July 21, 2017

Sector ETF Extremes Options Strategy Nearing a Trade?

The major benchmarks  remain in a neutral state. This week has seen the lowest volume of the year and I expect it to be much the same until about Wednesday of next week. Maybe then we can see an extreme hit one of the ETFs that I follow for my options strategies.

However, there could be an opportunity or two in the making in the Sector ETF Extremes Options Strategy. The Biotech sector ETF (IBB) has moved slightly in a short-term oversold state, so I will be watching how that ETF trades over the next few days. Although, the one I will be watching closely is the Utility sector ETF (XLU). It pushed higher and in to a short-term overbought state and best of all it tested and failed what seems to be an area of strong overhead resistance. Another test of that area (between $38.25-$38.50) and I think we could see a signal in the options strategy.

Again, the market, as Tim Knight stated today, seems to be in F.A.M. (farting around mode). One thing is for certain, it will not last for long. You can bet when the big boys get back from there two week hiatus that this market is going to move and move quickly. Add the end of the summer doldrums and we get see a nice, sharp trend going forward. Of course, I have no idea of the direction of the trend (although I am still leaning towards the bearish camp), but nonetheless, traders will appreciate some directional movement.

Enjoy the evening!


Overbought-Oversold levels for August 27, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 54.8 (neutral)
* Dow Jones (DIA) – 52.8 (neutral)
* Russell 2000 (IWM) – 51.4 (neutral)
* NASDAQ 100 (QQQQ) – 44.2 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 28.4 (oversold)
* Consumer Discretionary (XLY) – 49.4 (neutral)
* Health Care (XLV) – 41.4 (neutral)
* Financial (XLF) – 51.7 (neutral)
* Energy (XLE) – 67.3 (neutral)
* Industrial (XLI) – 46.5 (neutral)
* Materials (XLB) – 56.0 (neutral)
* Real Estate (IYR) – 49.2 (neutral)
* Retail (RTH) – 54.4 (neutral)
* Utilities (XLU) – 72.6 (overbought)

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