July 21, 2017

Retail Sector Hits Short-term Oversold State

Short post tonight.

First I would like to point out that the upside gaps in all of the major benchmark ETF that we follow here have officially closed. It looks like the historical tendencies lived up to their billing once again. Congrats to those of you who write in and stated handsome profits from the phenomenon. I don’t trade based solely on historical or seasonal tendencies, but with a near overbought reading and a large upside gap that went unclosed Friday the probability of a decline today increased substantially (as stated in my post from Sunday). Congrats again!

As always, I have updated daily overbought-oversold readings. The only ETF that is near an extreme is the retail sector ETF (RTH), but it still has a bit further to go before it hits an extreme.

My guess is that we eventually see a retest of the lows established next week. Uncertainty is rabid among traders and as we all know that does not bode well in most cases. Everyone wants to know that what happens after this last ditch effort from the government? What happens when short selling is allowed back on the street? One thing is certain, back in 1932 the halt on short selling led to a short-term bounce followed by a long deep decline. Will this be the fate of our current situation? Only time will tell. Either way, my options strategies should continue to out perform the market over the long-term.

Have a great night. Sorry about the short post, I will be back early tomorrow with a few interesting posts.


Overbought-Oversold levels for September 22, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 49.1 (neutral)
* Dow Jones (DIA) – 46.5 (neutral)
* Russell 2000 (IWM) – 50.3 (neutral)
* NASDAQ 100 (QQQQ) – 36.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 41.5 (neutral)
* Consumer Discretionary (XLY) – 33.2 (neutral)
* Health Care (XLV) – 32.7 (neutral)
* Financial (XLF) – 33.2 (neutral)
* Energy (XLE) – 670.3 (neutral)
* Industrial (XLI) – 40.2 (neutral)
* Materials (XLB) – 59.8 (neutral)
* Real Estate (IYR) – 41.5 (neutral)
* Retail (RTH) – 28.1 (oversold)
* Utilities (XLU) – 43.4 (neutral)

If you would like to follow my strategies with real-time alerts or have them auto-traded by a participating broker please click the following link! Try my options trading strategies. Remember, this is a marathon and not a sprint.