July 28, 2017

Winning Sometimes Hurts

Patience pays off again. Are you starting to get the idea of how I trade?

The Sector ETF Extremes options strategy has its first trade.

Late in yesterday’s trading session a signal was finally triggered in the Sector ETF Extremes. It was the first signal since the strategy was initiated on June 16th. XLF had moved into a “very overbought” state and my shortest-term proprietary model was reading an extreme state so I sent out a trade alert to the subcribers’ of the Sector ETF Extremes options strategy. The position was XLF Dec08 23 puts (XLFXW) for $2.55.

Early in the trading session the market turned decisively lower so I decided to take a 9.8% profit off the table. Check out the performance page. Certainly not a bad day by any stretch, but by the end of the day I had left an additional $.65 on the table. So, what was typically a nice gain for any strategy (9.8%) could have been much, much better (35.2%). As many of you have pointed out my market timing has been impeccable with the Extremes Strategies and believe me I appreciate the kind gestures, but that doesn’t hide the fact that I am still kicking myself a little bit for taking profits so early. This is why winning sometimes hurts.

Someone once said that any profit is a good profit, well, I am not so sure that I agree with that sentiment. Yes, I am happy by the end result today, but my goal is to be perfect. While I realize that this is an impossible task, particularly in the world of trading, it never hurts to strive for perfection.

So, after the sharp decline today the major benchmarks I follow have moved back into a neutral state. However, there are still a few Sector ETFs that have my attention. Utilities (XLU), Energy (XLE), and the Materials (XLB) sector remain in an oversold state, but my shortest-term overbought/oversold measures still need to confirm so I would need to see a further decline over the next few sessions for another signal in the Sector ETF Extremes to be triggered.

Until then enjoy the profits and stay tuned!

Have a great night,

Andy

Overbought/Oversold levels for July 24, 2008

ETF Extremes Options Strategy

* S&P 500 (SPY) – 45.2 (neutral)
* Dow Jones (DIA) – 45.8 (neutral)
* Russell 2000 (IWM) – 56.0 (neutral)
* NASDAQ 100 (QQQQ) – 43.8 (neutral)

Sector ETF Extremes Options Strategy

* Biotech (IBB) – 82.5 (very overbought)
* Consumer Discretionary (XLY) – 53.0 (neutral)
* Health Care (XLV) – 61.9 (neutral)
* Financial (XLF) – 52.2 (neutral)
* Energy (XLE) – 25.3 (oversold)
* Industrial (XLI) – 48.5 (neutral)
* Materials (XLB) – 28.5 (oversold)
* Real Estate (IYR) – 44.6 (neutral)
* Retail (RTH) – 47.1 (neutral)
* Utilities (XLU) – 23.4 (oversold)

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