August 22, 2017

Higher-beta sectors in an overbought state. OIH bounces.

After a slow start the market managed to snap back again today. The higher-beta Nasdaq 100 (QQQQ) and Russell (IWM) led the way and finished near their respective highs for the day. The move pushed QQQQ into overbought territory and IWM further into a very overbought state. Typically, we see weakness over the short-term(1-5 days) when our indicators move into this type of extreme, but as we all know, in a momentum driven market the likelihood for a continued move to the upside is possible. This is why it is imperative to implement a stop-loss plan if you decide take a position at this juncture.

IWM has moved lower over the short-term (1-5 days) every time it has reached this level over the course of the last year. Hopefully, it will live up to the historical precedent once again. As we all know there are no certainties in trading, but we can certainly stack the odds in our favor if we stay diligent and patient with our strategies.

OIH bounced higher again today. As I reported yesterday, our indicators have been right on in predicting short-term bounces in the Oil Services sector. Many of you have taken advantage of the extreme situation that we have reported and have reaped handsome profits as a result. Congrats!

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 21, 2007

  • SPY – 71.4 (overbought)
  • DIA – 59.3 (neutral)
  • IWM – 84.8 (very overbought)
  • QQQQ – 77.1 (overbought)
  • OIH – 52.4 (oversold)
  • GLD – 71.0 (overbought)

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Have a great night!