May 22, 2017

Archives for September 2013

From the Stratosphere to the Exosphere

The highly-anticipated FOMC meeting today left the bulls elated, while the bears once again hung their heads in shame. Roughly three days ago the major market indices started to move into short-term extremes overbought states. And after today's price action we are witness to some of the most short-term overbought states seen in years. Just look at the High-Probability, Mean-Reversion indicator below to see all of the very overbought readings in the ETFs I follow. Basically, only the commodity ETFs are in a neutral state and that's because they rallied hard after the announcement of no taper. But that was the case for everything...stocks, bonds, commodities...everything but the dollar and inverse ETFs moved substantially higher. It was … [Read more...]

Look Out Below? High-Probability, Mean-Reversion Indicator Extremes

Crowder Options: High-Probability, Mean-Reversion Indicator (9-17-13) As you can quickly see in the table below, all of the major indices are currently in a short-term, and let me emphasize one more time, short-term overbought to very overbought state. Typically, when we see this type of reading the underlying ETF experiences a short term reprieve. The one bullish sign is the fact that we are in a triple witching week. Historically, there has been a positive skew, so the bears will have a few obstacles in there way. However, given the overbought state in almost all of the ETFs we follow, combined with unclosed gaps below and strong overhead resistance the odds are currently with the bears, again for the short-term. One thing is … [Read more...]

Will Our Expectations Come to Fruition?

We all were witness the so-called Summer's Gap that occurred at the open this morning. Unfortunately, for the bulls, the short-term very overbought state was too much. All of the major indices sold off near the close. But wait, not all is lost. The Overbought/Oversold indicator indicates that we still have quite a few short-term extremes left in the market. The most notable are GLD and SDS on the oversold side of things. DIA and XLP reside in opposite territory as they are both firmly entrenched in a very overbought state. I put on a few trades today for my subscribers with one of the aforementioned ETFs included in the mix. It was just too good of a spot to ignore a trade...a gap higher into a short-term overbought state while … [Read more...]

The Week Ahead: 9/16 – 9/20

Larry Summers has decided to withdraw his name from the short list of potential Fed suitors. As a result, the market thinks the dovish Janet Yellen is next in line because the futures are way up after hours. I haven't had a trade on in the High-Probability, Mean-Reversion strategy , but that will change tomorrow. We should see a huge gap higher at the open which should act as a decent area to start selling some premium through the use of various credit spreads. As you can see from the chart below, the SPY is already in a short-term overbought state so a gap higher would certainly put it in an extreme state. Typically, when we see this type of reading a short-term reprieve is soon to follow which makes credit spreads a very good … [Read more...]