July 28, 2017

Biotech (IBB) trade successful. Will QQQQ continue the short-term move lower?

The market moved lower again today and as a result the major benchmark and sector ETFs that I follow are all in a neutral state.

Yesterday, I placed the following trade (posted yesterday) in the Biotech sector (IBB) due to the extreme overbought state that it had reached.

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The trade was the fourth in the PaperTrade Extremes strategy (Insiders Only) since its inception roughly one month ago. The short-term overbought/oversold indicators proved successful again today. The decline in IBB today (-$1.28) has left the Apr08 80 put worth roughly $5.50.

I held onto the trade for several reasons, one being the large unclosed gap in QQQQ that I have mentioned throughout the week. QQQQ moved decisively lower today and is now only slightly above the $43.10 area which was the high the prior trading day.

As always, I will post my exit of the trade once it occurs on the Insiders page so that you may take action if you are following me in real-time. Please be reminded that you may have to alter the price by approximately $.05 on occasion to ensure that an execution takes place. Anyway, I will let you know more in my Sunday evening post on the Insiders page.

As you can see from the trades below the PaperTrade Extremes strategy has done quite well. Like all of our strategies it doesn’t trade often, but as most professional traders will tell you the less you trade the better. Stay patient and be selective. This is the key to our success.

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Hopefully I can add another winner to the list above early next week. So far things look very good!

Overbought/Oversold for March 28, 2008

Major Benchmarks

  • Dow (DIA) – 42.9 (neutral)
  • S&P (SPY) – 43.5 (neutral)
  • Russell 2000 (IWM) – 47.2 (neutral)
  • Nasdaq 100 (QQQQ) – 47.5 (neutral)
  • Emerging Markets (EEM) – 51.0 (neutral)

more overbought/oversold levels on additional sectors found in the Insider’s page (Buy the White Paper and receive Two Months of the Insiders Page Free) – less than $1 a day.We work hard to bring you our latest views, opinions and research on a daily basis. If you are a loyal reader and find our thoughts useful please show us your support by joining our newsletter service.

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