The market traded sideways until the much anticipated Fed Minutes were
released at 2:00 EST. Once the minutes were released the market surged higher
and never looked back.
Now the major market benchmarks are back into an overbought
to very overbought state. The Nasdaq 100 continues the push
higher, but is near an extreme. This is exactly the set-up that we mentioned in
our newsletter (paid subscribers
only) this past weekend.
Typically, when an indice reaches this type of extreme we see a short-term
pullback. I admit, the recent surge has been frustrating for my trading. I am
not a momentum trader so the recent surge has tested my patience. While
frustrating, I remain patient because I know over the long haul I should come
out ahead as is evident in my ETF Extremes
strategy.
Moreover, the VIX has moved into an oversold state which typically means that
a short-term move lower looks likely. Remember, trading extremes is not an exact
science. There are no guarantees in trading. However, if you choose to forfeit
trading every day allowing commissions and most likely emotions to eat away at
your profits by sticking with at least one extreme strategy you will allow
probability to work for you. Again, look to our ETF
Extremes options strategy as an example. No this is not a ploy to get you to
join the strategy, this is a real-life example and one that should be
considered. Talk to any experienced trader and they will tell you that most
often the less you trade the more successful you will be. It is all about
picking your spots and picking them wisely. This takes an overwhelming amount of
patience, but it works. The lack of signals have led several of our subscribers
to leave the service which means that we have spots that are once again
available. We expect this and I think it says alot for our service quite
frankly. The fact that we refuse to trade just to place a trade, knowing that we
could potentially lose subscribers as a result means that we are here for the
long haul. That being said, we want to thank those of you that understand our
philosophy and what we are trying to do with our newsletter. Get rick quick is
not our goal. Substantially outperforming the market over the long-term is name
of the game, at least our game.
This is also why we are beginning to offer other stock options strategies.
Much like a diversified basket of stocks, we hope to eventually offer a wide
array of stock options strategies that take advantage of various market
conditions.
New SPY Diagonal LEAPS strategy
The strategy contniues to chug along with another gain today. Now the
strategy is up $957.00 or 4.8% since 9/24/07. Over the same period the S&P
(SPY) is up only 2.1%. As I stated yesterday, we will ahve to start looking at
rolling our short positions into next month so stay tuned. There is a specific
way to do know when the appropriate time to roll is and we will be talking about
that in the coming days so check back daily.
Overbought/Oversold for October 9, 2007
S&P (SPY) - 76.2 (overbought)
Russell 2000
(IWM) - 74.0 (overbought)
Dow (DIA) - 76.8
(overbought)
Nasdaq 100 (QQQQ) - 88.3 (very overbought)
Subscribers please check the Insiders’ page of the website if you wish to check the
overbought/oversold levels of the following 22 ETF’s: OIH, XLF, XLE, XLY, XLK,
XLV, XLB, XLI, XLP, TTH, XLU, GLD, FXI, ILF, EZU, EWA, INP, UNG, DBA, DBB, DBE,
and DBP.
We work hard to bring you our latest views, opinions and research on a daily
basis. If you are a loyal reader and find our thoughts useful please show us
your support by joining our newsletter service. We currently follow 3 stock
options strategies in our investment newsletter, the ETF Extremes, SPX Short
Iron Condor and SPY Diagonal LEAP.
If you want to an in-depth, step-by-step look at how we trade our strategies
purchase our acclaimed E-Book! With your purchase you will receive Two
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Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com