Thanksgiving seasonality

Well, it looks like the first half of the historically seasonal bullishness that surrounds Thanksgiving held true. Now, with the major market benchmarks nearing a short-term overbought state will we see the second half of the historical tendency live up to its billing? Read my post from yesterday for more info about the seasonal conditions that surround Thanksgiving.

The tech-heavy Nasdaq 100 (QQQQ) moved slightly above a strong area of overhead resistance. The S&P has also moved above the 850 area (currently 882). The 850 area should act as a strong area of support if and when we head back towards that level.

Anyway, I will most likely not have a post on Friday with only a half day left (and basically no volume) for the market this week. Stay tuned for the upcoming Weekly Option Report due out Sunday.

Have a wonderful and safe holiday.

Andy

Overbought-Oversold levels for November 26, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 62.6 (neutral)
* Dow Jones (DIA) - 63.5 (neutral)
* Russell 2000 (IWM) - 64.1 (neutral)
* NASDAQ 100 (QQQQ) - 63.4 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 53.2 (neutral)
* Consumer Discretionary (XLY) - 67.5 (neutral)
* Health Care (XLV) - 51.3 (neutral)
* Financial (XLF) - 61.5 (neutral)
* Energy (XLE) - 66.5 (neutral)
* Industrial (XLI) - 63.5 (neutral)
* Materials (XLB) - 64.6 (neutral)
* Real Estate (IYR) - 61.3 (neutral)
* Retail (RTH) - 69.9 (neutral)
* Utilities (XLU) - 33.7 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 61.6 (neutral)
* Ultra Short (SDS) - 62.4 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Thanksgiving Day Seasonality

Yes, I know. I was supposed to have a second post last night about the seasonality that surrounds Thanksgiving. I do apologize, but after shoveling the heavy snow last night all I wanted to do was sleep. So I decided to do just that - sleep.

Before I get to Turkey Day seasonality I would like to discuss the price action in the market today. The S&P continues to flirt with the 850 level as it hovered around it for the majority of the trading day. Could we preparing for a substantial move upward. Well, while many bulls would like to see that (and I do think we could witness another sharp rally before the end of the year) our indicators are firmly in an neutral state. As I stated yesterday my shortest-term overbought/oversold indicators (1-3 days) are indeed in an overbought they are certainly not near an extreme. So a continued push, especially if we are indeed witnessing a rally with conviction (when I say conviction I must point out that I am talking about a few weeks, if that).

So, couple the aforementioned state of the market with the upcoming bullish seasonality that surrounds Thanksgiving and we could indeed witness a test of the 900 on the S&P over the short-term.  The day before and after the Thanksgiving holiday have seen the market move higher by an average of 0.5% roughly 75% of the time. It is indeed the most bullish seasonal biases of the year. Will we see the historical averages repeat themselves again this year? I guess we will see soon enough.

As for our strategies I am patiently waiting for a signal. We were close to a Gap Fade trade today, but the underlying QQQQ just couldn’t push any higher at the open. Anway, as I always say opportunties are made up easier than losses.

Andy

Overbought-Oversold levels for November 25, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 54.4 (neutral)
* Dow Jones (DIA) - 56.3 (neutral)
* Russell 2000 (IWM) - 52.2 (neutral)
* NASDAQ 100 (QQQQ) - 51.3 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 40.9 (neutral)
* Consumer Discretionary (XLY) - 58.8 (neutral)
* Health Care (XLV) - 45.7 (neutral)
* Financial (XLF) - 55.1 (neutral)
* Energy (XLE) - 58.2 (neutral)
* Industrial (XLI) - 52.2 (neutral)
* Materials (XLB) - 55.5 (neutral)
* Real Estate (IYR) - 55.2 (neutral)
* Retail (RTH) - 60.6 (neutral)
* Utilities (XLU) - 61.8 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 53.2 (neutral)
* Ultra Short (SDS) - 40.0 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

S&P 500 advances to test 850

Back to a neutral state and back to the closely watched 850 area in the S&P 500. While the shortest-term measures are nearing overbought as you can see in the overbought/oversold readings below all of the ETFs I follow are firmly in a neutral state. What does this mean over the short-term? It means that the likelihood of a short-term reprieve looks likely (1-3 days). However, I am not necessarily counting out the sustainability of this rally as we head into Thanksgiving. If this is indeed the beginning of a move that is more intermediate-term then a continued to push over the next few days should be seen. As I said before, the 850 level of the S&P is a critical area and it should be very interesting how the market reacts over the next few days.

I will be back later tonight with a short post on how the market historically reacts around the upcoming holiday.

Stay tuned!

Andy

Overbought-Oversold levels for November 21, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 52.3 (neutral)
* Dow Jones (DIA) - 53.4 (neutral)
* Russell 2000 (IWM) - 48.4 (neutral)
* NASDAQ 100 (QQQQ) - 52.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 38.5 (neutral)
* Consumer Discretionary (XLY) - 54.2 (neutral)
* Health Care (XLV) - 36.4 (neutral)
* Financial (XLF) - 43.4 (neutral)
* Energy (XLE) - 55.4 (neutral)
* Industrial (XLI) - 50.5 (neutral)
* Materials (XLB) - 45.3 (neutral)
* Real Estate (IYR) - 51.5 (neutral)
* Retail (RTH) - 62.9 (neutral)
* Utilities (XLU) - 59.1 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 48.5 (neutral)
* Ultra Short (SDS) - 43.1 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Overbought-Oversold Readings

Here are the numbers. I will have more information available in the upcoming Options Expiration Report. Stay tuned and don’t forget to check your email.

Have a great weekend!

Andy

Overbought-Oversold levels for November 21, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 21.3 (oversold)
* Dow Jones (DIA) - 42.4 (neutral)
* Russell 2000 (IWM) - 31.7 (neutral)
* NASDAQ 100 (QQQQ) - 32.6 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 20.5(oversold)
* Consumer Discretionary (XLY) - 37.1 (neutral)
* Health Care (XLV) - 22.3 (oversold)
* Financial (XLF) - 19.3 (very oversold)
* Energy (XLE) - 44.8 (neutral)
* Industrial (XLI) - 31.3 (neutral)
* Materials (XLB) - 23.2 (oversold)
* Real Estate (IYR) - 16.3 (very oversold)
* Retail (RTH) - 35.1 (neutral)
* Utilities (XLU) - 56.6 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 34.6 (neutral)
* Ultra Short (SDS) - 57.1 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Patience Continues to Pay While Greed Continues to Kill

As much as my  gut feels that the market will experience a near-term rally I am glad I haven’t acted on it in our options strategies. I have been patiently waiting on the sidelines (as I always do) for the my signals to trigger a warranted trade and so far this has worked over the short, intermediate and long-term, particularly in the ETF Extremes strategy.

Just by sitting on the sidelines I continue to outperform the market by a substantial margin. The important thing to point out that I did not come to this conclusion recently. The strategies did not blow up in the face of the bear market. Actually, the ETF Extremes has gained considerable ground over the past year (and since its inception three years ago for that matter).

Greed kills. How many advisory and newsletter services tout gains over the short-term only to blow up and lose it all when faced with adverse conditions. Too many. I will continue to stock to my guidelines that have kept me profitable in this market whether the market is up, down or sideways.

Some people scoff at the strategies. You should be selling options. You should do this or do that. Believe me, these are the same people that continue to lose subscribers/clients and are on the never-ending treadmill of trading/investing.

All I know is that I have found a strategy that works (ETF Extremes) for me and more importantly I am extremely comfortable with how it trades. I am realistic. Yes, anyone can make 100% or even 1000% on an option trade, but the question is can they sustain the gains.In most cases, no. This is why trading/investing is so incredibly difficult. Inherently, we are impatient, we want to see results now. If you are sitting on the sidelines in cash you feel that the strategy is being left to the wayside. Just look at my trades and how infrequent they are in the ETF Extremes strategy and then look at the final results. You tell me what works and more importantly what works in any market environment. I can proudly stand and state that the strategies have withstood the market collapse and in the case of the ETF Extremes they have actually made substantial progress. Hopefully our good fortune will continue.

Have a great night!

Andy

Overbought-Oversold levels for November 20, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 19.4 (very oversold)
* Dow Jones (DIA) - 23.1 (oversold)
* Russell 2000 (IWM) - 15.6 (very oversold)
* NASDAQ 100 (QQQQ) - 12.0 (very oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 19.9 (very oversold)
* Consumer Discretionary (XLY) - 16.6 (very oversold)
* Health Care (XLV) - 21.4 (oversold)
* Financial (XLF) - 12.3 (very oversold)
* Energy (XLE) - 23.8 (oversold)
* Industrial (XLI) - 17.5 (very oversold)
* Materials (XLB) - 18.7 (very oversold)
* Real Estate (IYR) - 16.3 (very oversold)
* Retail (RTH) - 20.9 (oversold)
* Utilities (XLU) - 24.1 (oversold)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 17.3 (oversold)
* Ultra Short (SDS) - 81.8 (very overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Oversold to Very Oversold - Ready for a short-term bounce?

Another trend day lower.

Well, the 850 level on the S&P was taken out early in the trading day and as result the ES (S&P futures) moved swiftly lower throughout the day to finally close at 811. The decline has pushed the major market benchmark back into a short-term oversold state. Moreover, it has pushed the tech-heavy Nasdaq 100 (QQQQ) back into a short-term “very oversold” state.

Depending on how the market reacts at the open we could see a few trades in both of our Extremes strategies. There are a plethora of oversold to very oversold readings in the sectors so I will try and sift through a few tonight to see where the best opportunities are for a short-term trade. Of course, that is if a trade does indeed occur.

The strategies, particularly the ETF Extremes have performed wonderfully (check out the performance page) during the entirety of this bear market and I expect to see similar results going forward, especially with the strict stop-loss guidelines that we have in place. Remember, risk management is the key to long-term success. I can’t tell you how many professional traders/RIAs/newsletters that have neglected to use this all important technique and as result everyone involved has suffered.

It is times like these that prove the worth of a trader/RIA/newsletter and as I have stated repeatedly over the past year, our performance speaks for itself.

Again, I only care about taking calculated risks based on high-probability setups. Furthermore, I always, and I want to stress always, know that even though the probability of a trade looks favorable that losses can indeed occur. It is a necessary part of trading. This is why I keep my losses to a minimum and again that is displayed on the performance page of the website.

If you have any questions please do not hesitate to email me.

Kindest regards,

Andy

Overbought-Oversold levels for November 19, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 27.9 (neutral)
* Dow Jones (DIA) - 31.3 (neutral)
* Russell 2000 (IWM) - 20.9 (neutral)
* NASDAQ 100 (QQQQ) - 16.8 (very oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 26.8 (oversold)
* Consumer Discretionary (XLY) - 21.7 (oversold)
* Health Care (XLV) - 27.5 (oversold)
* Financial (XLF) - 16.9 (very oversold)
* Energy (XLE) - 38.7 (neutral)
* Industrial (XLI) - 20.5 (oversold)
* Materials (XLB) - 22.6 (oversold)
* Real Estate (IYR) - 20.4 (oversold)
* Retail (RTH) - 26.1 (oversold)
* Utilities (XLU) - 38.5 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 24.9 (oversold)
* Ultra Short (SDS) - 72.2 (overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

850 continues to hold on the S&P

850 continues to hold on the S&P or $83.58 as seen on the SPY chart. I continue (for all the reasons given on yesterdays post) to believe we are headed higher over the short to intermediate-term. Yesterday’s post pretty much sums up my current sentiment so I really do not have much to say today.

I am currently watching the Nasdaq 100 (QQQQ) and XLF for potential short-term trades in our two extreme strategies. Subscribers, as always, I will send out a real-time trade alert if and when a trade occurs.

Until then, have a great night!

Andy

Overbought-Oversold levels for November 18, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 41.2 (neutral)
* Dow Jones (DIA) - 41.9 (neutral)
* Russell 2000 (IWM) - 32.4 (neutral)
* NASDAQ 100 (QQQQ) - 26.5 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 38.2 (neutral)
* Consumer Discretionary (XLY) - 30.7 (neutral)
* Health Care (XLV) - 39.5 (neutral)
* Financial (XLF) - 25.2 (oversold)
* Energy (XLE) - 49.7 (neutral)
* Industrial (XLI) - 32.3 (neutral)
* Materials (XLB) - 31.0 (neutral)
* Real Estate (IYR) - 29.8 (oversold)
* Retail (RTH) - 33.1 (neutral)
* Utilities (XLU) - 46.7 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 34.2 (neutral)
* Ultra Short (SDS) - 59.0 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Options Expiration begins in Lackluster Fashion

The week of options expiration started in a lackluster fashion. After trading lower at the open the market moved slightly into positive territory only to give the gains back during the final hour of trading.

The move today put the tech-heavy Nasdaq 100 (QQQQ) back into an oversold state and once again close to another signal in our ETF Extremes strategy.

On a seasonal nasis the week of options expiration during the month of November has averaged a gain of 1.2% since 1995.  Eleven of the last 13 years have finished the week in the black.

Furthermore, according to Jason Goepfert of Sentimentrader there have been 10 occasions when the S&P have closed Friday by 2% or lower and then proceeded to decline by an additional -0.5% the following Monday. Buying at the open on Monday and holding until Wednesday’s close resulted in 9 out of 10 winners with an average of 2.4%.

The aforementioned statistic coupled with a short-term oversold market and strong support around the 850 area on the S&P has increased the probability of a short-term bounce significantly.

We also have a capitulation day last Thursday that needs to be taken into account.

With all this being said, my intention is to continue to watch for short-term opportunities in the ETF and Sector ETF Extremes strategies over the next few days.

Have a great night!

Overbought-Oversold levels for November 17, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 34.1 (neutral)
* Dow Jones (DIA) - 35.7 (neutral)
* Russell 2000 (IWM) - 33.3 (neutral)
* NASDAQ 100 (QQQQ) - 26.7 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 40.7 (neutral)
* Consumer Discretionary (XLY) - 31.5 (neutral)
* Health Care (XLV) - 35.6 (neutral)
* Financial (XLF) - 26.7 (oversold)
* Energy (XLE) - 42.9 (neutral)
* Industrial (XLI) - 31.9 (neutral)
* Materials (XLB) - 32.9 (neutral)
* Real Estate (IYR) - 34.2 (neutral)
* Retail (RTH) - 32.0 (neutral)
* Utilities (XLU) - 51.2 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 32.8 (neutral)
* Ultra Short (SDS) - 62.8 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Overbought/Oversold Readings

Here are the overbought/oversold numbers as we head into the weekend. Next week brings options expiration and I think we could in store for a doozy. Anyway, I will save my commentary for the Weekend Report due out Sunday. 

Until then, have a wonderful weekend. Life is good!

Andy

Overbought-Oversold levels for November 14, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 36.6 (neutral)
* Dow Jones (DIA) - 38.7 (neutral)
* Russell 2000 (IWM) - 34.6 (neutral)
* NASDAQ 100 (QQQQ) - 31.6 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 45.2 (neutral)
* Consumer Discretionary (XLY) - 41.2 (neutral)
* Health Care (XLV) - 35.9 (neutral)
* Financial (XLF) - 34.1 (neutral)
* Energy (XLE) - 46.8 (neutral)
* Industrial (XLI) - 36.2 (neutral)
* Materials (XLB) - 36.2 (neutral)
* Real Estate (IYR) - 35.0 (neutral)
* Retail (RTH) - 36.2 (neutral)
* Utilities (XLU) - 51.9 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 36.3 (neutral)
* Ultra Short (SDS) - 56.8 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

Classic Washout - Where Now?

Could today be the intermediate-term low that we have all been seeking? It certainly felt like a day of capitulation. One thing is certain, what we did get was a fake breakdown. The futures pointed towards a breach of the October lows and after a brief rally (if you can call it that) the bears took control and moved the market decisively lower. The move lower lasted until around 1pm EST (after almost all stops were taken out, convenient eh?) and then quickly rallied to close near the highs of the day and the buying demand was legitimate as we moved past several important areas of overhead resistance.

The question is now, will this rally continue? If you have been reading my blog recently you certainly know my opinion. All of the intermediate-term indicators are pointing towards a rally that lasts until the New Year. Seasonality is very strong in the 4th quarter and the “big boys” need to finish the year on a strong note and believe me they have the power to do so. I will talk about the classic washout that occurred today in much greater detail in the upcoming Weekend Report. 

I do think that once we hit a short-term overbought state that we will see a short-term (1-3 day) pullback and that is exactly what I will be looking for in the ETF Extremes and the Sector ETF Extremes. 

Until then I will be patiently waiting on the sidelines.

Have a great night!

Overbought-Oversold levels for November 13, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 48.9 (neutral)
* Dow Jones (DIA) - 51.2 (neutral)
* Russell 2000 (IWM) - 49.4 (neutral)
* NASDAQ 100 (QQQQ) - 47.1 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 57.9 (neutral)
* Consumer Discretionary (XLY) - 45.0 (neutral)
* Health Care (XLV) - 57.6 (neutral)
* Financial (XLF) - 42.0 (neutral)
* Energy (XLE) - 55.1 (neutral)
* Industrial (XLI) - 47.2 (neutral)
* Materials (XLB) - 48.0 (neutral)
* Real Estate (IYR) - 47.4 (neutral)
* Retail (RTH) - 51.5 (neutral)
* Utilities (XLU) - 60.5 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) - 47.6 (neutral)
* Ultra Short (SDS) - 45.9 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies.

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