Deadlock, durables, dismal earnings hit Wall Street – RSI picks Mexico (EWW) July 27, 2011
Posted by Marlowe Cassetti in EWW.trackback
Wall Street suffered its worst day in eight weeks on Wednesday, hit by weak earnings, lackluster economic data and no movement in Washington talks as the deadline for a default looms.
The debt ceiling debate has grabbed much of investors’ attention this week as the August 2 deadline approaches, but it took a back seat for much of the day as the market reacted to earnings disappointments in industrial and technology sectors.
The Dow Jones industrial average .DJI was down 198.75 points, or 1.59 percent, at 12,302.55. The Standard & Poor’s 500 Index was down 27.05 points, or 2.03 percent, at 1,304.89. The Nasdaq Composite Index .IXIC was down 75.17 points, or 2.65 percent, at 2,764.79.
The S&P 500 fell below it’s 50-day moving average, and analysts are eyeing the 200-day average at 1283.6 as an area of support. The S&P 500 and the Nasdaq have fallen for three straight days while the Dow fell for a fourth day. (commentary & photo courtesy of Reuters)
This is the market’s worse day in eight weeks. This big market selloff today wacked the RSI portfolio. What do we do now? The simple answer is that we stick with the discipline of the system. We have sell stops on all our holdings at the –1.0R levels. We also have alerts at the +2.0R levels. When this level is hit we will initiate –0.3R trailing profit stops. I have tested the RSI methodology throughout some of the worse market selloffs and it hasn’t blown up. Yes, it can be gut wrenching, but RSI will survive. Right now we are experiencing a pretty sharp drawdown but it isn’t even close to 10%. Of our twelve current positions, only four are profitable and another day like today could easily see two or three positions stopped out for a loss. We have to live with that reality and not panic out. It pays to sit tight.
Well, after the close, RSI issued a buy signal:
- Buy 743 shares iShares MSCI Mexico Investable Mkt Idx (EWW)
This caught me flatfooted but let’s take a look at it. It was one of the few ETFs that were up today. It is showing great volume and good money flow. Looks like a winner to me.
Catch you later.
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