signal in the QQQQ Gap Fade strategy which is up 24.2% since it was initiated in early Feb ‘08. As we all know that situation didn;t play out, but with some decent news tomorrow we could see a gap to the upside this time. However, the futures are pointed lower as I write this so it doesn’t look good. That is perfectly fine with me. As always I will patiently allow the signals to come to me and then react accordingly. My strategies sit on the sidelines and wait for high probability set-ups and as you can see by the performance in all the strategies the less you trade the better.

The ETFs that I follow are back in a neutral state other than the Energy (XLE) and Utility (XLU) sectors. XLE could be a Sector ETF Extremes candidate if I continue to see further downside over the coming days, but XLU, even though it is in a short-term oversold state is not on my radar. Why? Because my shortest-term proprietary oversold/overbought measures actually have a higher reading than the short-term oversold/overbought screen that I use on this blog.

A further short-term advance would certainly push the major benchmarks and the sector I follow into an overbought state. This could lead to a short-term reprieve or choppy conditions at best.

Check out the following Russell (RUT) chart by Tim Knight (the chart guru in my opinion). Again, a short-term advance to the levels stated on his chart would certainly push the index (in my case the IWM) and the other ETFs I follow into a short-term overbought state. If this occurs I expect to see a few signals in the Extremes strategies, but as we all know only time will tell. Stay tuned!

Have a wonderful evening!

Andy

Overbought/Oversold levels for July 29, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 55.4 (neutral)
* Dow Jones (DIA) – 52.9 (neutral)
* Russell 2000 (IWM) – 62.3 (neutral)
* NASDAQ 100 (QQQQ) – 56.7 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 89.3 (very overbought)
* Consumer Discretionary (XLY) – 52.8 (neutral)
* Health Care (XLV) – 65.4 (neutral)
* Financial (XLF) – 58.4 (neutral)
* Energy (XLE) – 27.0 (oversold)
* Industrial (XLI) – 60.1 (neutral)
* Materials (XLB) – 57.9 (neutral)
* Real Estate (IYR) – 66.1 (neutral)
* Retail (RTH) – 57.7 (neutral)
* Utilities (XLU) – 26.5 (oversold)

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! Try our strategies for a 30 day risk-free trial!

Could we see another gap lower tomorrow? What would it mean for the options trading strategies?

Another decline and more oversold readings. We also (depending on the reaction tomorrow morning to the economic reports) could have a signal in the QQQQ Gap Fade strategy. A sharp gap lower tomorrow would certainly put the tech-heavy index back in a short-term oversold state and if you couple this with the aforementioned gap there could be a nice set-up in the making. Subscribers, as always, I will send out a trade-alert, if and when a trade occurs. So far since the strategy is up 24.2% with a win ratio of 75% (6 out of 8 trades) since it was initiated in early Feb ‘08.

There are a few sectors back on my radar after today’s plunge. Materials (XLB) and Utilities (XLU) are the two that I am watching closely especially if we see the overall market move lower tomorrow and into an oversold state.

I would also like to point out that on a seasonal basis the last three days of June have a bullish bias as roughly 70% of those days over the past thirty years have shown an advance.

Could we see more trades in the three strategies this week? Only time will tell, but a move lower tomorrow would certainly increase the odds greatly.

Overbought/Oversold levels for July 28, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 31.7 (neutral)
* Dow Jones (DIA) – 30.2 (neutral)
* Russell 2000 (IWM) – 46.3 (neutral)
* NASDAQ 100 (QQQQ) – 39.9 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 87.5 (very overbought)
* Consumer Discretionary (XLY) – 37.1 (neutral)
* Health Care (XLV) – 56.2(neutral)
* Financial (XLF) – 38.1 (neutral)
* Energy (XLE) – 30.6 (neutral)
* Industrial (XLI) – 38.8 (neutral)
* Materials (XLB) – 28.8 (oversold)
* Real Estate (IYR) – 42.1 (neutral)
* Retail (RTH) – 32.3 (neutral)
* Utilities (XLU) – 21.9 (oversold)

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! Try our strategies for a 30 day risk-free trial!

Weekly Review/Preview

stated last week that we would most likely see a short-term reprieve in the major market stalwarts and that is indeed what occurred. During the prior week the market was able to reap exceptional gains, but unfortunately the Dow (DIA) and S&P (SPY) were not able to build upon last week’s advance.

For the week the Dow, S&P, NASDAQ and Russell 2000 finished the week mixed at -1.1%, -0.2%, 1.2% and 2.5%, respectively.

Fundamentally, the market should have moved higher as oil prices continued the trend lower as the market scalped another 4.7% off the price to finish the week at $123.77 a barrel.

Also, the financial sector received more positive news, this time from Bank of America which stated that it would not have to cut its dividend. This combined with the Fannie and Freddie news from the prior week helped to continue the push upwards.

However, the overall market and a few major sectors, namely the financial sector had pushed into an extreme short-term overbought state by the end of the trading day Wednesday. Even though the news remained positive the financials tanked during Thursday’s session and brought the entire market down with it. The 6.8% move lower would mark the largest one-day decline for the financial sector in over eight years.

Remember, the financial sector makes up roughly 20% of the S&P 500 (SPY) so a move this large would obviously have detrimental affects on the overall market.

Investors remain worried that the worst of the tight credit market still lies ahead. America’s banks have struggled to escape the cascading effects of paralysis in the debt markets and the decline in home values. Sales of previously owned homes declined in June at nearly double the rate that economists had expected, according to a report on the national real estate market Thursday.

“We are approaching a bottom, but we are not there yet,” said Michelle Meyer an economist at Lehman Brothers.

“The housing data still speaks of contraction and falling prices, so it’s tough to get excited about that,” said Joseph Battipaglia, strategist at Stifel Nicolaus.

Next week, brings the always highly anticipated employment report. July is expected to show another modest decline, but of course no one really knows.

On the technical side of things, I really don’t have much to contribute this week. All of the major benchmarks finished the week firmly in a neutral state. When probability is not on my side I wait patiently until the market gives me an edge and right now I just can’t find one.

Have great weekend!
Andy

Overbought/Oversold Reading for July 25th – Crowder’s Options Strategies

As I reported last week, every Friday my blog will only contain the overbought-oversold readings for the ETFs I follow for my strategies. My commentary or market review/preview will be available each Sunday.

Have a great weekend!

Andy

Overbought/Oversold levels for July 25, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 45.5 (neutral)
* Dow Jones (DIA) – 42.5 (neutral)
* Russell 2000 (IWM) – 61.0 (neutral)
* NASDAQ 100 (QQQQ) – 55.9 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 85.3 (very overbought)
* Consumer Discretionary (XLY) – 49.1 (neutral)
* Health Care (XLV) – 68.8 (neutral)
* Financial (XLF) – 51.1 (neutral)
* Energy (XLE) – 27.4 (oversold)
* Industrial (XLI) – 55.8 (neutral)
* Materials (XLB) – 30.6 (neutral)
* Real Estate (IYR) – 51.5 (neutral)
* Retail (RTH) – 40.4 (neutral)
* Utilities (XLU) – 18.2 (very oversold)

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! Try our strategies for a 30 day risk-free trial!

Winning Sometimes Hurts

Patience pays off again. Are you starting to get the idea of how I trade?

The Sector ETF Extremes options strategy has its first trade.

Late in yesterday’s trading session a signal was finally triggered in the Sector ETF Extremes. It was the first signal since the strategy was initiated on June 16th. XLF had moved into a “very overbought” state and my shortest-term proprietary model was reading an extreme state so I sent out a trade alert to the subcribers’ of the Sector ETF Extremes options strategy. The position was XLF Dec08 23 puts (XLFXW) for $2.55.

Early in the trading session the market turned decisively lower so I decided to take a 9.8% profit off the table. Check out the performance page. Certainly not a bad day by any stretch, but by the end of the day I had left an additional $.65 on the table. So, what was typically a nice gain for any strategy (9.8%) could have been much, much better (35.2%). As many of you have pointed out my market timing has been impeccable with the Extremes Strategies and believe me I appreciate the kind gestures, but that doesn’t hide the fact that I am still kicking myself a little bit for taking profits so early. This is why winning sometimes hurts.

Someone once said that any profit is a good profit, well, I am not so sure that I agree with that sentiment. Yes, I am happy by the end result today, but my goal is to be perfect. While I realize that this is an impossible task, particularly in the world of trading, it never hurts to strive for perfection.

So, after the sharp decline today the major benchmarks I follow have moved back into a neutral state. However, there are still a few Sector ETFs that have my attention. Utilities (XLU), Energy (XLE), and the Materials (XLB) sector remain in an oversold state, but my shortest-term overbought/oversold measures still need to confirm so I would need to see a further decline over the next few sessions for another signal in the Sector ETF Extremes to be triggered.

Until then enjoy the profits and stay tuned!

Have a great night,

Andy

Overbought/Oversold levels for July 24, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 45.2 (neutral)
* Dow Jones (DIA) – 45.8 (neutral)
* Russell 2000 (IWM) – 56.0 (neutral)
* NASDAQ 100 (QQQQ) – 43.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 82.5 (very overbought)
* Consumer Discretionary (XLY) – 53.0 (neutral)
* Health Care (XLV) – 61.9 (neutral)
* Financial (XLF) – 52.2 (neutral)
* Energy (XLE) – 25.3 (oversold)
* Industrial (XLI) – 48.5 (neutral)
* Materials (XLB) – 28.5 (oversold)
* Real Estate (IYR) – 44.6 (neutral)
* Retail (RTH) – 47.1 (neutral)
* Utilities (XLU) – 23.4 (oversold)

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! Try our strategies for a 30 day risk-free trial!

Sector ETF Extremes – Strategy’s First Trade Today

We had our first trade in the Sector ETF Extremes trade today. The trade is still open so I will not report anything until the position is closed (hopefully for a profit) as it would not be fair to those who pay to subscribe to my service and receive real-time alerts among many other things.

IWM looks even more delightful at these levels. As we can all plainly see by today’s action, even short-term overbought levels do not necessarily mean further upside is out of the question. I have remained on the sideline because my short-term overbought/oversold readings (proprietary) have told me to sit patiently for a signal. Will we see one tomorrow? Possibly, but as you all know by now I never force a trade. Again, opportunities are made up easier than losses and with a return that exceeds 150% since the ETF Extremes options strategy was initiated over two years ago why would I want to rush into anything.

Utilities (XLU) has once again caught my etye as it has moved back into a short-term oversold state. I would like to see the sector push further into a short-term oversold extreme before taking a position so I will have to see what the market presents me over the next few days.

As always, I will patiently wait on the sidelines until a high-probability set-up that meets my strict guidelines crosses my path. It has been a great week so far for my options strategies and also a very good year. Hopefully we can continue the trend as the year progresses. Stay tuned for the results of today’s Sector ETF Extremes trade. Until then have a wonderful night!

Andy

Overbought/Oversold levels for July 23, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 73.3 (overbought)
* Dow Jones (DIA) – 75.0 (overbought)
* Russell 2000 (IWM) – 83.7 (very overbought)
* NASDAQ 100 (QQQQ) – 59.1 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 82.7 (very overbought)
* Consumer Discretionary (XLY) – 74.2 (neutral)
* Health Care (XLV) – 64.2 (neutral)
* Financial (XLF) – 78.5 (overbought)
* Energy (XLE) – 26.3 (oversold)
* Industrial (XLI) – 77.7 (overbought)
* Materials (XLB) – 43.6 (neutral)
* Real Estate (IYR) – 79.9 (overbought)
* Retail (RTH) – 62.5 (neutral)
* Utilities (XLU) – 23.8 (oversold)

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! Try our strategies for a 30 day risk-free trial!

Another Gap Fade Success! Options Strategy up 24.2% YTD. Enjoy the Profits!

Yes, another successful trade in the NASDAQ 100 (QQQQ) Gap Fade options strategy today. The market moved sharply lower at the open and as a result a signal was triggered in the Gap Fade strategy. About 90 minutes later I was out of the trade for a 6% gain on the day. Check out the details of the trade here.

It was the 8th trade of the year. Yes, I have only been exposed to this market for all of 8 days in the Gap Fade strategy. Amazing, eh. Some of you are slowly catching on; trading every day or just using an options strategy that exposes you to the market on a daily basis will eventually catch-up to you. If you feel like you must have action every day then why not at least hedge your strategies with one of mine? As I always say the performance speaks for itself.

I am so incredibly enthused by the response to the strategies as of late. Thank you all for the kind words.

As for the current market, well, IWM is looking pretty sweet right now. The small-cap index has pushed into a short-term overbought state and my shortest-term overbought/oversold measures have moved to overbought levels not seen in well over a year.

Moreover, the several of the sectors I follow have pushed into an overbought state so we could finally see our first Sector ETF Extremes trade. No hurry remember. Patience. Wait for the probability to lean heavily to your side. Opportunities are made up easier than losses.

Oh yeah, I almost forgot, Gap Fade subscribers while you are enjoying the rewards of the strategy don’t get to comfortable. If the market jumps higher at the open tomorrow we could be in for another signal and another opportunity at some nice gains. Upside gaps into “very overbought” states are some of my favorite set-ups.

As always subscribers, I will send you out a real-time trade alert with all of the necessary info if and when a signal occurs.

Until then enjoy the profits and have a great afternoon!

Overbought/Oversold levels for July 22, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 70.5 (overbought)
* Dow Jones (DIA) – 72.9 (overbought)
* Russell 2000 (IWM) – 82.6 (very overbought)
* NASDAQ 100 (QQQQ) – 45.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 81.5 (very overbought)
* Consumer Discretionary (XLY) – 66.8 (neutral)
* Health Care (XLV) – 58.4 (neutral)
* Financial (XLF) – 77.1 (overbought)
* Energy (XLE) – 35.5 (neutral)
* Industrial (XLI) – 71.6 (overbought)
* Materials (XLB) – 65.1 (neutral)
* Real Estate (IYR) – 74.7 (overbought)
* Retail (RTH) – 35.4 (neutral)
* Utilities (XLU) – 37.0 (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! Try our strategies for a 30 day risk-free trial!

30 day Risk-Free Trial – Small-Caps Nearing Extreme

Not too much going on today. The Russell 2000 (IWM) and Biotech sector (IBB) have moved into an overbought state, but not yet near an extreme. My proprietary short-term overbought/oversold model shows IWM is getting very close and a decent open to the upside tomorrow could push it there. I will be waiting and as always I will send out an alert if and when a signal occurs.

Okay, I have been doing this for over two years now and yes, I am finally offering a 30 day risk-free trial offer for the first time ever. I truly feel that I offer a service that is unlike any other and by capping my subscribers (75 per strategy) I am able to concentrate on what is important. If you would like to know more about the service browse around the site and of course you can email me with any questions that you might have. Give us a try!

Overbought/Oversold levels for July 21, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 60.4 (neutral)
* Dow Jones (DIA) – 66.0 (neutral)
* Russell 2000 (IWM) – 72.6 (overbought)
* NASDAQ 100 (QQQQ) – 45.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 71.5 (overbought)
* Consumer Discretionary (XLY) – 57.8 (neutral)
* Health Care (XLV) – 50.7 (neutral)
* Financial (XLF) – 67.9 (neutral)
* Energy (XLE) – 48.3 (neutral)
* Industrial (XLI) – 59.7 (neutral)
* Materials (XLB) – 66.3 (neutral)
* Real Estate (IYR) – 64.0 (neutral)
* Retail (RTH) – 45.7 (neutral)
* Utilities (XLU) – 45.4 (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! Try our strategies for a 30 day risk-free trial!

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