June 26, 2017

Market Due For Short-Term Reprieve

As you can plainly see from the “Overbought-Oversold” levels below, the market has moved into a short-term “very overbought” state. The Wilder RSI (2) reading for the Nasdaq 100 (QQQQ)  and Russell 2000 (IWM), as expected, has also moved into extreme territory. Both index ETFs have pushed above 99 which signals a short-term decline is right around the corner. The probability of such a move is overwhelmingly in the bears favor short-term, however, as we all know in trading there are no guarantees. Even so, when we have a reading this high, if you indeed trade extreme readings, well, it just doesn’t get much better than a set-up like this one.  A bearish move looks imminent.

I am still working on my book regarding Iron Condors and how to trade them effectively over the long-term so stay tuned!

Overbought-Oversold levels for September 15, 2009

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 83.6 (very overbought)
* Dow Jones (DIA) – 80.0  (very overbought)
* Russell 2000 (IWM) – 86.3 (very overbought)
* NASDAQ 100 (QQQQ) – 86.0 (very overbought)

Other ETFs

* Ultra Long (SSO) – 83.6 (very overbought)
* Ultra Short (SDS) – 16.9 (very oversold)