Wall Street Flat – Buy PowerShares DB US Dollar Index Bullish (UUP) March 26, 2010
Posted by Marlowe Cassetti in UUP.trackback
The Dow and S&P ended flat on Friday, giving back earlier gains after the sinking of a South Korean naval ship, while tech shares’ weakness kept the Nasdaq in slightly negative territory.
The Dow Jones industrial average rose 0.08 percent, to end at 10,850.36. The Standard & Poor’s 500 Index inched up just 0.07 percent, to 1,166.59. But the Nasdaq Composite Index slipped 0.10 percent, to close at 2,395.13.
About 8.61 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion. There were roughly an equal number of advancers and decliners on the New York Stock Exchange, while on the Nasdaq, slightly more stocks fell than rose.(commentary & photo courtesy of Reuters)
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I am reading more and more market pessimism on the Internet and in the print media. That pessimism appears to be growing. There is a lot of nervous money out there along with the money sitting on the sideline. Is it time to bail out? Or is it time to get aggressive? My plan is simple. I will continue to follow the RSI methodology. I wait for RSI to generate new buy ideas and I adjust my stops to compensate for the volatility. I don’t need to predict the future. It is all pretty much cut and dried.
Today I received a copy of the book Trade Your Way to Financial Freedom (second edition) by Van Tharp. I know it is a bullshit title, but don’t let the hokey title turn you off. It is a valuable resource for anyone developing trading methodologies. I obtained the first edition back in the late 1990s and I lost my copy after loaning it to someone who moved away. I got the idea for position sizing from this book and the Turtle Trading methodology reinforced this strategy, which I subsequently incorporated into RSI. I’m anxious to reread this and maybe I will learn something new.
As we close out another week in the market RSI has generated a new buy recommendation:
- Buy 955 shares PowerShares DB US Dollar Index Bullish (UUP); Stop = -$1.05 Target = +$0.84 Volatility = 1.74%
Please note … Due to UUP having a very low volatility of 1.74% this trade would encompass a trade of $22,881 or 24% of the hypothetical $100,000 portfolio. That is way to large, so if you trade a smaller amount you are risking less than the suggested 1% and probably a more prudent way to go.
UUP has been on a strong up-trending channel since early Dec. 2009. It is trading near the upper channel trendline and may be a bit extended. I wouldn’t have a problem with waiting for a price pullback.
Have a great weekend and I’ll catch you next week.
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