June 26, 2017

A Reversal Looks Imminent

Is the rally over? Or will we see a continuation of the current rally?

If you believe in mean-reversion, it’s hard to deny the overbought extremes that currently reside in the market.

Just look at the SPY chart below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As you can clearly see, over every time frame the major market benchmark has reached an extreme overbought state. If the SPY chart isn’t enough evidence to at least make you question the sustainability of the current rally, just take a look at the VXX chart.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Again, you can see that implied volatility is at a short to intermediate-term oversold extreme…and as most of you know, when we see this type of set-up a reversal is typically on the horizon. I expect to see much of the same this time around.

However, I do realize that my assumptions could be completely wrong. Remember, there are no certainties in investing…which is why I choose to use strategies with a statistical advantage. As I always say, it’s all about the probabilities.

I will explain how I approach this type of set-up in the market in greater detail in my upcoming issue of Vertically-Inclined.

Until then, if you haven’t, join my Twitter feed or Facebook.

Also, I have officially opened up my strategies to the public. The response has been overwhelming but I still have a few seats left. If you are a believer in a statistical approach towards investing please do not hesitate to try one of my options strategies. I use simple mean-reversion and probabilities for each and every trade. Give it a try, it’s free for 30 days.

Kindest,

Andrew