Living Up to Its Historical Billing

January 4, 2007 · Print This Article

Trading off of seasonal tendencies has been extremely challenging over the past few months. However, today, the 2nd trading day of year and consistently the most positive trading day of the year lived up to its historical billing. The tech heavy Nasdaq 100 (QQQQ) led the way today and almost all of the other sectors had problems keeping up. It would have been nice to see the S&P (SPY) and DIA (Dow) join the rally.

When investors show an interest in the higher-beta sectors it shows that they are willing to invest more higher-risk areas of the market and it is usually a positive going forward. Currently the Nasdaq 100 (QQQQ) sits at a precarious overbought state. There could be a short-term opportunity here, but I would first like to see the S&P (SPY) and Dow (DIA) move closer to an overbought state.

For those of you who come here daily for the oversold/overbought conditions within the major Etfs you will be happy to know that we are adding a stock-based strategy for our newsletter that takes advantage of these short-term opportunities. Much of the portfolio will be based on the successful trader Vaughn Okumura’s theories but with a Crowder twist. We are extremely excited about the potential of this strategy.

RSI Wilder (5) for January 4, 2007