The market continues to trade in a range

The longer a market remains range bound (no matter the time frame) the sharper the move outside of the range. We have a short-term range bound market and I expect to see some fireworks that takes us outside of the range over the near term (1-3 days).

The markets charged higher at the open only to give back the gains after lunch and like yesterday rallied into the close to finish near session highs. The tug of war continued today right around the 850 mark on the S&P futures and will continue to trade in this range until we either break down hard or move above the 900 level.

I am not going to do much with the indicators below firmly in a neutral state and the market clearly in a up-in-arms state as to where the market is headed. I would prefer to see an overbought state to short, but as always I will be patiently waiting on the sidelines until an opportunity presents itself. Also, tomorrow brings another good opportunity for a Gap Fade trade in QQQQ if indeed the futures point towards a higher open tomorrow.

Overbought-Oversold levels for December 3, 2008

ETF Extremes Options Trading Strategy

* S&P 500 (SPY) – 55.3 (neutral)
* Dow Jones (DIA) – 56.0 (neutral)
* Russell 2000 (IWM) – 55.2 (neutral)
* NASDAQ 100 (QQQQ) – 55.1 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 55.8 (neutral)
* Consumer Discretionary (XLY) – 61.6 (neutral)
* Health Care (XLV) – 57.4 (neutral)
* Financial (XLF) – 55.2 (neutral)
* Energy (XLE) – 46.5 (neutral)
* Industrial (XLI) – 57.1 (neutral)
* Materials (XLB) – 49.2 (neutral)
* Real Estate (IYR) – 52.7 (neutral)
* Retail (RTH) – 54.9 (neutral)
* Utilities (XLU) – 55.5 (neutral)

Ultra Extremes (Insiders Page Only)

* Ultra Long (SSO) – 53.9 (neutral)
* Ultra Short (SDS) – 39.6 (neutral)

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