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I hope everyone had a wonderful extended holiday. As we enter the last week of 2010, the Materials sector (NYSEARCA:XLB) has pushed into a short-term overbought state.

Typically, the last week of the year is bullish and I would expect to see much of the same this week. When the stock market has advanced 10% higher headed into the final week of the year and 3% higher during the final month the S&P 500 is positive 92% (11 out of 12%) of the time.

Going back to the Materials sector (XLB), if the ETF opens up today, there could be a trade in the near future.

As I stated last week, going back over the last seven years, if you purchased QQQQ on the 8th trading day of January and held until the end of the month, you would have had returns of -2.3%, -3.1%, -2.3%, -2.7%, -4.1% ,-1.6% and -7.7%. The median maximum gain during those trades was +0.7% compared to a median draw down of -5.3%.

If you were unable to check out the results Sunday night here they are: High-Probability, Mean-Reversion ETF Options Strategy.

I am going to keep it short today. The holidays are here and I am anxious to spend some quality time with my family. I hope all of you have a safe and wonderful holiday weekend.

Short-Term High-Probability, Mean-Reversion Indicator – as of close 12/23/10

Benchmark ETFs

* S&P 500 (NYSEARCA:SPY) – 73.2 (overbought)
* Dow Jones (NYSEARCA:DIA) –68.2 (overbought)
* Russell 2000 (NYSEARCA:IWM) – 74.3 (overbought)

* NASDAQ 100 (QQQQ) – 65.6 (neutral)

Sector ETFs

* Biotech (NASDAQ:IBB) – 88.5 (very overbought)
* Consumer Discretionary (NYSEARCA:XLY) – 75.9 (overbought)
* Health Care (NYSEARCA:XLV) – 54.5 (neutral)
* Financial (NYSEARCA:XLF) – 75.9 (overbought)
* Energy (NYSEARCA:XLE) – 68.8 (neutral)
* Gold Miners (NYSEARCA:GDX) – 50.3 (neutral)
* Industrial (NYSEARCA:XLI) – 70.3 (overbought)
* Materials (XLB) – 85.4 (very overbought) / RSI (2) – 96.0
* Real Estate (NYSEARCA:IYR) – 68.1 (neutral)
* Retail (NYSEARCA:RTH) – 72.5 (overbought)
* Semiconductor (NYSEARCA:SMH) – 56.1 (neutral)
* United States Oil Fund (NYSEARCA:USO) – 68.1 (neutral)
* Utilities (NYSEARCA:XLU) – 65.2 (neutral)

International ETFs

* Brazil (NYSEARCA:EWZ) – 32.7 (neutral)
* China 25 (NYSEARCA:FXI) – 36.0 (neutral)
* EAFE (NYSEARCA:EFA) – 46.9 (neutral)
* South Korea (NYSEARCA:EWY) – 55.2 (neutral)

Commodity ETFs

* Gold (NYSEARCA:GLD) – 50.3 (neutral)

Ultra Extremes

* Small Cap Bear 3x (NYSEARCA:TZA) – 14.1 (very oversold)
* Small-Cap Bull 3x (NYSEARCA:TNA) – 85.3 (very overbought)
* UltraLong QQQQ (NYSEARCA:QLD) – 67.5 (neutral)
* Ultra Long S&P 500 (NYSEARCA:SSO) – 82.5 (very overbought)
* Ultra Short S&P 500 (NYSEARCA:SDS) – 82.5 (very oversold)
* UltraShort 20+ Treasury (NYSEARCA:TBT) – 39.3 (neutral)

Source: Short-Term, High-Probability Mean-Reversion Indicator: Materials Sector Overbought