Post options expiration is historically a difficult time for the bulls and this time around is no different.
As I have stated the last two days, the week after September triple witching has seen the Dow lower 13 out of the last 16 years given the recent surge a short-term move lower is certainly not out of the question. Furthermore, September is notorious for having a weak close.
Typically the bulk of post expiration weakness occurs the day following options expiration, however, I think we could see more weakness as the week progresses particularly in the tech heavy sectors.
Also, when looking at the Overbought/Oversold levels in the Commodities section below for the Agriculture (DBA) and Energy DBE) I expect to see some short-term weakness over the short-term (1-5 days). Both ETF’s have reached an extreme overbought state and the indicators are pegged.
As for our SPX Short Iron Condor strategy, we were able to make over 9% over a four week period. With implied volatility up in the SPX we were able to choose a 225 point range. Not bad over a four week period, expecially given the fact that the market vacillated so widely this past expiration period.
Have a wonderful weekend and subscribers look for the Expiration Report this weekend with the trading guidelines for our new Diagonal LEAPS strategy and a discussion on the new and improved Insider’s page.
Overbought/Oversold for September 21, 2007
S&P (SPY) - 65.5 (neutral)
Russell 2000 (IWM) - 67.2 (neutral)
Dow (DIA) - 77.8 (overbought)
Nasdaq 100 (QQQQ) - 75.0 (overbought)
Oil Services (OIH) - 88.7 (very overbought)
Please click the following if you wish to read the resat of the report: http://www.crowderinvestments.com/blog/?p=381
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com