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Monday’s rally helped the Dow advance to its best January in over a decade. Tuesday’s gain helped the Dow close above 12,000 for the first time since mid-June 2008, which was right before the financial crisis moved into its worst drawdown. The Dow has gained a staggering 84% since it hit a 12-year low in early March of 2009. That is 480 trading days to be exact – one of the fastest rallies on record.

Now that the Dow has hit a 30-month high could the rally be coming to an end? February is the second worst performing month (after September) for the S&P since 1950.

However, for the High-Probability, Mean-Reversion strategy it truly doesn’t matter. The strategy is more concerned with short-term extremes and as you can see in the readings below the current readings are neutral in almost all of the ETFs I follow. Yes, Energy (NYSEARCA:XLE) has moved into a short-term “very overbought” state, but the RSI (2) is not as high as I would like to see.

Although, if energy moves significantly higher tomorrow we could see a reading that calls for a trade so subscribers be aware for a potential alert.

Wednesday, Thursday and Friday are all very bearish on a seasonal basis so it will be interesting to see if the historical precedents play out. A move high Wednesday could send quite a few of the ETFs I follow in the newsletter strategy back into a short-term “overbought” to “very overbought” state so the next few days could be quite busy. We shall see soon enough.

Short-Term High-Probability, Mean-Reversion Indicator – as of close 2/01/11

Benchmark ETFs

* S&P 500 (NYSEARCA:SPY) – 68.6 (neutral)
* Dow Jones (NYSEARCA:DIA) 69.6 (neutral)
* Russell 2000 (NYSEARCA:IWM) – 63.8 (neutral)
* NASDAQ 100 (QQQQ) – 61.8 (neutral)

Sector ETFs

* Biotech (NASDAQ:IBB) – 48.4 (neutral)
* Consumer Discretionary (NYSEARCA:XLY) – 48.2 (neutral)
* Health Care (NYSEARCA:XLV) – 62.1 (neutral)
* Financial (NYSEARCA:XLF) – 69.0 (neutral)
* Energy (XLE) – 84.3 (very overbought)
* Gold Miners (NYSEARCA:GDX) – 60.6 (neutral)
* Industrial (NYSEARCA:XLI) – 68.6 (neutral)
* Materials (NYSEARCA:XLB) – 71.7 (overbought)
* Real Estate (NYSEARCA:IYR) – 70.6 (overbought)
* Retail (NYSEARCA:RTH) – 46.4 (neutral)
* Semiconductor (NYSEARCA:SMH) – 70.9 (overbought)
* United States Oil Fund (NYSEARCA:USO) – 57.1 (neutral)
* Utilities (NYSEARCA:XLU) – 60.4 (neutral)

International ETFs

* Brazil (NYSEARCA:EWZ) – 50.2 (neutral)
* China 25 (NYSEARCA:FXI) – 46.0 (neutral)
* EAFE (NYSEARCA:EFA) – 69.6 (neutral)
* South Korea (NYSEARCA:EWY) – 63.6 (neutral)

Commodity ETFs

* Gold (NYSEARCA:GLD) – 50.8 (neutral)

Ultra Extremes

* Small Cap Bear 3x (NYSEARCA:TZA) – 34.5 (neutral)
* Small-Cap Bull 3x (NYSEARCA:TNA) – 62.5 (neutral)
* UltraLong QQQQ (NYSEARCA:QLD) – 61.1 (neutral)
* Ultra Long S&P 500 (NYSEARCA:SSO) – 68.3 (neutral)
* Ultra Short S&P 500 (NYSEARCA:SDS) – 30.3 (neutral)
* UltraShort 20+ Treasury (NYSEARCA:TBT) – 61.8 (neutral)

Watch and learn firsthand how I implement my options strategies.

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in XLE over the next 72 hours.

Source: Other Than XLE, ETFs Firmly Entrenched in Neutral State?