June 23, 2017

Short-term overbought with seasonally weak conditions

Subscribers, if you haven’t already, please click the following link to access the March 2008 Expiration Report.

Today’s advance pushed many of the sectors we follow (Insiders page) plus most of the major benchmarks into an overbought state. The move came on a gap open (to the upside of course) that ended the day unclosed.

Now the focus is on the overbought conditions in the sectors, namely Retail (RTH), Real Estate (IYR) and Consumer Discretionary (XLY). All three have moved into an overbought state and are very close to an extreme state which would trigger a signal in our PaperTrade Extremes portfolio which I follow on the Insiders page. As always, I will inform you (on the Insiders page) if and when the trade comes  to fruition.

Furthermore, the major benchmarks are also near an overbought state and a push higher tomorrow would certainly put at least four out of the five I follow on the community blog (and on the Insiders page) in an overbought state. This type of price action could also trigger a signal in the ETF Extremes strategy. Yes, we are once again near a trade in the strategy that hasn’t traded in quite some time – the ETF Extremes. However, the strategy (since its inception) even with its recent lack of trading has outperformed the major benchmarks by approximately 100%.

As for our SPX and RUT Iron Condor plays we placed the following trades in the TOS PaperTrade platform(portfolios available on the Insiders page).

We were able to do $.10 better than our proposed trade price in SPX ($1.20 credit)  and $.10 less than our proposed RUT trade ($.55 credit). Proposed SPX and RUT Iron Condor trades are available with each expiration report, unless it is a five week options cycle. I only go out a max of four weeks, so during a five week option week a wait a week and send post the proposed Iron Condor trades on the Insiders page.

The March Expiration cycle saw gains of 5.6% in the RUT Iron Condor and 11.7% in the SPX Iron Condor.

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Seasonal Note of Interest:

The trading week following the Easter holiday is historically very weak. It has the weakest post-holiday performance of any of the market holidays. The S&P has been lower 9 out of the last 11 years. As the month progresses towards the middle of the month (tax time) the market historically weakens particularly after the tax deadline.

Overbought/Oversold for March 24, 2008

Major Benchmarks

  • Dow (DIA)- 69.2 (neutral)
  • S&P (SPY) – 65.3 (neutral)
  • Russell 2000 (IWM) – 67.3 (neutral)
  • Nasdaq 100 (QQQQ) – 69.4 (neutral)
  • Emerging Markets (EEM) – 53.5 (neutral)

more overbought/oversold levels on additional sectors found in the Insider’s page (Buy the White Paper and receive Two Months of the Insiders Page Free) – less than $1 a day.

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