August 19, 2017

Oversold to Very Oversold – Ready for a short-term bounce?

Another trend day lower.

Well, the 850 level on the S&P was taken out early in the trading day and as result the ES (S&P futures) moved swiftly lower throughout the day to finally close at 811. The decline has pushed the major market benchmark back into a short-term oversold state. Moreover, it has pushed the tech-heavy Nasdaq 100 (QQQQ) back into a short-term “very oversold” state.

Depending on how the market reacts at the open we could see a few trades in both of our Extremes strategies. There are a plethora of oversold to very oversold readings in the sectors so I will try and sift through a few tonight to see where the best opportunities are for a short-term trade. Of course, that is if a trade does indeed occur.

The strategies, particularly the ETF Extremes have performed wonderfully (check out the performance page) during the entirety of this bear market and I expect to see similar results going forward, especially with the strict stop-loss guidelines that we have in place. Remember, risk management is the key to long-term success. I can’t tell you how many professional traders/RIAs/newsletters that have neglected to use this all important technique and as result everyone involved has suffered.

It is times like these that prove the worth of a trader/RIA/newsletter and as I have stated repeatedly over the past year, our performance speaks for itself.

Again, I only care about taking calculated risks based on high-probability setups. Furthermore, I always, and I want to stress always, know that even though the probability of a trade looks favorable that losses can indeed occur. It is a necessary part of trading. This is why I keep my losses to a minimum and again that is displayed on the performance page of the website.

If you have any questions please do not hesitate to email me.

Kindest regards,


Overbought-Oversold levels for November 19, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 27.9 (neutral)
* Dow Jones (DIA) – 31.3 (neutral)
* Russell 2000 (IWM) – 20.9 (neutral)
* NASDAQ 100 (QQQQ) – 16.8 (very oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 26.8 (oversold)
* Consumer Discretionary (XLY) – 21.7 (oversold)
* Health Care (XLV) – 27.5 (oversold)
* Financial (XLF) – 16.9 (very oversold)
* Energy (XLE) – 38.7 (neutral)
* Industrial (XLI) – 20.5 (oversold)
* Materials (XLB) – 22.6 (oversold)
* Real Estate (IYR) – 20.4 (oversold)
* Retail (RTH) – 26.1 (oversold)
* Utilities (XLU) – 38.5 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) – 24.9 (oversold)
* Ultra Short (SDS) – 72.2 (overbought)

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