Wednesday, February 21, 2007

FXI: Watch This ETF



I bought FXI near the close today. As you can see in the above daily chart, this ETF has been consolidating for about 2 months on declining volume. Notice how the 50 day moving average has been providing support for FXI.

In the lower panel is the ADX indicator. Right now the ADX is at a very low level which was last seen in September right before the big up move began. Many times low ADX readings give birth to trending moves but the trick in using this indicator is knowing how to apply it. You want to use low ADX readings on momentum stocks combined with a chart pattern. What I like about FXI's pattern is that for the past 7 weeks we've seen lower highs and higher lows. Today for the first time in 7 weeks FXI made a higher high which tells me that maybe buyers are being more aggressive here. FXI is also in an uptrend so I think it's worth buying here. My stop is below last week's low. The risk is low and the reward is high. I'm all in!

7 comments:

h. lovil said...

Kevin- what would that stop be?

Saves me having to try and work it out on stockcharts :)

Thanks

Kevin said...

last week's low was 104.44 so the stop goes below that.

downtowntrader said...

Nice chart setting up on FXI. Also, FDX which you mentioned below is setting up in a pretty large inverse head and shoulders over the last year or so. This would be an interesting development if they led transports into a rally when most are expecting the markets to top out. Nice work in general by the way, I love the blog.

DT

Lauriston said...

I guess FXI will probably start moving again significantly when the Chinese markets open next week after one week closure for New Year celebrations.

Blain said...

haha, nice chart Kevin, I posted FXI on Tuesday,

http://falkininvesting.com/blog/2007/02/20/fxi-chart-analysis-bull-flag-waving/

Great minds think alike man. Good luck with your position.

Kevin said...

Hi Blain,
I didn't know you had a blog... I'll add you to my blog roll.

d333gs said...

Interesting moment for FXI testing the 50 and an interesting interaction with the 13 & 34 EMA.

Any idea whats cooking?

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