The market rallied mightily today with nary a pause. Typically, the market will fade a bit, if only to fill the upside gap, but not today. The market moved steadily higher throughout the afternoon and then pulled back a tad at the close, but that was most likely a result of traders taking some money off the table ahead of the weekend.
Now all of the major market benchmarks that we follow are back in an overbought to very overbought state and the shorter-term measures that we follow have reached an extreme state.
Typically, when the market reaches this type of an extreme we see a short-term (1-5 days) fade in the indices. Furthermore, sharp moves after payroll reports tend to fade back a bit in the coming days.
In addition to the bearish tendencies above the Stock Trader’s Almanac, reports that Tuesday and Wednesday of next are historically quite bearish with the S&P only finishing higher 28.6% and 38.1%, respectively.
As you can guess all of the extreme readings that I have mentioned above have put our ETF Extremes strategy very close to its first signal in quite some time. We have had some close calls recently, but this time around looks very likely. With a win ratio near 90% we are confident in all of our signals. Of course there are no guarantees in trading, only probabilities.
Iron Condor Strategy
Even with today’s sharp move, the S&P (SPX) is still well within our 200 point range.
To read the rest of this report please go to the Crowder Investment Research website.
Kindest,
Andrew Crowder