More Short-term Oversold Readings

The decline today pushed the major benchmarks (DIA & SPY) back in a short-term oversold state. It also helped to push the consumer discretionary (XLY), financial (XLF), and retail (RTH) further in a short-term oversold state.

I still think the NASDAQ 100 (QQQQ) will see the gap close from 3/24. A move down to the $43.00 area could possibly witness an intermediate-term bottom, but that is highly speculative. Certainly a push to this level over the next few days would push the major indexes and sector I follow in a short-term oversold extreme and would most likely trigger a signal.

I want to see a capitulation or flush at this juncture, but it seems that everyone else is looking for this type of event as well. I will continue to wait patiently on the sidelines for a highly probable set-up to present itself and I think thy might be getting close. Options expiration is next week so I expect to see a highly volatile trading environment and possibly a busy one for my strategies. So far 2008 has been kind to the strategies so lets hope good fortune continues to come my way.

Have a great weekend!

Andy

Overbought/Oversold Levels for July 11, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) - 28.6 (oversold)
* Dow Jones (DIA) - 29.6 (oversold)
* Russell 2000 (IWM) – 46.2 (neutral)
* NASDAQ 100 (QQQQ) - 37.6 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 71.2 (neutral)
* Consumer Discretionary (XLY) – 20.7 (oversold)
* Health Care (XLV) - 51.8 (neutral)
* Financial (XLF) - 25.7 (oversold)
* Energy (XLE) – 39.6 (neutral)
* Industrial (XLI) – 41.9 (neutral)
* Materials (XLB) - 36.4 (neutral)
* Real Estate (IYR) – 42.1 (neutral)
* Retail (RTH) - 25.2 (oversold)
* Utilities (XLU) – 47.9 (neutral)

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