The market experienced a wave of panic this morning. As a result the major market benchmark, S&P 500 (SPX) sold off to 1370, a level not seen since the short correction that began in late February. However, the surge lower led to one of the biggest intraday reversals in quite some time and the S&P actually closed the day in the black, up 0.32%.
The intraday move brought the S&P proxy back into neutral territory, but the Dow (DIA), and the tech-heavy Nasdaq 100 (QQQQ) remain in an “oversold” to “very oversold” state. Seasonal tendencies have had no bearing on the current market although I think this could change with post-expiration on the horizon. As I always state around options expiration; post-expiration, specifically the trading day following expiration, is historically bullish. Couple this precedent with oversold conditions and we often see a turn for the better, at least over the short-term (1-5 days). Add on all the inflection point extremes today and the probability looks favorable for a short-term swing higher.
Overbought/Oversold for August 16, 2007
SPY - 34.0 (neutral)
IWM - 46.9 (neutral)
DIA - 26.7 (oversold)
QQQQ - 19.1 (very oversold)
GLD - 24.1 (oversold)
OIH - 18.7 (very oversold)
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 2 stock options strategies in our investment newsletter, the ETF Extremes and SPX Short Iron Condor.
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 Free Months of our investment newsletter enabling you to follow our strategies as you learn. What do you have to lose? Join today!
Andrew Crowder, www.crowderinvestments.com