IYJ Trading Update and Dow Stocks Index Buy Signals

By: Patrice_V_Johnson

LONG-TERM TREND (> 1YR) OF THE MARKETS: DOWN
INTERMEDIATE-TERM TREND (> 3 WKS, & <1 YR) OF THE MARKETS: UP

SHORTS LONGS _____________________
None - IYJ (i shares dow jones industrial sector index etf)

Greetings, fellow J.E.D.I.,

This article is to alert you that The J.E.D.I. Way received a fill on its market order of 50 shares of IYJ at $42.91. The J.E.D.I. Way will now place a protective stop behind its long postion in IYJ as follows: (See chart below):

While the long-term trend of the markets remain down, the intermediate-term trend of the markets has changed from down to up. If you take a look at the Daily chart of the Dow Jones Industrial Average [the "DOW"] (Ticker Symbol: DJIA), the DOW stopped making lower lows sometime after July 13, 2009 and its recent close above the right shouldler on high volume of what was then considered a "HEAD AND SHOULDERS PATTERN" suggest that the support areas of 8200 and 8000 on the DOW should hold. While indicators on the Daily Chart suggest that the current runup may be overdone (or overbought), the weekly chart suggest that the DOW’s previous runup is far from overdone (or is oversold.). (SEE BELOW):

DAILY CHART OF DOW JONES INDUSTRIAL AVERAGE (DJIA) DATED 7/19/2009


WEEKLY CHART OF THE DOW JONES INDUSTRIAL AVERAGE (DJIA) DATED 7/19/09

Thus, I think these divergences with the Daily and Weekly chart on the DOW means that perhaps we will get more overbought on the daily and then see a pullback to the right shoulders before continuing higher. A pullback to the right shoulder (of what was then considered a H & S pattern) would approximate a 50% retractment of the current new uptrend on the daily chart. And this pull back could take place this week.

To reiterate: The J.E.D.I. Way will place a protective stop behind its long postion purchase of 50 shares of I shares Dow Jones Industrial Average Sector ETF (Ticker Symbol: IYJ) at $42.38. This should cut our losses short to around $26.50 before commissions since we received a fill at $42.90 on Monday, July 20, 2009. If we are stopped out and the market goes back up strong and signals that the long term trend is up, we will just get back in and follow up with another stop loss at an approproate price level that keeps cuts our losses short and let our profits run.

The goal of trading is to not lose money, but if we do lose money, make sure to lose very little. (Old Korean Trading Principal) ...And let profits run about.

Until Next Time.

Thanks for listening; Good Luck in your Trading; And May the force of volatility be you!

Best Regards,
Patrice V. Johnson

E-mail : Patrice@stockbarometer.com if you have any questions about this trade or any other questions or comments.

If you are interested in continuing to receive our advice as your free trial, please click the following link to subscribe.
http://www.stockbarometer.com/pagesJEDI/learnmore.aspx

Important Disclosure
Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.
Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.
In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.
For a complete understanding of the risks associated with trading, see our Risk Disclosure.

© 2009 Copyright Patrice V. Johnson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.