July 28, 2017

Could we see a retest of the 1500 area in the S&P over the next 1-5 days?

As expected (per my post yesterday), after the huge rally earlier this week the market decided to take a pause today. I would not be surprised to see the 1500 level tested again before buyers step back in with conviction. Those who missed the rally the first time around want to get in and by the looks of it the 1500 area seems the most logical. TYpically the first move back towards a major breakout area, in this case the 1500 level in the S&P, is met with a bullish response. Those who missed the train want to make certain it doesn’t happen a second time.

With options expiration tomorrow, I expect to see a volatile day and would not be surprised to see the day finish flat. As I stated yesterday, the week after September triple witching has seen the Dow lower 13 out of the last 16 years and given the recent surge a short-term move lower is certainly not out of the question. Furthermore, September is notorious for having a weak close.

If you look below most of the sectors are still in an overbought to very overbought. This is just another reason why I expect to see the eventual retest of 1500 (or close to it) before the market begins an attempt towards the year-to-date highs. Who knows we could just roll over here and continue to descend, but given the recent bullishishness and the close proximity to YTD highs a move back to 1550 area in the S&P looks likely, especially after overbought conditions wear off.  

As for the Diagonal LEAPS Strategy – we have decided to discuss it in full with our paid subscribers in this weekends Expiration report/newsletter. We will bring you an abridged verion next week once we add the positions next Monday. So, those of you who are subscribers please make it a point to read the newsletter this weekend as there are going to be quite a few new additions to talk about, including the new and improved Insiders’ page and how to utilize it to enhance your trading.

Overbought/Oversold for September 20, 2007

S&P (SPY) – 69.2 (neutral)

Russell 2000 (IWM) – 65.9 (neutral)

Dow (DIA) – 76.7 (overbought)

Nasdaq 100 (QQQQ) – 69.6 (neutral)

Oil Services (OIH) – 85.8 (very overbought)

Newly added ETF’s (will follow in the Insiders’ page (subscriber’s only) starting 9/24)

Core Sector List

Financials (XLF) – 64.1 (neutral)

Energy (XLE) – 88.2 (very overbought)

Cons. Cyclicals (XLY) – 53.6 (neutral)

Technology (XLK) – 76.9 (overbought)

Health Care (XLV) – 76.7 (overbought)

Materials (XLB) – 83.2 (very overbought)

Industrials (XLI) – 68.1 (neutral)

Cons. Staples (XLP) – 80.5 (very overbought)

Telecom (TTH) – 78.4 (overbought)

Utilities (XLU) – 65.0 (neutral)

Gold (GLD) – 87.7 (very overbought)

International

FTSE/XINHUA China 25 (FXI) – 79.2 (overbought)

Latin America (ILF) – 70.7 (overbought)

MSCI EMU (EZU) – 76.5 (overbought)

Australia (EWA) – 75.1 (overbought)

India (INP) – 75.1 (very overbought)

Commodities

Natural Gas (UNG) – 55.4 (neutral)

Agriculture (DBA) – 89.3 (very overbought)

Base Metal (DBB) – 65.1 (neutral)

Energy (DBE) – 93.0 (very overbought)

Prec Metal (DBP) – 93.8 (very overbought)

Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.  

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Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com