Top Nav

The Top Five Overbought ETFs (QQQ, XLI, XLB, EWG, IWM)

Andy Crowder

After a month-long correction, the S&P 500 has managed to bounce significantly higher over a relatively short timeframe.

As the old Wall Street adage goes, “never sell a dull market." And that is exactly what we witnessed last week in the market — low volume and no sellers.

The lack of sellers allowed what little buyers there were out there to push the market higher and back into a short-term overbought state.

Typically when we see this type of overbought reading, mean-regression kicks in and a short-term reprieve occurs over the next 1-5 days.

Out of the 40+ high-liquid ETFs I follow in my Options Advantage service, the following are the most overbought at the moment:

  • Proshares Ultrashort 20-year Treasuries (QQQ)            98.9 (very overbought)
  • AMEX Industrial (XLI)                                                             98.7 (very overbought)
  • AMEX SPDR Materials (XLB)                                               98.6 (very overbought)
  • iShares Germany (EWG)                                                      98.5 (very overbought)
  • iShares Russell 2000 (IWM)                                                98.7 (very overbought)

The aforementioned ETFs are just a few of the highly liquid, overbought ETFs I follow in the market. In fact, out of the 40+ ETFs that I follow for the Options Advantage service, nine are in an extreme overbought state.

Typically, when this type of overbought set-up occurs I will fade the market by selling bear call spreads with a high probability of success.

If you would like to learn more about the strategies I use in the Options Advantage service please do not hesitate to email me at optionsadvantage@wyattresearch.com.

Strike Price Offer

The Strike Price is your leading resource for insight into the world of options trading. Chief options analyst Andy Crowder will guide you through the best options strategies—telling you exactly where he's putting his money, and how you can make safe, reliable gains from some simple options trades. Your FREE subscription also includes Andy’s report "The One Vital Rule for Every Options Trade"—which reveals the #1 rule to achieve a high win-rate in every options trade.
You've successfully subscribed, click the link in your email to confirm your subscription.
There was an error, and you have not been subscribed, please try again.