I stated yesterday how the market had reached an oversold level where we typically see a bounce. A healthy relief bounce came today which brought the S&P (SPX) back to the pivotal 1444 area. The question is, will the 1444 area act as resistance or support going forward?
I am leaning more towards overhead resistance at this point. I do think we could move a bit higher as we move closer to options expiration, but I think we could get another decent down day shortly after expiration. It truly depends on how the market reacts over the next few days. If the bulls manage to push the major indices into overbought territory I think a decent set-up could follow. Watch how the market reacts around the 1444 area. This should act as a wonderful gauge as to where the market is headed over the short-term.
Furthermore, the VIX is back down to historically low levels (around 10). Each time the VIX reaches this level the market seems to sell-off. I would be surprised to see the market deviate from the recent historical precedent.
I would also like to let everyone know that we will be offering the opportunity to have our Short Iron Condor auto-traded. We will be limiting the amount of subscribers to 75 so spots will go quickly. If you wish to participate email us at
support@crowderinvestments.com
and we will do our best to save you a spot once we make the portfolio live, which will occur after the March expiration cycle.
Overbought/Oversold levels for February 13, 2007
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SPY - 57.9 (neutral)
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DIA - 61.3 (neutral)
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IWM - 62.0 (neutral)
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QQQQ - 42.1 (neutral)
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OIH - 59.7 (neutral)
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GLD - 68.0 (neutral)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com