These charts of XLF are as of the close Monday February 8, 2010. The horizontal lines on my charts are drawn at approximately one (1) standard deviation of the oscillator that is drawn on the chart. The charts illustrated here show an extreme movement of the various oscillators to several standard deviations below the Zero line that is essentially the mean. Many times you will see a lower low in the price while the oscillator will form a higher low. This divergence is very bullish. I almost covered my short and went long yesterday, Monday, near the close, however, I could not pull the trigger. Today's pre-opening futures market action convinced me that we have formed a new center post from which we can trade to the long side of the market. At the opening this morning I covered my short position in the XLF and went long.
I executed orders at the following prices:
Bought to cover FAS @ 64.30 + 8.01
Sold Long FAZ @ 20.95 + 1.88
Here is a chart depicting the last three (3) T's formed in the XLF. You will note how the stock sells off after the T has expired. This has become a very good short sell signal.
I went long the DIA on the opening and will publish those charts along with the price executions.
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1 comment:
DC, sell at expiration is a better strategy for down trends. If we've started an uptrend, this method may prove dangerous.
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