June 26, 2017

Get ready bulls? Hmm….

Okay, where to start?

I guess I should start by pointing out that the Health Care sector (XLV) was able to sustain a short-term overbought reading over the last two days which, well, could lead to another leg higher for the overall market, at least over the short-term. I think if and when one or both of the aforementioned sectors hits a “very overbought” state we will see another short-term decline for the overall market.

Right now my I am seeing a short-term bias to the upside particularly for the NASDAQ 100 (QQQQ). As you can see (hopefully the chart is clear) or not, I am watching the $29.00 area (more specifically $29.25) as the first area of support in the QQQQ.

If that level does not hold, well, I think we might quickly see the tech-heavy benchmark move back down to the $27 area. Just look at how the Q’s have performed around the $27 level. It looks to be a very strong area of support.

Also, I would like to point out that we have reached another inflection point- the 50-day moving average.

The two other times that that it hit this area over the past year was right before the June earnings and the September earnings, both times it failed and failed miserably. Will the pattern continue? I will have more on how the market has performed after hitting the 50-day MA for the first time in over two months. Stay tuned!

I have been stating over the past few months that I expected to see a move to the upside through the New Year with another test of the recent lows as we enter the first month or two of 2009. My guess is that it will occur sooner than later, but only time will tell.

I will have more tomorrow on this subject plus a seasonal look at the next two weeks. Get ready bulls?

Overbought-Oversold levels for December 18, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 44.7 (neutral)
* Dow Jones (DIA) – 45.5 (neutral)
* Russell 2000 (IWM) – 60.8 (neutral)
* NASDAQ 100 (QQQQ) – 50.5 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 70.3 (overbought)
* Consumer Discretionary (XLY) – 53.4 (neutral)
* Health Care (XLV) – 74.0 (overbought)
* Financial (XLF) – 49.9 (neutral)
* Energy (XLE) – 36.9 (neutral)
* Industrial (XLI) – 45.5 (neutral)
* Materials (XLB) – 50.9 (neutral)
* Real Estate (IYR) – 51.1 (neutral)
* Retail (RTH) – 60.4 (neutral)
* Utilities (XLU) – 49.2 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) – 50.9 (neutral)
* Ultra Short (SDS) – 46.3 (neutral)

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