Wall Street flies on China comment, Microsoft upgrade – Buy TLT & DOG May 27, 2010
Posted by Marlowe Cassetti in DOG, TLT.trackback
Stocks rallied on Thursday as investor worry was eased after China refuted a report that it was reviewing its euro-zone bond holdings due to the region’s debt crisis.
Thursday’s gains marked the largest advance for the S&P 500 on a percentage basis since May 10, although volume was below average.
China’s denial was enough of a catalyst to entice buyers into the volatile equity market, which fell sharply from April highs as investors worried that Europe’s debt woes would spiral into a larger financial crisis.
The Dow Jones industrial average .DJI gained 284.54 points, or 2.85 percent, to 10,258.99. The Standard & Poor’s 500 Index .SPX advanced 35.11 points, or 3.29 percent, to 1,103.06. The Nasdaq Composite Index.IXIC jumped 81.80 points, or 3.73 percent, to 2,277.68. (market commentary & photo courtesy of Reuters)
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Today RSI issued two buy signals:
- Buy 116 shares iShares Barclays 20+ Year Treasury Bond (TLT); Stop -$8.60 Trailing Stop Alert +$25.78 Volatility = 3.50%
- Buy 303 shares ProShares Short Dow30 (DOG); Stop = -$3.30 Trailing Stop Alert +$5.49 Volatility = 5.31%
Okay, let’s address the first pick. TLT has been the ETF that has been the target of “flight to safety” since all the high volatility of the past few weeks.
TLT took a hit today (-2.27%) as the market euphoria flushed the holders of TLT out of their positions to move into more speculative equities. I suspect that it may test the lower trend line before a move higher. I will be looking to buy TLT. Keep in mind any Fed rate hiking will slam TLT. Rates up, long bonds down.
As for DOG, RSI has previously picked this fund, but another, unrelated module has picked it again. So let’s take another look at it too.
Boy, do these two charts look the same or what? If you don’t have a market short position, you might consider DOG when it returns to the upward path. It too got slammed today (-2.91%). I already own it for a small net profit.
Catch you later.
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