April 24, 2017

Archives for November 2010

Short-Term High-Probability, Mean-Reversion Indicator. Waiting Patiently on the Sidelines.

It was the second day of losses for the major indices, but the $117.50 - $118.00 level on the S&P 500 tracking ETF SPY has managed to keep the losses at a reasonable level. Since the gap down on the 16th, the major benchmark has muddled around this area without the bulls or bears showing much directional conviction. Interestingly enough, I placed my last trade on the 16th and I would imagine until this market shows some direction I will remain patiently on the sidelines. However, as we all know, the longer the market trades in a tight range the more apt it is for a strong directional move outside of the range. The problem is no one quite knows which direction the market is headed. There are a few more oversold readings in the … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Waiting for an Extreme.

As I stated before, the beginning of this week (Monday and Tuesday) are seasonally bearish. Typically, I do not trade based on seasonality, but I do like to pay attention to them as they often assist me when an ETF within my High-Probability, Mean-Reversion Indicator hits an extreme. Currently, there are only two ETF within my daily list that are oversold, Utilities and the European Union, and neither have moved into an extreme state. So, I am sitting idly by until an ETF that I follow within my strategy hits an extreme. It has been several weeks (Nov. 16th) since I have had a trade in the High-Probability, Mean-Reversion Strategy. However, as is usually the case , patience pays as the trade made 21.7%. Admittedly, it has been a … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Historical Seasonal Trend Holds True.

The seasonal bullishness that occurs the day before Thanksgiving held true again this year as the S&P advanced 1.5% on low volume. The day after Thanksgiving also is bullish, but as I mentioned in earlier posts the next two days, which would be Monday and Tuesday of next week, are overwhelmingly bullish on a seasonal basis. Currently, Retail (RTH) and Semiconductors (SMH) are the only two sectors that are displaying an overbought reading, but neither have an RSI (2) that is even above 90. Preferably I like to see a reading above 95 before I will seriously consider stepping into a trade in the High-Probability, Mean-Reversion Strategy. So, hopefully, Friday brings more of the same low-volume advance which is enough to push a few of … [Read more...]

Happy Thanksgiving!!!

I will be back later tomorrow for my daily High-Probability, Mean-Reversion Indicator. Stay tuned! … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. A Few Oversold ETFs, But No Extremes.

More uncertainty entered the market today. North and South Korea conflict, more allegations of insider trading and continued concerns plagued the market today and one has to wonder if this market can gain any ground as we move closer and closer to the 2011. Fortunately, I do not concern myself with these types of issues in my trading. The so-called noise does not concern me as much as when the ETFs I follow hit a short-term oversold/overbought extreme. The High-Probability, Mean-Reversion Indicator was once again successful in pointing out the short-term direction in overbought Retail sector (RTH) as well as the Semiconductors (SMH). After today's market-wide drubbing, several of the ETFs that I follow have moved into a short-term … [Read more...]

Short-Term High-Probability, Mean-Reversion Indicator. Semiconductors and Retail Overbought.

As I stated last week, the day after Thanksgiving is historically bearish. Well, for most of the day the historical tendency held true, but as the day progressed the bulls slowly chipped away at the losses and as a result, two out the four major indices (QQQQ and IWM) managed to close the day higher. Actually, quite a few of the ETFs I follow in my High-Probability, Mean-Reversion Strategy advanced today, but only two managed to reach a short-term overbought extreme: Retail (RTH) and Semiconductors (SMH). Both moved into a short-term overbought territory and the RSI (2) for both pushed above 95. As a result, both on currently on my radar, so subscribers stay tuned tomorrow as you could be receiving a trade alert at the beginning of the … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator. Weakness After Options Expiration?

Options expiration started out with a sharp decline at the open which I thought might just close the gap on SPY at $118.71. The ETF fell as low as $119.25 before rallying to close the end of the week at $120.29. Historically, the week after options expiration, particularly the trading day immediately following options expiration is quite bearish. While there is no true edge currently, at least according to my High-Probability, Mean-Reversion Indicator, I do think that history will once again repeat itself on Monday. I expect to see a close of the gap early next week and possibly a return to the declines that began on 11/08. The one thing that could keep this market afloat over the next week or so is the bullishness that surrounds the … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator. Back In a Short-Term Neutral State.

Some say that the news of a bailout in Ireland and the better-than-expected Philly Fed report were the reasons behind the surge today. Well, I do find it interesting that the sharp bounce came off of "very oversold" readings (as stated in my post yesterday) in the major market indexes. Also, interestingly enough, for some odd reason the indices managed to stop moving higher once the gaps were closed from 11/16. Sorry for the sarcasm, but this happens more often than not when we see these types of readings and yet, the talking heads mention nothing of the short-term extremes in the market. It amazes me! Oh well, I guess it is to our benefit right? The gap higher at the open eventually led to a close of the 11/16 gap in the S&P 500 … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator. The Dow Still “Very Oversold”. Short-Term Bounce?

Sorry for the late post. It has been a bit hectic around here as the emails keep coming. The response to my High-Probability, Mean-Reversion Strategy has been overwhelming and I just wanted to thank all of you for the continued support and kinds words. DIA and USO are both in extreme oversold states. As a result, I would expect to see a short-term bounce. I plan on taking advantage of this set-up if one or both open lower or flat tomorrow. I would prefer to see a lower reading in USO, but the RSI (2) is low enough to trigger a signal especially if the ETF opens up lower tomorrow. Unless something major happens overnight I would expect to see a higher open in both ETFs, as the futures are significantly higher as I am writing this … [Read more...]

Short-Term High-Probability, Mean Reversion Indicator. Can You Say, “OVERSOLD”? Also TBT and FXI Trade Update.

Today's plunge occurred on the back of  fears in Ireland and interest rate hikes in China. However, the sharp decline has left all of the major indices and quite a few of the ETFs I follow in an "oversold" to "very oversold" state. So, what exactly does that mean? Well, it means that the probability of a short-term bounce has increased dramatically. Just look a t the S&P (SPY) and Nasdaq 100 (QQQQ). Both have RSI (2) readings below 2 which is extremely rare. Typically, the S&P only reaches this low of a reading during a handful of days each year and almost every time the major market bounces back over the short-term (1-3 days). I expect to see much of the same this time around. However, I do feel like a short pop will turn into a … [Read more...]