Patience equals success

The Materials sector (XLB) continued to lag today even with with an overall market advance. The “very oversold” status has me focused an a potential upcoming signal in the Sector ETF Extremes strategy. I would like to see the shorter-term overbought/oversold indicators, namely the RSI (2) move a bit lower before taking a position so I will patiently wait to see what the market offers me over the next few days.

We could also see a Gap Fade signal tomorrow in the QQQQ. The tech-heavy ETF closed $.14 shy of the high on the day so some positive news could push the futures and QQQQ well above this area. We will have to wait and see what happens.

As for the major benchmarks I trade in the ETF Extremes options strategy, well, all of them are back in a neutral state so I will once again sit on my hands until an opportunity presents itself.

Presently, I am unsure which way the market will take us over the short-term. Neutral readings only mean that I would be guessing at a short-term move. Fortunately, I have learned that I do not have to play the market on a daily basis. I take what the market offers and if my signals line up I pounce. The last trade in the ETF Extremes strategy was on 5/20 and I made 22.1% on the trade. Furthermore, with this slow and steady approach the options strategy has made gains in excess of 150% since its inception over two years ago.

If you have any questions or comments please do not hesitate to send me an email.

Happy trading!

Andy

Overbought/Oversold Levels for July 10, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) - 35.9 (neutral)
* Dow Jones (DIA) - 38.3 (neutral)
* Russell 2000 (IWM) - 41.6 (neutral)
* NASDAQ 100 (QQQQ) - 46.7 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) - 78.0 (neutral)
* Consumer Discretionary (XLY) - 24.9 (oversold)
* Health Care (XLV) - 74.6 (neutral)
* Financial (XLF) - 31.7 (neutral)
* Energy (XLE) - 39.6 (neutral)
* Industrial (XLI) - 41.9 (neutral)
* Materials (XLB) - 18.2 (very oversold)
* Real Estate (IYR) - 41.9 (neutral)
* Retail (RTH) - 31.8 (neutral)
* Utilities (XLU) - 41.9 (neutral)

If you would like to follow my strategies with real-time alerts or have them autotraded by a participating broker please click the following link: Try our strategies for a 30 day risk-free trial!