02 March 2008

The Dow Leapt from Red to Green

The Pig took some profits on his short positions on Leap Day. I felt like I jumped the gun for a meager 3% gain on the sale of shares of DXD. Those shares were sold at $57.15, with a cost basis of $55.48 basis. I still hold a position in DXD with a basis of $54.48.

I got caught up in the selling atmosphere (in a good way) and unloaded shares of SDS for $64.00, from a $59.50 basis, for a gain of 7.6%, and made a quick three-day trade of FXP, selling shares for $90.20 at 3:59pm, from a $80.88 basis. That's a nice 11.5% pick-up in short order.

16 out of 30 Dow components are showing up dark green in my chart. From the 27th of February to the 29th, the RSI(2) reading for the Dow swung from one extreme to another, from 93 to 8.

I am excited for the first few trading days in March. If the market continues downward, as the bad news out of Boeing portends, I will look to clear out the remaining DXD holdings, as well as another block of FXP shares. And on the purchasing front, I will look to bolster my holdings in ALB for the long-term, and pick up some DDM for a short-term swing trade.

In spite of my eagerness, patience is the operative word for Monday. Establishing every trade on my wish-list immediately would be hasty and hoggish. After glancing over my collected RSI data, I have noticed that there's often about a three day period where the market lingers in its positive, or negative, as it is right now, sentiment. You can see an example of this in the above chart--the Dow was overbought and was mighty red from the 25th of February through the 27th. Friday was the first day in oversold territory, so we may be in store for at least a few more.

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