Short-Term Extremes – Potential Signal Tomorrow?

Can you believe the short-term ‘extreme’ oversold readings that currently reside in the market. Every ETF we follow is in a very oversold state. I have not seen short-term oversold readings in the major benchmarks move this deep in quite some time. The same can be said for all of the sector ETFs that I follow for the Sector ETF Extremes strategy.

As I stated yesterday, we could see a signal as early as tomorrow, but I will continue to listen to my indicators which have kept me out of this crazy market during both of the sharp declines over the past year. just look at the down periods for the ETF Extremes strategy to see how the indicators have kept the strategy on the sidelines while the market was tanking.

The market pushed to new lows today and equities reached an all-time record of new 52-week lows. We have not seen this many equities reach new lows like this in over 60 years.

But the important thing to consider is the oversold status of the ETFs we follow. Just look at the RSI Wilder readings and you can see what type of extremes we are dealing with. Again, it is amazing to see levels this low and my hope is that we will see a signal or two tomorrow. Only time will tell. As always, we will notify subscribers in real-time, if and when a trade occurs.

Overbought-Oversold levels for October 7, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 14.2 (very oversold)
* Dow Jones (DIA) – 15.5 (very oversold)
* Russell 2000 (IWM) – 12.7 (very oversold)
* NASDAQ 100 (QQQQ) – 10.6 (very oversold)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 12.4 (very oversold)
* Consumer Discretionary (XLY) – 9.8 (very oversold)
* Health Care (XLV) – 10.9 (very oversold)
* Financial (XLF) – 21.1 (oversold)
* Energy (XLE) – 15.7 (very oversold)
* Industrial (XLI) – 6.9 (very oversold)
* Materials (XLB) – 7.5 (very oversold)
* Real Estate (IYR) – 14.9 (very oversold)
* Retail (RTH) – 12.5 (very oversold)
* Utilities (XLU) – 11.4 (very oversold)

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.