Helicopter Ben Strikes Again

Bonds Options
by 

Helicopter Ben Strikes Again

The market absolutely loved the news from Helicopter Ben.

Yesterday Ben Bernanke announced QE3 and since that point all of the major indices have pushed at least 2% higher.

As a result, many of the ETFs I follow for the Options Advantage service have pushed into a short-term “very overbought” state so while this rally looks strong, I do expect at least a pause over the next week or so.

Some of the most short-term overbought ETFs at the moment are:

  • ETFS Platinum (PPLT)                                                 99.6 (very overbought)
  • iShares Peru (EPU)                                                      99.2 (very overbought)
  • Proshares Ultrashort 20yr Treasuries (TBT)           99.2 (very overbought)
  • iShares Japan (EWJ)                                                    99.2 (very overbought)
  • iShares Russell 2000 (XHB)                                       99.1 (very overbought)

The aforementioned ETFs are just a few of what is now a plethora of “very overbought” ETFs in the market. In fact, only Natural Gas (UNG), Consumer Staples (XLP) and Utilities (XLU).

Typically, when this type of “very overbought” set-up occurs I will fade the market by selling bear call spreads or through buying puts. I prefer to use the former strategy, but will occasionally use the latter strategy for a shorter-term scalp trade.

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 [email protected].

To top