June 23, 2017

Short-term Bears Finally Step Up

As expected, the short-term bearish indicators that had trickled into the market over the past 5 trading days finally proved too much for the market to overcome. The market witnessed a steady decline throughout the day and managed to break a few key support levels. The 1515 on the S&P is the most important and should be closely watched over the next few days. According to our overbought/oversold indicators there is still a bit more room for the indices to move even lower and I would not be surprised to see further declines come to fruition. However, each time the market has hit an oversold reading it has moved sharply higher as a result and I expect to see the same type of price action this time around as well.  

The market is still in the “sell in may and go away” range and should contniue to do so with slight expansion as the summer progresses. As I have stated over the past few months this should bode well for our SPX Short Iron Condor strategy. We have yet to place our condor position for this expiration cycle (as we prefer to only go out a max of four weeks) so if you wish to join the condor service you have until this Sunday.

Overbought/Oversold levels for June 20, 2007

  • SPY –  41.9 (neutral)
  • DIA – 44.9 (neutral)
  • IWM – 41.7 (neutral)
  • QQQQ – 48.6 (overbought)
  • GLD – 43.4 (neutral)
  • OIH – 53.0 – (overbought)

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