June 23, 2017

Post Expiration Weakness Again?

Post options expiration is historically a difficult time for the bulls and this time around is no different.

As I have stated the last two days, the week after September triple witching has seen the Dow lower 13 out of the last 16 years given the recent surge a short-term move lower is certainly not out of the question. Furthermore, September is notorious for having a weak close.

Typically the bulk of post expiration weakness occurs the day following options expiration, however, I think we could see more weakness as the week progresses particularly in the tech heavy sectors.

 Also, when looking at the Overbought/Oversold levels in the Commodities section below for the Agriculture (DBA) and Energy DBE) I expect to see some short-term weakness over the short-term (1-5 days). Both ETF’s have reached an extreme overbought state and the indicators are pegged.

As for our SPX Short Iron Condor strategy, we were able to make over 9% over a four week period. With implied volatility up in the SPX we were able to choose a 225 point range. Not bad over a four week period, expecially given the fact that the market vacillated so widely this past expiration period.

Have a wonderful weekend and subscribers look for the Expiration Report this weekend with the trading guidelines for our new Diagonal LEAPS strategy and a discussion on the new and improved Insider’s page.

Overbought/Oversold for September 21, 2007

S&P (SPY) – 65.5 (neutral)

Russell 2000 (IWM) – 67.2 (neutral)

Dow (DIA) – 77.8 (overbought)

Nasdaq 100 (QQQQ) – 75.0 (overbought)

Oil Services (OIH) – 88.7 (very overbought)

Newly added ETF’s (will follow in the Insiders’ page (subscriber’s only) starting 9/24)

Core Sector List

Financials (XLF) – 59.8 (neutral)

Energy (XLE) – 89.2 (very overbought)

Cons. Cyclicals (XLY) – 52.2 (neutral)

Technology (XLK) – 81.0 (very overbought)

Health Care (XLV) – 78.2 (overbought)

Materials (XLB) – 80.3 (very overbought)

Industrials (XLI) – 69.3 (neutral)

Cons. Staples (XLP) – 65.3 (neutral)

Telecom (TTH) – 83.6 (very overbought)

Utilities (XLU) – 56.8 (neutral)

Gold (GLD) – 76.4 (overbought)

International

FTSE/XINHUA China 25 (FXI) – 85.9 (very overbought)

Latin America (ILF) – 75.3 (overbought)

MSCI EMU (EZU) – 79.6 (overbought)

Australia (EWA) – 77.3 (overbought)

India (INP) – 81.7 (very overbought)

Commodities

Natural Gas (UNG) – 49.5 (neutral)

Agriculture (DBA) – 90.5 (very overbought)

Base Metal (DBB) – 56.1 (neutral)

Energy (DBE) – 92.9 (very overbought)

Prec Metal (DBP) – 85.5 (very overbought)

Okay, the plan is to follow a total of at least 25 major ETF’s is complete. Again, in the near future this list will only be available to subscribers to the newsletter/strategies on the Insiders’ page.  

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Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com