August 17, 2017

Where Now?

The market spiked higher after the Fed announced a 50 basis point cut, but the advance did not last long. Strong overhead resistance and short-term overbought conditions were too much for the bulls to overcome. Will we test the recent lows now? If I had to take a guess I would say yes. Just look at the technicals and you can deduct that the probability of a continuation of the move lower is probable.

Tomorrow will be interesting. The futures have spiked lower on several bad earnings reports. After hours SPY is currently trading around the 134 level and the low today was 134.58 so if the futures continue to hold te market lower into the open tomorrow I would expect to see the gap close and then the market begin the descent. Of course, no one knows for certain, that is just my feeling at this point.

Friday will most likely bring another wave of strong buying or selling depending on Wall Streets interpretation of the employment report so the move tomorrow could be muted after the first hour of trading in anticipation of the report. All I know is that I am very frustrated by the lack of signals in the ETF Extremes strategy. We get close to a signal and the market moves fades before we have an opportunity to get in. I hate to alter the strategy as it has made 113% since its inception roughly 22 months ago, outperforming the market by a mile, but as I said, I am getting a bit frustrated. Hopefully we will have a signal in the coming days.

Overbought/Oversold for January 30, 2008 

S&P (SPY) – 47.7 (neutral)

Russell 2000 (IWM) – 48.2 (neutral)

Dow (DIA) – 51.9 (neutral)

Nasdaq 100 (QQQQ) – 35.9 (neutral) 

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