July 28, 2017

The Dow (DIA) and Trading ETF Options

Wow! April is certainly keeping up with its historical precedents as the best performing month for the Dow since 1950. The Dow (DIA) opened up the month at $123.66 and is now trading for $130.62 up 5.6% for the month with three trading days left. The average gain for April is 1.8% with pre-election years significantly higher at 4.2%. The bullish move has pushed the major indice into record territory. Does anyone even remember Feb.27? The bulls short-term memory has managed to reap rewards for those long the market and those short, well, lets say they have had quite a few sleepless nights recently. Which brings us to our ETF Extremes strategy.

Our shorter-term proprietary indicators have managed to keep us out of this quickly rising market even though our overbought/oversold indicators (below) have recently spent quite a few days in overbought to very overbought territory. Our indicators have kept us out of similar situations in the past. This gives us the confidence and needed patience to effectively trade this strategy. 

Overbought/Oversold levels for April 25, 2007

  • SPY –  86.2 (very overbought)
  • DIA – 89.2 (very overbought)
  • IWM – 70.8 (overbought)
  • QQQQ – 91.2 (very overbought)
  • GLD – 51.0 (neutral)
  • OIH – 78.3 (overbought)

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