August 20, 2017

Short-term bearish signals lining up

Volume was extremely slow today due to the upcoming market holiday. As a result the major indices traded in a fairly tight range. My guess is that volume should pick up tomorrow morning and taper off as the day progresses.

I mentioned yesterday how the days surrounding President’s Day overwhelmingly negative on a historical basis. I think this warrants some attention as the S&P, Dow, and Nasdaq 100 all sit in an overbought state. Moreover, the VIX is back down to 10 which in the recent past has triggered a quick sell-off. Also, don’t forget the seasonal weakness that typically occurs the day following options expiration. It is certainly worth looking a short-term play and if we get continue to trade at this current level tomorrow or move higher I might be tempted to take a position late in the day.

It is always tricky to trade on options expiration especially going into an extended weekend. Historically, the range during options expiration is fairly tight with a slight edge to the upside. I would love to see history repeat itself tomorrow.

One additional note, it looks as if our Iron Condor will once again expire worthless. This will make our third straight month of gains that exceed 10%. We are looking forward to offering our condor service for the first time next month. So far the response has been overwhelming. There will be a limited group of subscribers that are allowed in this service so please remember to email us if you wish to join. We will be sending out all of the details in the next couple of weeks.

and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.

Overbought/Oversold levels for February 15, 2007

  • SPY – 71.7 (overbought)
  • DIA – 76.2 (overbought)
  • IWM – 64.1 (neutral)
  • QQQQ – 74.1 (overbought)
  • OIH – 38.6 (neutral)
  • GLD – 76.1 (overbought)

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Have a great night!