August 20, 2017

Dow is “Very Overbought” Ahead of Historical Post-Expiration Weakness

Not much has changed since my post on Thursday. I stated yesterday that if the large-cap Dow and S&P “can somehow manage to stay in an “overbought” state or preferably moving back into a “very overbought” state tomorrow then a short-term reprieve in the Dow (DIA) looks likely during the early past of next week. Remember, historically if the market is overbought as the market moves into the week of post options expiration a decent short opportunity  is usually found.

Our SPX Short Iron Condor strategy settled within our 140 point range today. The strategy reaped a 7.5% profit for the expiration period. Yesterday I presented several reasons why a short iron condor strategy looks attractive during the “sell in May and go away” period. I typically like to take a neutral stance with a 140 point range which allows for a 70 point movement on both sides in the SPX. This means SPX can move roughly 4.5% to the upside/downside over the next four weeks before the strategy fails.

I hope all of you have a wonderful weekend and if you are interested in learning about our strategies in depth please purchase our White Paper. It will give you all the details necessary to trade our strategies effectively.

Overbought/Oversold levels for May 18, 2007

  • SPY –  75.8 (overbought)
  • DIA – 82.6 (very overbought)
  • IWM – 52.5 (neutral)
  • QQQQ – 58.8 (neutral)
  • GLD –  35.3 (oversold)
  • OIH – 87.4 (very overbought)

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Have a great night!