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Overbought QQQQ (incomplete)

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PostPosted: Sun Jul 15, 2007 7:36 am    Post subject: Overbought QQQQ (incomplete) Reply with quote

The chart service is interrupted. So, there will be no chart this week. However, the QQQQ weekly RSI and ULT are both well above 70, which is rare for a major ETF. So, QQQQ may pullback soon. QQQQ closed at 49.90, and the Jul 51 puts closed at 1.15, which is about 100% intrinsic value. A pullback may take place to below 49.50 next week, to make a substantial gain. The QQQQ Jul 52 puts are also about 100% intrinsic value. However, a safer trade would be the QQQQ Aug 50 puts, which closed at 0.90.

Next week is an options expiration week, which tend to be volatile and bullish. However, given SPX has risen 50 points over the past two weeks, there may be a pullback early next week. So, SPY Jul 158 puts may be worth the risk on a high open. Also, the OIH weekly MFI is 84.00, which remains extremely overbought. So, OIH Jul 185 puts may also be a buy Monday. The following was written in the Next Day Trading Plan on Wednesday July 11th: "OIH shows many bearish technical indications, e.g. six dojis in a row, at or near the yearly high, a three-day island reversal, a daily MACD bearish kiss, low volume, and weekly MFI still above 80..." Energy stocks are roughly 15% of SPX. So, OIH may bring down SPX.
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