The Dow Jones Industrials (2nd Week Of Month Still Bullish)
Back in early February, I observed a pattern in the dow which I posted about in detail. You can read about this pattern by clicking here.
Basically the pattern is to buy the Dow Jones Industrials (DIA) on Monday of the second week of the month and exit on Friday's close. Since I frist wrote about this pattern we have had 3 signals and all 3 have been profitable. I just closed out my long DIA trade today which I bought on Monday.
As long as the Dow stays above it's 10 week moving average, I will continue to take this trade.
Trading is all about patterns and as a trader it is our job to identify such patterns as early as possible.
Lately it seems like the big trade every Friday is to try to find the next stock that will be bought out over the weekend. I'm in contact with a lot of traders and it appears we are all doing the same thing. We are all looking at stock and option volume trying to identify unusual volume activity with the hopes of finding the next stock to be taken over. I just wonder how much of that volume is caused by people like myself trying to build a position ahead of the weekend.
I've been doing this trade and was able to catch MEDI a few weeks ago, but since then most of my picks have been losers. Every Friday I buy JEF near the close and every Monday it gaps down 70 cents on the open. I've also been watching CHAP, ELN, CFC, GSF, RIG, MIR, AKS to name a few. By no means am I recommending that you get involved in the stocks I just mentioned. All I'm trying to do is point out what many traders seem to be doing every Friday. My personal opinion about doing this kind of trading is that it's giving me one big headache!
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5 comments:
K..good to see you back...you are one of the best. Yes, this month has been very hard. The extended stuff seems to be the long plays, but with no decent entry spots...and there seems to be a lot of things actually going down, and frustrating many when they see the market apparently up everyday...I think its going to get more volatile.
Tom
Kevin, if you're going to play this pattern, why not go for the extra oomph provided by a leveraged ETF like DDM or SSO?
Trader's Narrative
I agree...not only do I buy ETFs but I also buy the most volatile bullish dow stocks.. I'm just trying to keep it simple here so I only mention the DIA's.
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Hey Kevin, I have a question about this strategy. What is the "second week"? Do you count partial weeks as a first week, or does the first week have to include a Monday?
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