Not All Trades Can be Winning Trades

Andrew Crowder — Thu, 04 Sep 2008 20:04:13 +0000

Yesterday, a signal was triggered in the Sector ETF Extremes Options Trading Strategy. The utility sector ETF (XLU) had pushed into an oversold state and was struggling to move lower as it had hit an area of support. As a result, the probability had shifted to a short-term move to the upside, but as we all know there are no certainties in trading. My intention was to keep the loss to roughly $.30 on the trade.

XLU continued to follow the path of the overall market throughout the trading day. NASDAQ futures and S&P futures were lower 50 and 40, respectively on the day. When my stop-loss was hit I decided to take prudent action and remove the trade for the $.30 loss. You can check out the trade details on the performance page.As I always say, if any options strategy or trading strategy for that matter is to succeed over the long-term, money management and strict stop-loss guidelines must be a priority. You can see how I have lived up to this theory in the performance of the ETF Extremes Options Strategy over the last 2 1/2 years. Of course there have been losing trades in the strategy, but the overall return has been outstanding. By staying disciplined and keeping losses to a minimum, the strategy has made over 160% (with my monthly fees and commissions included) since it was initiated back in April 2006.

I certainly have the same expectations for my Sector ETF Extremes strategy as well. While nothing is guaranteed in trading, one thing is certain I will always stick to a strict money management guideline. Losses will happen. There is no holy grail in trading. As William Schreyer stated,

“Life wasn’t designed to be risk-free. The key is not to eliminate risk, but to estimate it accurately and manage it wisely.”

I trade by this mantra and believe me it works. Losses are how we learn. Winning trades are easy. Losing trades test our conviction to our stated guidelines.

I can’t begin to tell you how many traders and other so-called newsletter services hold on to positions for entirely too long in hopes that the trade will turn around. This is a disaster waiting to happen and has led to several strategies, hedge funds and the like blowing up. It is not an unacceptable way to trade and should not be tolerated by any service or fund that you are a member of.

So far the life of the Sector ETF Extremes Options Trading Strategy has only consisted of two trades. As with all my trades they are long-term endeavors and should be viewed this way. I patiently wait for extremes to hit the market and pounce on opportunities when probability is overwhelmingly in my favor. In most cases it works, but with all probabilities there is always a chance for failure. It is an accepted part of trading and if it is not, then you should probably not be in the profession because again losses will occur, that is the only guarantee in trading.

As for the current state of the market, well, quite a large number of sectors are oversold to very oversold, which could trigger another signal in the Sector ETF Extremes Options Strategy over the next day or so. Furthermore, the major benchmarks, most notable the NASDAQ 100 ETF, QQQQ, has pushed into a short-term very oversold state so I will be watching this closely over the coming days.

Also, the always highly anticipated Unemployment Report is out tomorrow which could cause a gap tomorrow and lead to a trade in the Gap Fade Options Strategy. It has been quite some time, but as always I will continue to wait patiently for a signal. What is the hurry right? The strategy has proven successful over the long-term and so have all the backtests. Hopefully, we see a signal tomorrow. Cross your fingers.

Have a great night and please do not hesitate to email me with any questions that you might have.

Andy

Overbought-Oversold levels for September 4, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 23.8 (oversold)
* Dow Jones (DIA) - 29.7 (oversold)
* Russell 2000 (IWM) - 33.2 (neutral)
* NASDAQ 100 (QQQQ) - 13.6 (very oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 27.3 (oversold)
* Consumer Discretionary (XLY) - 43.5 (neutral)
* Health Care (XLV) - 24.1 (oversold)
* Financial (XLF) - 48.0 (neutral)
* Energy (XLE) - 21.9 (oversold)
* Industrial (XLI) - 22.3 (oversold)
* Materials (XLB) - 17.5 (very oversold)
* Real Estate (IYR) - 46.2 (neutral)
* Retail (RTH) - 50.0 (neutral)
* Utilities (XLU) - 18.5 (very oversold)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

Short-term Extremes are Back. Will the Options Strategies Benefit?

Andrew Crowder — Wed, 03 Sep 2008 20:44:50 +0000

Well, the time has come again. A signal was triggered in Sector ETF Extremes Options Trading Strategy around mid-day. To be fair to my loyal paying subscribers I will discuss the details on the blog only after the trade is closed. Hopefully, I will have some good news to discuss tomorrow.

As for the current short-term state of the market, well, we are finally seeing some short-term extremes enter the market. The NASDAQ 100 (QQQQ) in our ETF Extremes Options Strategy has moved into a short-term oversold state, while several of the ETF options in our Sector ETF Extremes Options Strategy have pushed into both oversold and overbought territory.

I would like to provide some interesting glimpse or tidbit into the current state of the market, but I really have nothing at the moment other than my simple proprietary overbought-oversold indicators screaming short-term extremes in several of the ETFs I follow for the strategies. In most cases, this is the only info I need to trade successfully. I live by the mantra, Keep It Simple Stupid, and so far the strategies I follow have proved the KISS theory effective. Why do I want to make the my trading more complicated than it needs to be? I can’t begin to tell you how many traders I know that have come and gone because they overwhelm themselves with trying to understand numerous technical strategies and trading methods. Fortunately, I have found a few simple options strategies that have proved effective over the long-term. Don’t believe me, check out the performance located on the home page of the website, particularly the ETF Extremes strategy. I hate to keep repeating this but, the performance speaks for itself!

Overbought-Oversold levels for September 3, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 44.4 (neutral)
* Dow Jones (DIA) - 52.8 (neutral)
* Russell 2000 (IWM) - 60.5 (neutral)
* NASDAQ 100 (QQQQ) - 22.1 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 46.1 (neutral)
* Consumer Discretionary (XLY) - 68.2 (neutral)
* Health Care (XLV) - 44.4 (neutral)
* Financial (XLF) - 75.5 (overbought)
* Energy (XLE) - 26.9 (oversold)
* Industrial (XLI) - 44.6 (neutral)
* Materials (XLB) - 31.0 (neutral)
* Real Estate (IYR) - 71.3 (overbought)
* Retail (RTH) - 72.4 (overbought)
* Utilities (XLU) - 23.4 (oversold)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

September is Historically Weak - Overbought-Oversold Extremes

Andrew Crowder — Tue, 02 Sep 2008 22:32:29 +0000

Seasonal Info

The seasonal bearish bias held true once again this year and now the question is will September live up to its historically bearish ways.

September has been notably weak over the past 60 years. The average return is the worst of all the calendar months, -0.67%. It is one of only two months with an overall negative return.

Current Short-Term Reading

A few of the sectors we follow have officially moved into a short-term extreme state. Furthermore, we are seeing some short-term weakness in the NASDAQ 100 (QQQQ) as it is closing in on a short-term extreme state as well. A moderate decline tomorrow will certainly trigger a few signals in our options strategies, namely the Sector ETF Extremes Options Strategy and the ETF Extremes Options Strategy. Hopefully tomorrow brings us and our options strategies good fortune.

Until then have a great night!

Andy

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 44.9 (neutral)
* Dow Jones (DIA) - 49.1 (neutral)
* Russell 2000 (IWM) - 56.5 (neutral)
* NASDAQ 100 (QQQQ) - 26.6 (oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 30.5 (neutral)
* Consumer Discretionary (XLY) - 65.6 (neutral)
* Health Care (XLV) - 34.5 (neutral)
* Financial (XLF) - 71.3 (overbought)
* Energy (XLE) - 28.0 (oversold)
* Industrial (XLI) - 64.6 (neutral)
* Materials (XLB) - 35.4 (neutral)
* Real Estate (IYR) - 65.0 (neutral)
* Retail (RTH) - 68.9 (neutral)
* Utilities (XLU) - 34.1 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

Seasonal Tendencies - What Are They Telling Us?

Andrew Crowder — Thu, 28 Aug 2008 23:22:29 +0000

Will the market experience the seasonally bullish that typically occurs on the trading day prior to the Labor Day holiday? The market has already witnessed three straight days of advances and some of my shorter-term proprietary overbought-oversold indicators have pushed near extremes, so probability says a short-term reprieve is near. However, it must be noted that over 76% of the trading days prior to the Labor Day holiday weekend have been higher with an average return of over 0.4% since 1950.

One other note of interest is the fact that when the S&P 500 (SPY) has advanced two days prior to a 0.5% gap higher (like it did today), the S&P, when in a bear market, was higher approximately 23% of the time the following day.

I will be back with a seasonal take on September tomorrow. Stay tuned!

As for my options strategies, the Sector ETF Extremes Options Trading Strategy is very close to a signal. We could see one as early as tomorrow so subscribers, as always, I will send out a real-time trade alert if and when a trade occurs. For those of you who autotrade, well, you have no worries. Hopefully you can just enjoy the gains, that is of course if all goes as well as planned.

Interested in how our flagship strategy, the ETF Extremes Options Strategy, has performed since it was initiated well over 2 years ago (with commissions and our monthly fees included) click here:

http://www.crowderoptions.com/another-successful-etf-extremes-trade-sample-allocation-important-please-read/

Overbought-Oversold levels for August 28, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 65.6 (neutral)
* Dow Jones (DIA) - 67.8 (neutral)
* Russell 2000 (IWM) - 66.1 (neutral)
* NASDAQ 100 (QQQQ) - 54.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 45.6 (neutral)
* Consumer Discretionary (XLY) - 64.2 (neutral)
* Health Care (XLV) - 51.5 (neutral)
* Financial (XLF) - 66.1 (neutral)
* Energy (XLE) - 54.7 (neutral)
* Industrial (XLI) - 67.9 (neutral)
* Materials (XLB) - 68.0 (neutral)
* Real Estate (IYR) - 67.8 (neutral)
* Retail (RTH) - 65.4 (neutral)
* Utilities (XLU) - 74.0 (overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

Sector ETF Extremes Options Strategy Nearing a Trade?

Andrew Crowder — Thu, 28 Aug 2008 00:25:09 +0000

The major benchmarks remain in a neutral state. This week has seen the lowest volume of the year and I expect it to be much the same until about Wednesday of next week. Maybe then we can see an extreme hit one of the ETFs that I follow for my options strategies.

However, there could be an opportunity or two in the making in the Sector ETF Extremes Options Strategy. The Biotech sector ETF (IBB) has moved slightly in a short-term oversold state, so I will be watching how that ETF trades over the next few days. Although, the one I will be watching closely is the Utility sector ETF (XLU). It pushed higher and in to a short-term overbought state and best of all it tested and failed what seems to be an area of strong overhead resistance. Another test of that area (between $38.25-$38.50) and I think we could see a signal in the options strategy.

Again, the market, as Tim Knight stated today, seems to be in F.A.M. (farting around mode). One thing is for certain, it will not last for long. You can bet when the big boys get back from there two week hiatus that this market is going to move and move quickly. Add the end of the summer doldrums and we get see a nice, sharp trend going forward. Of course, I have no idea of the direction of the trend (although I am still leaning towards the bearish camp), but nonetheless, traders will appreciate some directional movement.

Enjoy the evening!

Andy

Overbought-Oversold levels for August 27, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 54.8 (neutral)
* Dow Jones (DIA) - 52.8 (neutral)
* Russell 2000 (IWM) - 51.4 (neutral)
* NASDAQ 100 (QQQQ) - 44.2 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 28.4 (oversold)
* Consumer Discretionary (XLY) - 49.4 (neutral)
* Health Care (XLV) - 41.4 (neutral)
* Financial (XLF) - 51.7 (neutral)
* Energy (XLE) - 67.3 (neutral)
* Industrial (XLI) - 46.5 (neutral)
* Materials (XLB) - 56.0 (neutral)
* Real Estate (IYR) - 49.2 (neutral)
* Retail (RTH) - 54.4 (neutral)
* Utilities (XLU) - 72.6 (overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

More of the same - Options Strategies Patiently Wait for a Signal

Andrew Crowder — Wed, 27 Aug 2008 00:15:07 +0000

Not much to say today as all of the major benchmarks and sectors I follow for my options trading strategies remain in a neutral state. My hope is that we see another sharp decline over the next two days that pushes the ETFs I follow back in an oversold state. If this occurs before the seasonal bullishness that historically occurs the day before Labor Day then we might see a signal in both of the Extreme Options Strategies. Might I add that I would not mind a gap lower over the next few days as well. It has been a while since the market has witnessed a gap lower, (or higher for that matter) and the Gap Fade Options Strategy would love an opportunity to take a position. If only Mr. Market would cooperate.

Anyway, here are a few quality charts by my favorite chartist, Tim Knight. Enjoy!

As always, have a wonderful evening,

Andy

Overbought-Oversold levels for August 26, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 43.5 (neutral)
* Dow Jones (DIA) - 43.6 (neutral)
* Russell 2000 (IWM) - 39.1 (neutral)
* NASDAQ 100 (QQQQ) - 34.5 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 35.2 (neutral)
* Consumer Discretionary (XLY) - 47.2 (neutral)
* Health Care (XLV) - 38.7 (neutral)
* Financial (XLF) - 42.7 (neutral)
* Energy (XLE) - 60.9 (neutral)
* Industrial (XLI) - 42.5 (neutral)
* Materials (XLB) - 41.9 (neutral)
* Real Estate (IYR) - 41.9 (neutral)
* Retail (RTH) - 52.8 (neutral)
* Utilities (XLU) - 52.1 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

Patience is the Key to Options Trading (at least at CrowderOptions.com)

Andrew Crowder — Mon, 25 Aug 2008 21:27:49 +0000

Just a few short snippets today and not much else.

Well, the losses today wiped out the gains from late last week. I guess one encouraging statistic is that in past when the S&P declined this sharply on a Monday the return over the next three trading days was positive but only slightly. So, given the recent price action and the fact that we are in a bear market I will not hold my breath. I still think the July lows will eventually be tested and possibly breached, but that is pure speculation and more of an intermediate-term outlook. My true focus and the focus of my options strategies is to find extremes in the market. Lately the major benchmarks and the sectors I follow just want to sit in a neutral state. That is fine, extremes will hit the market as they always do and I will be waiting patiently to jump on those opportunities when the arise. Remember, patience is the key for long-term success in options trading. My performance speaks for itself. Just check out the 2+ year track record for the ETF Extremes Options Strategy.

The NASDAQ 100 closed near the low the trading day so we could see a gap opportunity in the Gap Fade Options Strategy. I would love to see signal that is for certain.

Will the S&P hold above the 1260 low from last week. If not keep a close eye on 1250 because a breach and hold below that area could spell trouble and a retest of the July 15th low. Sorry Cramer.

Have a great night!

Andy

Overbought-Oversold levels for August 25, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 40.0 (neutral)
* Dow Jones (DIA) - 37.5 (neutral)
* Russell 2000 (IWM) - 41.4 (neutral)
* NASDAQ 100 (QQQQ) - 35.6 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 30.9 (neutral)
* Consumer Discretionary (XLY) - 41.9 (neutral)
* Health Care (XLV) - 39.9 (neutral)
* Financial (XLF) - 38.9 (neutral)
* Energy (XLE) - 51.4 (neutral)
* Industrial (XLI) - 40.2 (neutral)
* Materials (XLB) - 38.9 (neutral)
* Real Estate (IYR) - 35.7 (neutral)
* Retail (RTH) - 46.5 (neutral)
* Utilities (XLU) - 52.1 (overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

Pre-Market Trading Thoughts

Andrew Crowder — Mon, 25 Aug 2008 02:53:32 +0000

Below are the overbought-oversold numbers from last Friday. All of the major benchmarks and sectors I follow for the options strategies we trade (other than the Utilities Sector (XLU)) remain in a neutral state.

As I stated recently,

over the last eleven years, seven have witnessed significant declines in the major market benchmark S&P 500 (SPY) during the final five trading days of August. The S&P has lost on average -2.6% during that short time frame. Will it occur again this year? No one knows for certain, but if we are able to hold the current overbought levels or sell-off near-term and rally back to overbought levels as we enter the seasonally weak period at the end of August I would expect to see probability win out once again.

The market has since moved back to a neutral state, but a push early Monday could lead to a trade in the ETF Extremes Options Strategy. Furthermore, I am watching the XLU for a Sector ETF Extremes Options Strategy. My hope is that we get a few trades off this week, but as all of my loyal readers know I allow the signals to come to me and never force a trade. Patience, patience, patience. Remember, opportunities are made up easier than losses.

See ya bright and early!

Overbought-Oversold levels for August 22, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 62.5 (neutral)
* Dow Jones (DIA) - 54.5 (neutral)
* Russell 2000 (IWM) - 57.5 (neutral)
* NASDAQ 100 (QQQQ) - 63.2 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 40.5 (neutral)
* Consumer Discretionary (XLY) - 58.3 (neutral)
* Health Care (XLV) - 59.7 (neutral)
* Financial (XLF) - 40.2 (neutral)
* Energy (XLE) - 58.8 (neutral)
* Industrial (XLI) - 65.4 (neutral)
* Materials (XLB) - 47.7 (neutral)
* Real Estate (IYR) - 47.7 (neutral)
* Retail (RTH) - 64.8 (neutral)
* Utilities (XLU) - 76.7 (overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

A Few Sectors Moving Near Extremes

Andrew Crowder — Thu, 21 Aug 2008 22:32:42 +0000

Finally, a few of the sectors I follow for the Sector ETF Extremes Options Strategy have pushed near an extreme state. Our last signal was on 7/23 when we made roughly 9.8% on an XLF trade. Since then I have been waiting patiently for a set up and now another one might be coming to fruition.

Real Estate (IYR) , Energy (XLE) and Utilities (XLU) are currently on my radar after today’s trading session. If all goes well we will hit an extreme in one or more of those sectors over the next couple days.

As for the Gap Fade optoins strategy, we came close to a trade today, but the NASDAQ 100 (QQQQ) only gapped down by $.01 and quickly closed at the open so no trade occurred. The last month has been rather stagnant for gaps in the QQQ’s, but as well all know that can change quickly.

Remember what I went over last week. The last 5 trading days of August are rather weak so as we approach the last days of August pay attention to where the major benchmarks and sector ETFs are trading. I will be looking for potential trade in anything that is overbought at that time. As always I will keep you all posted of my thoughts when the time comes. Stay tuned.

Enjoy the sunshine. It is finally here in VT, thankfully.

Have a wonderful night!

Andy

Overbought-Oversold levels for August 21, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 45.1 (neutral)
* Dow Jones (DIA) - 40.0 (neutral)
* Russell 2000 (IWM) - 56.3 (neutral)
* NASDAQ 100 (QQQQ) - 38.7 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 27.8 (oversold)
* Consumer Discretionary (XLY) - 44.4 (neutral)
* Health Care (XLV) - 40.7 (neutral)
* Financial (XLF) - 33.8 (neutral)
* Energy (XLE) - 74.4 (overbought)
* Industrial (XLI) - 35.3 (neutral)
* Materials (XLB) - 66.2 (neutral)
* Real Estate (IYR) - 28.2 (oversold)
* Retail (RTH) - 52.4 (neutral)
* Utilities (XLU) - 72.8 (overbought)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!

High-Beta Index Clinging to Support Level

Andrew Crowder — Thu, 21 Aug 2008 00:35:37 +0000

The NASDAQ 100 (QQQQ) just can’t rally off what seems to be a strong support level at $47.00. While the index is firmly in a neutral state (so there isn’t a true bullish or bearish edge). We have been trading in a fairly tight range over the last two trading days so I would expect to see something give very soon. A push to the downside could trigger a few signals, but only if we can get an oversold reading. It has been quite some time since every index and sector ETF I follow for the options strategies have held in a neutral state. In the past when this type of event occurs (or should I say non-event) a sharp move typically follows. Until then, as always, I will be patiently waiting on the sidelines for a signal to occur in one of our options strategies.

Have a wonderful night!

Andy

Overbought-Oversold levels for August 20, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) - 42.6 (neutral)
* Dow Jones (DIA) - 40.3 (neutral)
* Russell 2000 (IWM) - 39.8 (neutral)
* NASDAQ 100 (QQQQ) - 40.3 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 33.9 (neutral)
* Consumer Discretionary (XLY) - 37.9 (neutral)
* Health Care (XLV) - 40.7 (neutral)
* Financial (XLF) - 39.3 (neutral)
* Energy (XLE) - 66.9 (neutral)
* Industrial (XLI) - 31.9 (neutral)
* Materials (XLB) - 59.1 (neutral)
* Real Estate (IYR) - 34.5 (neutral)
* Retail (RTH) - 45.1 (neutral)
* Utilities (XLU) - 60.2 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try our strategies for a 30 day risk-free trial!