The seasonal bullishness that occurs the day before Thanksgiving held true again this year as the S&P advanced 1.5% on low volume. The day after Thanksgiving also is bullish, but as I mentioned in earlier posts the next two days, which would be Monday and Tuesday of next week, are overwhelmingly bullish on a seasonal basis.
Currently, Retail (NYSEARCA:RTH) and Semiconductors (NYSEARCA:SMH) are the only two sectors that are displaying an overbought reading, but neither have an RSI (2) that is even above 90. Preferably, I like to see a reading above 95 before I will seriously consider stepping into a trade in the High-Probability, Mean-Reversion Strategy.
So, hopefully, Friday brings more of the same low-volume advance, which is enough to push a few of the ETFs I follow into an extreme state. If indeed that occurs, next week could bring quite a few nice set-ups.
Until then, keep enjoying the holiday.
Short-Term High-Probability, Mean-Reversion Indicator – as of close 11/24/10
* Biotech (NASDAQ:IBB) – 64.9 (neutral)
* Consumer Discretionary (NYSEARCA:XLY) – 64.8 (neutral)
* Health Care (NYSEARCA:XLV) – 48.1 (neutral)
* Financial (NYSEARCA:XLF) – 42.5 (neutral)
* Energy (NYSEARCA:XLE) – 58.5 (neutral)
* Gold Miners (NYSEARCA:GDX) – 54.6 (neutral)
* Industrial (NYSEARCA:XLI) – 62.6 (neutral)
* Materials (NYSEARCA:XLB) – 56.2 (neutral)
* Real Estate (NYSEARCA:IYR) – 58.1 (neutral)
* Retail (RTH) – 70.5 (overbought)
* Semiconductor (SMH) – 79.1 (overbought)
* United States Oil Fund (NYSEARCA:USO) – 58.6 (neutral)
* Utilities (NYSEARCA:XLU) – 41.0 (neutral)
* Gold (NYSEARCA:GLD) – 59.4 (neutral)
* Small Cap Bear 3x (NYSEARCA:TZA) – 29.8 (oversold)
* Small-Cap Bull 3x (NYSEARCA:TNA) – 68.4 (neutral)
* UltraLong QQQQ (NYSEARCA:QLD) – 61.3 (neutral)
* Ultra Long S&P 500 (NYSEARCA:SSO) – 54.3 (neutral)
* Ultra Short S&P 500 (NYSEARCA:SDS) – 43.7 (neutral)
* UltraShort 20+ Treasury (NYSEARCA:TBT) – 58.7 (neutral)
Disclosure: Short SPY.