Short-Term, High-Probability Mean-Reversion Indicator: Semiconductors and Retail Overbought

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Includes: DIA, EEM, EFA, EWY, EWZ, FXI, GDX, GLD, IBB, IWM, IYR, OIH, QLD, QQQ, RTH, SDS, SMH, SPY, SSO, TBT, TNA, TZA, USO, VXX, XLB, XLE, XLF, XLI, XLU, XLV, XLY
by: Andrew Crowder

As I stated last week, the day after Thanksgiving is historically bearish. Well, for most of the day the historical tendency held true, but as the day progressed the bulls slowly chipped away at the losses and as a result, two out the four major indices (QQQQ and IWM) managed to close the day higher.

Actually, quite a few of the ETFs I follow in my High-Probability, Mean-Reversion Strategy advanced yesterday, but only two managed to reach a short-term overbought extreme: Retail (NYSEARCA:RTH) and Semiconductors (NYSEARCA:SMH). Both moved into a short-term overbought territory and the RSI (2) for both pushed above 95. As a result, both on currently on my radar, so subscribers stay tuned tomorrow as you could be receiving a trade alert at the beginning of the trading day.

Tomorrow I will bring you the seasonal chart that surrounds Turkey day.

Short-Term High-Probability, Mean-Reversion Indicator – as of close 11/22/10

Benchmark ETFs

* S&P 500 (NYSEARCA:SPY) – 53.4 (neutral)
* Dow Jones (NYSEARCA:DIA) –46.6 (neutral)
* Russell 2000 (NYSEARCA:IWM) – 62.9 (neutral)
* NASDAQ 100 (QQQQ) – 61.8 (neutral)

Sector ETFs

* Biotech (NASDAQ:IBB) – 68.0 (neutral)
* Consumer Discretionary (NYSEARCA:XLY) – 67.3 (neutral)
* Health Care (NYSEARCA:XLV) – 53.4 (neutral)
* Financial (NYSEARCA:XLF) – 32.8 (neutral)
* Energy (NYSEARCA:XLE) – 64.6 (neutral)
* Gold Miners (NYSEARCA:GDX) – 60.2 (neutral)
* Industrial (NYSEARCA:XLI) – 56.1 (neutral)
* Materials (NYSEARCA:XLB) – 57.2 (neutral)
* Real Estate (NYSEARCA:IYR) – 42.4 (neutral)
* Retail (RTH) – 73.4 (overbought) / RSI (2) – 95.3
* Semiconductor (SMH) – 77.4 (overbought) / RSI (2) – 95.6

* United States Oil Fund (NYSEARCA:USO) – 32.6 (neutral)
* Utilities (NYSEARCA:XLU) – 41.5 (neutral)

International ETFs

* Brazil (NYSEARCA:EWZ) – 41.0 (neutral)
* China 25 (NYSEARCA:FXI) – 33.4 (neutral)
* EAFE (NYSEARCA:EFA) – 44.3 (neutral)
* South Korea (NYSEARCA:EWY) – 60.9 (neutral)

Commodity ETFs

* Gold (NYSEARCA:GLD) – 55.3 (neutral)

Ultra Extremes

* Small Cap Bear 3x (NYSEARCA:TZA) – 34.8 (neutral)
* Small-Cap Bull 3x (NYSEARCA:TNA) – 61.8 (neutral)
* UltraLong QQQQ (NYSEARCA:QLD) – 62.6 (neutral)
* Ultra Long S&P 500 (NYSEARCA:SSO) – 53.0 (neutral)
* Ultra Short S&P 500 (NYSEARCA:SDS) – 46.4 (neutral)
* UltraShort 20+ Treasury (NYSEARCA:TBT) – 40.7 (neutral)

Disclosure: Short SPY.