August 22, 2017

Gap higher sucks in buyers and immediately sells-off

The gap higher today (on the heels of the Microsoft earnings report) was quickly sold-off, mostly due to the reasons I mentioned in the psiot yesterday. The gap higher pushed the market into a short-term overbought state as well as into strong overhead resistance. I would not be surprised to see the market test the recent lows over the coming days before attempting to move higher once again. One thing is for certain a sustained push lower will be detrimental to the market over the intermediate-term.

As expected, our short-term overbought levels wore off today with the decline. It looks as though a test of the recent lows will put us back in  an oversold state and again hoping that a signal is triggered in the ETF Extremes. I will be introducing a few new strategies over the coming weeks so stay tuned.

Have a wonderful and safe weekend!

Overbought/Oversold for January 25, 2008 

S&P (SPY) – 36.3 (neutral)

Russell 2000 (IWM) – 42.1  (neutral)

Dow (DIA) – 41.7 (neutral)

Nasdaq 100 (QQQQ) – 37.4 (neutral) 

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