July 21, 2017

Post Fed?

Oversold levels dominated the market coming into “fed day”, but I am never a fan of taking a position ahead of an event that can move the market against you (and your position) in a matter of seconds. In options trading such a quick move can be devastating to a position, which is why the risk/reward always prohibits me from placing a trade ahead of major market moving events.

Interestingly enough the DOW (DIA) and the Industrials (XLI) are still in an oversold state and with the post-fed reversal that typically occurs a day or two after the release we could see a short-term extreme reading in both of these ETFs over the coming days. My hope was to see a washout today so that I could place a few trades in our options extremes strategies, but the market just didn’t want to cooperate. Remember, opportunities are made up easier than losses.

Have a great night.

Andrew

Overbought/Oversold Levels for June 25, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 32.3 (neutral)
* Dow Jones (DIA) – 19.8 (oversold)
* Russell 2000 (IWM) – 37.3 (neutral)
* NASDAQ 100 (QQQQ) – 46.4 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 61.7 (neutral)
* Consumer Discretionary (XLY) – 34.6 (neutral)
* Health Care (XLV) – 58.1 (neutral)
* Financial (XLF) – 30.3 (neutral)
* Energy (XLE) – 49.3 (neutral)
* Industrial (XLI) – 21.8 (oversold)
* Materials (XLB) – 32.7 (neutral)
* Real Estate (IYR) – 35.7 (neutral)
* Retail (RTH) – 46.9 (neutral)
* Utilities (XLU) – 60.3 (neutral)

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