August 20, 2017

Energy, Brazil and Biotech

The Energy sector (XLE) came tumbling down today as the underlying XLE moved lower $2.06 and back into a neutral state. Those of you who were fortunate enough to step in today were rewarded handsomely. I will continue to inform subscribers’ on the Insiders page of the site of extremes that develop in the various ETFs I follow. I follow approximately 15-20 more ETFs on the Insiders page and hope to contonue to add more as the Insiders page evolves. Anyway, I digress…

Brazil (EWZ) still looks ripefor a fade with an overbought reading above 80 and a RSI (2) of 91.7. I would prefer to see the RSI (2) a little higher before placing a trade. Anothe test of the 85 level and I just might do that. I actually looked at it today, but the bid-ask spread for an at-the-money March or April option was $.30. I could probably shave $.20 off by placing the order $.10 below the ask, but that is still quite a hefty bid-ask spread to overcome.

The Biotechs (IBB) has actually pushed lower into an oversold state (near very oversold at 20.7), but the most telling part is the RSI (2). It is slightly above 2, and right in the wheelhouse. A move below 2 has a very high probability of a sohrt-term bounce to the upside. Again, I will be watching this one and informing subscribers’ my thoughts as the trading day progresses tomorrow on the Insiders page of the website.

All of the major indices are still in an neutral state, but are inching ever closer to an oversold state. I would love to see a retest of the recent lows. That type of move would certainly move the indices into an extreme oversold state and could (I almost hate to say it) trigger a signal in the ETF Extremes strategy.

Subscribers’ also check out the intraday note on the triangle set up that everyone (even on CNBC today) is following.

Overbought/Oversold for February 21, 2008

Major Benchmarks

  • Dow (DIA) – 44.7 (neutral)   
  • S&P (SPY) – 44.7 (neutral)
  • Russell 2000 (IWM) – 39.5 (neutral)
  • Nasdaq 100 (QQQQ) – 38.6 (neutral) 

more overbought/oversold levels on additional sectors found in the Insider’s page

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. 

Check out our Gap Fade strategy and ETF Extremes strategy! Learn the simplicity of four powerful options strategies in our newsletter including SPX and RUT Iron Condors.

If you want to an in-depth, step-by-step look at how we trade our strategies purchase our acclaimed E-Book! With your purchase you will receive Two Free Months of our investment newsletter plus unlimited access to our Insider’s page enabling you to follow our strategies as you learn. What do you have to lose? Join today!