July 21, 2017

Several ETFs in a Short-Term Overbought State

Agriculture and India are both in an extreme short-term overbought state. Couple the extreme readings with the fact that the overall market, as seen by the S&P 500 ETF (SPY), is also overbought I would expect to see another short-term reprieve going forward. I've established a few April expiration positions, more specifically a few bear call spreads, to take advantage of the recent overbought readings in the major indexes and are are working well so far. As for my March bear call spread, I am very close to the short strike and will certainly keep everyone (subscribers) aware of any pertinent moves. Stay tuned! If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. … [Read more...]

The Time is Now

After completing my daily routine of updating the short-term oversold/overbought list of highly-liquid ETFs for the High-Probability, Mean-Reversion indicator I can't help, but to be excited for the days ahead. Of course, I'm talking short-term, but I think this extends through the November and December expiration cycles as well for those of us who like to sell options. But if you like to play the directional game, which I do once in a while, you can't ask for a better time. Indeed, the God of Probability is smiling right now. Just look at all of the short-term extremes in the market right now. Take your pic. The fact, that all but volatility is in a short-term extremes tells us a mean-reversion is likely. Historically, when we see … [Read more...]

High-Probability, Mean-Reversion Indicator

I'm adding a new ETF to the mix...Homebuilders (XHB). This one looks ripe for the picking. Highly-Liquid. Implied volatility (IV) has spiked and the ETF is in a "very oversold" state on a short-term basis. Bull put spread? Straight call? Both? Subscribers stay tuned! If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days. If you haven’t, join my Twitter feed or Facebook. Kindest, Andy … [Read more...]

High-Probability, Mean-Reversion Indicator

If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days. If you haven’t, join my Twitter feed or Facebook. Kindest, Andy … [Read more...]

Bulls Beware…Major Indices at Historic Extremes

Yes, the market has rallied in the face of, well, almost everything. While I have my doubts about the sustainability of the current rally I'm not going to give you the reasons why...because it's only my opinion and as we all know when using a statistical approach towards investing/trading opinions are essentially useless. The Russell 2000 (IWM), S&P 500 (SPY) and Dow (DIA) have recently pushed to all-time highs which has pushed our High-Probability, Mean Reversion indicators to extreme overbought states. Moreover, if you look at the RSI over various timeframes you will quickly notice that most of the ETFs I follow are pegged right now. Typically, when this time of reading occur we see a decent decline short-term decline going … [Read more...]

Short-Term Reprieve Makes An Appearance….

I am going to keep it very short tonight. The S&P 500 (SPY) took its largest tumble of the year today after reaching an extreme overbought state. My recent directional assumptions haven't played out as planned, but after today all of the positions in my two options selling strategies are in very good shape. In fact, I should be able to take a few profits if we see a short-term continuation of this reprieve. And that's the beauty of credit spreads. You can be completely wrong in your directional assumption and still come out on top. It's all about the probabilities...creating a large enough margin of error (through the selling out-of-the-money credit spreads) to absorb a continuation of the move you are fading. But now that … [Read more...]

Further Declines Ahead?

We finally saw a break in the market today. On the 26th I stated a market reversal looks imminent.  The decline today has the market back at that pivotal area. If that breaks we could see $146.50 in DIA and possibly a fill of the New Year gap. The gap fill is going to happen, the problem is we have no idea when. I am not one to play guessing games with the market. An assumption with a high-probability strategy wrapped around it  is more my speed...and the current market could be giving us some opportunities going forward. We now have a solid top or area of overhead resistance, which allows those of us who sell options premium a decent guideline over the short- to intermediate-term. Selling options above the current overhead … [Read more...]

A Market Top is Near…At Least Over the Short-Term

As I stated late last week, "a reversal looks imminent." Couple my stated reasons last week, with extreme short to intermediate-term overbought readings in the major market benchmarks and you can quickly see why I think a correction, at least over the short-term, is near. Check out the short-term extremes at the bottom of the page. Tomorrow, could be the day with Bernanke up to bat.   If you haven’t, join my Twitter feed or Facebook. Also, I have officially opened up my strategies to the public.  If you are a believer in a statistical approach towards investing please do not hesitate to try one of my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, … [Read more...]

A Reversal Looks Imminent

Is the rally over? Or will we see a continuation of the current rally? If you believe in mean-reversion, it's hard to deny the overbought extremes that currently reside in the market. Just look at the SPY chart below.                                 As you can clearly see, over every time frame the major market benchmark has reached an extreme overbought state. If the SPY chart isn't enough evidence to at least make you question the sustainability of the current rally, just take a look at the VXX … [Read more...]

Several ETFs in Short-Term Extremes

Most of the ETFs I follow for the High-Probability, Mean-Reversion indicator have pushed into an overbought to very overbought state. But, what is most interesting is the extreme overbought readings over the shortest of time frames I follow. For instance, readings in IWM and SPY are in the high 90's...an extreme we don't often see in the benchmark ETFs. As a result, we are finding more and more opportunities for bear call spreads. The only downside is the low implied volatility., but one way to combat low volatility, particularly if you are expecting a quick fade of the current trend is to take use a bear call spread with a lower probability of success, say in the 60-70 range. This will allow you to bring in more premium and if a move to … [Read more...]