Another decline and more oversold readings. We also (depending on
the reaction tomorrow morning to the economic reports) could have a
signal in the QQQQ Gap Fade strategy. A sharp gap lower tomorrow would
certainly put the tech-heavy index back in a short-term oversold state
and if you couple this with the aforementioned gap there could be a
nice set-up in the making. Subscribers, as always, I will send out a
trade-alert, if and when a trade occurs. So far since the strategy is up 24.2% with a win ratio of 75% (6 out of 8 trades) since it was initiated in early Feb ‘08.
There are a few sectors back on my radar after today’s plunge.
Materials (XLB) and Utilities (XLU) are the two that I am watching
closely especially if we see the overall market move lower tomorrow and
into an oversold state.
I would also like to point out that on a seasonal basis the last three days of June have a bullish bias as roughly 70% of those days over the past thirty years have shown an advance.
Could we see more trades in the three strategies this week? Only
time will tell, but a move lower tomorrow would certainly increase the
odds greatly.
Overbought/Oversold levels for July 28, 2008
ETF Extremes Options Strategy
* S&P 500 (SPY) - 31.7 (neutral)
* Dow Jones (DIA) - 30.2 (neutral)
* Russell 2000 (IWM) - 46.3 (neutral)
* NASDAQ 100 (QQQQ) - 39.9 (neutral)
Sector ETF Extremes Options Strategy
* Biotech (IBB) - 87.5 (very overbought)
* Consumer Discretionary (XLY) - 37.1 (neutral)
* Health Care (XLV) - 56.2(neutral)
* Financial (XLF) - 38.1 (neutral)
* Energy (XLE) - 30.6 (neutral)
* Industrial (XLI) - 38.8 (neutral)
* Materials (XLB) - 28.8 (oversold)
* Real Estate (IYR) - 42.1 (neutral)
* Retail (RTH) - 32.3 (neutral)
* Utilities (XLU) - 21.9 (oversold)
If you would like to follow my strategies with real-time alerts or
have them autotraded by a participating broker please click the
following link! Try our strategies for a 30 day risk-free trial!