August 24, 2017

Pre-Market Trading Thoughts

Below are the overbought-oversold numbers from last Friday. All of the major benchmarks and sectors I follow for the options strategies we trade (other than the Utilities Sector (XLU)) remain in a neutral state.

As I stated recently,

over the last eleven years, seven have witnessed significant declines in the major market benchmark S&P 500 (SPY) during the final five trading days of August. The S&P has lost on average -2.6% during that short time frame. Will it occur again this year? No one knows for certain, but if we are able to hold the current overbought levels or sell-off near-term and rally back to overbought levels as we enter the seasonally weak period at the end of August I would expect to see probability win out once again.

The market has since moved back to a neutral state, but a push early Monday could lead to a trade in the ETF Extremes Options Strategy. Furthermore, I am watching the XLU for a Sector ETF Extremes Options Strategy. My hope is that we get a few trades off this week, but as all of my loyal readers know I allow the signals to come to me and never force a trade. Patience, patience, patience. Remember, opportunities are made up easier than losses.

See ya bright and early!

Overbought-Oversold levels for August 22, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 62.5 (neutral)
* Dow Jones (DIA) – 54.5 (neutral)
* Russell 2000 (IWM) – 57.5 (neutral)
* NASDAQ 100 (QQQQ) – 63.2 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 40.5 (neutral)
* Consumer Discretionary (XLY) – 58.3 (neutral)
* Health Care (XLV) – 59.7 (neutral)
* Financial (XLF) – 40.2 (neutral)
* Energy (XLE) – 58.8 (neutral)
* Industrial (XLI) – 65.4 (neutral)
* Materials (XLB) – 47.7 (neutral)
* Real Estate (IYR) – 47.7 (neutral)
* Retail (RTH) – 64.8 (neutral)
* Utilities (XLU) – 76.7 (overbought)

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