July 28, 2017

Strong Short-Term Seasonal Weakness Ahead

The market held steady as it enters options expiration tomorrow. Options expiration tends to display a slow and steady trend to the upside. However, the trading day following options expiration is historically very weak so if the market is able to hold up tomorrow we could get a signal in the ETF Extremes as we move into the weekend. As I have stated over the past few days, given the recent action and the “very overbought” state of the market the probability of a short-term move lower remains. Watch closely to see how the market ends the day.

Overbought/Oversold levels for April 19, 2007

  • SPY –  88.1 (very overbought)
  • DIA – 89.0 (very overbought)
  • IWM – 50.9 (neutral)
  • QQQQ – 71.2 (overbought)
  • GLD – 49.8 (neutral)
  • OIH – 37.7 (neutral)

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