Earlier in the week I mentioned that “since the low established in July 2006 the S&P (SPY) has been higher during expiration week 10 out of 11 times. If the market lives up to its recent historical precedent I would expect to see the historically weak period of post options expiration kick in.”
Barring a major setback in the upcoming inflation reports over the next two days the market should be able to continue its winning ways again this week. However, I do expect to see another test to the downside next week. Maybe, not to the recent lows, but at least a decent move to the downside particularly if the market can reach an overbought state going into the week of post expiration. Also, the week after June Triple-Witching has seen the Dow lower 15 out of the last 17 years.
Overbought/Oversold levels for June 13, 2007
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SPY - 53.9 (neutral)
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DIA - 53.4 (neutral)
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IWM - 46.9 (neutral)
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QQQQ - 55.0 (neutral)
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GLD - 39.7 (neutral)
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OIH - 60.4 (neutral)
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Have a great night!
Andrew Crowder, Chief Investment Strategist,
www.crowderinvestments.com