August 24, 2017

Market Rallies Off Lows. Possible Short-term Rally Ahead?

It was a wild day for the market and traders alike. The market (Dow) staged a late day rally to close down 22 points after a plunge of 292 points at the open. Best of all, the major indices (DIA, QQQQ, SPY and IWM) are still in a short-term oversold state which means that the probability of a continued short-term bullish run is better than average. I am looking for a close in the gap from 5/20 in all of the indices mentioned.

I currently have positions in USO and IWM, as well as a mid-day purchase of GDX. Here is the trade from my TOS account:

GDX Trade

I also added another IWM position to the mix:

IWM Trade

Both trades did extremely well today. The GDX trae is currently higher 35.3% or $.71 and the IWM trade is up 26.1% or $.52. However, my USO position is still underwater as well as my other IWM trade. I still expect a move to the upside to close the gap from 5/20 so if this does indeed occur I could reap quite the profit for the portfolio. As I stated before the major indices remain in a short-term oversold state so the probability of a move higher looks likely based the historical oversold/overbought precedents I follow.