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Focus on SMH

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), EFA, EWY, EWZ, FXI, GDX, GLD, IBB, IWM, IYR, QLD, QQQ, RTH, SDS, SMH, SPY, SSO, TBT, TNA, TZA, USO, XLB, XLE, XLF, XLI, XLU, XLV, XLY

Even though the tech-heavy QQQQ and its aggressive counterpart QLD remain in an overbought state, I am now solely focused on SMH for a new short position. The Semiconductor ETF (NYSEARCA:SMH) has moved into a “very overbought” state with a RSI (2) reading of 97.5.  Both QQQQ and QLD moved lower Friday which lowered the RSI (2) of both, but kept the high-i indicator above 75. I like to see an RSI (2) reading above 95 before I begin to take a look at the trade.

Subscribers, be on the lookout for a trade alert tomorrow. The S&P futures   again as I write this, so tomorrow could be the day that I finally take my lumps on my SPY trades. I might keep my DEc10 SPY puts, but I think the others have to go. Also,  have to pull the plug on my TZA trade. FXI is up in the air as I have a 48.7% profit on the trade right now, but with the futures higher I would imagine we will the FXI move in sync.

Short-Term, High-Probability, Mean Reversion Indicator – as of close 10/29/10

Benchmark ETFs

  • S&P 500 (NYSEARCA:SPY) – 65.0 (neutral)
  • Dow Jones (NYSEARCA:DIA) – 54.7 (neutral)
  • Russell 2000 (NYSEARCA:IWM) – 51.9 (neutral)
  • NASDAQ 100 (QQQQ) – 75.4 (overbought)

Sector ETFs

  • Biotech (NASDAQ:IBB) –64.7 (neutral)
  • Consumer Discretionary (NYSEARCA:XLY) – 68.1  (overbought)
  • Health Care (NYSEARCA:XLV) – 48.4 (neutral)
  • Financial (NYSEARCA:XLF) – 45.3 (neutral)
  • Energy (NYSEARCA:XLE) – 55.4 (neutral)
  • Gold Miners (NYSEARCA:GDX) – 65.6 (neutral)
  • Industrial (NYSEARCA:XLI) – 43.8 (neutral)
  • Materials (NYSEARCA:XLB) – 59.4 (neutral)
  • Real Estate (NYSEARCA:IYR) – 33.9 (neutral)
  • Retail (NYSEARCA:RTH) – 37.5 (neutral)
  • Semiconductor (SMH) – 85.4 (very overbought) / RSI (2) – 97.5
  • United States Oil Fund (NYSEARCA:USO) – 41.5 (neutral)
  • Utilities (NYSEARCA:XLU) – 43.5 (neutral)

International ETFs

  • Brazil (NYSEARCA:EWZ) – 49.0 (neutral)
  • China 25 (NYSEARCA:FXI) – 34.4 (neutral)
  • EAFE (NYSEARCA:EFA) – 49.0 (neutral)
  • South Korea (NYSEARCA:EWY) – 43.3 (neutral)

Commodity ETFs

  • Gold (NYSEARCA:GLD) – 64.2 (neutral)

Ultra Extremes

  • Small Cap Bear 3x (NYSEARCA:TZA) – 45.9 (neutral)
  • Small-Cap Bull 3x (NYSEARCA:TNA) – 50.0 (neutral)
  • UltraLong QQQQ (NYSEARCA:QLD) – 77.4 (overbought)
  • Ultra Long S&P 500 (NYSEARCA:SSO) – 61.9 (neutral)
  • Ultra Short S&P 500 (NYSEARCA:SDS) – 37.0 (neutral)
  • UltraShort 20+ Treasury (NYSEARCA:TBT) – 53.1 (neutral)

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Kindest,

Andy




Disclosure: Short SPY and FXI. Long TZA.