August 17, 2017

Daily Short-Term, High-Probability, Mean Reversion Indicator

Short-Term, High-Probability, Mean Reversion Indicator – as of close 10/25

I hope that all of you find the following information useful in your trading endeavors. I will be back later with my daily market commentary.

After being deeply oversold on a short-term basis, Brazil (EWZ) bounced back today, and is now sitting comfortably in a neutral state. The ETF gained of $.70 or 0.92%. The at-the-money EWZ Dec10 76 puts had a net change today of $0.55 or 16.4%.

Even after today’s failed rally (considering the highs of the day), there are still a few ETFs that I am watching for a potential trade.

The QQQQ is an obvious one that I have added to my short-term watchlist. The tech-heavy index is on the border of being “very overbought” and has a decent RSI (2) rating above 93. I would prefer to see a higher number (greater than 95), but given how heavy the market currently feels I will be watching this one closely tomorrow.

The other is the Real Estate sector (IYR) as it has pushed into a “very overbought” state. The RSI (2) is not as high as I would like, but I will be watching this one closely nonetheless for a quick decline.

Benchmark ETFs

  • S&P 500 (SPY) – 69.2 (neutral)
  • Dow Jones (DIA) – 69.3 (neutral)
  • Russell 2000 (IWM) – 65.2 (neutral)
  • NASDAQ 100 (QQQQ) – 79.4 (overbought) / RSI(2) – 93.3

Sector ETFs

  • Biotech (IBB) –63.2 (neutral)
  • Consumer Discretionary (XLY) – 75.7 (overbought) / RSI (2) – 91.7
  • Health Care (XLV) – 68.2 (neutral)
  • Financial (XLF) – 45.7 (neutral)
  • Energy (XLE) – 68.6 (neutral)
  • Gold Miners (GDX) – 48.8 (neutral)
  • Industrial (XLI) – 67.9 (neutral)
  • Materials (XLB) – 66.8 (neutral)
  • Real Estate (IYR) – 80.3 (very overbought)  /RSI (2) – 87.8
  • Retail (RTH) – 66.8 (neutral)
  • Semiconductor (SMH) – 71.2 (overbought)
  • United States Oil Fund (USO) – 52.5 (neutral)
  • Utilities (XLU) – 39.8 (neutral)

International ETFs

  • Brazil (EWZ) – 36.8 (neutral)
  • China 25 (FXI) – 62.9 (neutral)
  • EAFE (EFA) – 60.3 (neutral)
  • South Korea (EWY) – 42.7 (neutral)

Commodity ETFs

  • Gold (GLD) – 52.9 (neutral)

Ultra Extremes

  • Small Cap Bear 3x (TZA) – 33.6(neutral)
  • Small-Cap Bull 3x (TNA) – 64.1 (neutral)
  • UltraLong QQQQ (QLD) – 78.1 (overbought)/RSI (2) – 92.1
  • Ultra Long S&P 500 (SSO) – 69.7 (neutral)
  • Ultra Short S&P 500 (SDS) – 29.8 (oversold)
  • UltraShort 20+ Treasury (TBT) – 51.6 (neutral)

I work hard to bring you my latest views, opinions and research on a daily basis. If you are a loyal reader and find my thoughts useful please show your support by joining my newsletter service.

Watch and learn firsthand how I implement my options strategies.

Kindest,

Andy Crowder (www.CrowderOptions.com)