Monday, November 17, 2008

Trade Alert: SKF

How would you like me to tell you what the stock market is going to do next; then you tell me what the SKF is up to! The reason is because the financials lead the market up or down and this ETF is that teatime inverse of the Dow Jones financials.

What I see is the SKF reaching a price point from which it has returned at least four times since July. But this time instead of the stochastics been at the top and ready to turn over, they already have turned over and gone down to the halfway point on nobody can tell anything from it kind of volume. The point is I don't have a real clear indication of what this ETF will do next. Now it's difficult enough to be right when the charts are clear, but when they're muddled is just nothing you can do but wait.

You can see by the IYR at the Dow Jones financials are firmly ensconced and a well-worn downtrend, so I am leaning slightly that way. I will probably take a small position in SKF and hold it looking to add in either a higher or much lower level.


Anonymous said...

Be careful trading the technicals with SKF. Back when they stopped short-selling financials, SKF went down and stopped tracking the financials index for a short while. This has, in my mind anyways, skewed the technicals and I will look at the chart for XLF instead.

I get what you're saying about SKF's trading patterns, and I probably approach trading this thing much the same way you do, but I'd be careful in trying to compare where SKF is at right now with where it was in, say, March or July.

StockMarket -Implode said...

good point!