How To Time Into The Water Index (PHO)

A reader asked me if I thought PHO (Power Shares Water Resources Portfolio) was a buy here so I decided to post the above chart.

Since PHO has been in existence, almost every buying opportunity came when the 10 day stochastics moved below 20 (buy line) followed by a turn up in the oscillator.

If you look at the above chart you will see eleven buy signals. Nine of them have been profitable which makes this timing tool about 82% accurate.

In addition to the oscillator I've also noticed that PHO is very cyclical...It seems like every 2 months is a buying opportunity.. EX: July 2006 low, September 2006 low, November 2006 low, January 2007 low...etc.

So my advice to the reader who asked me if PHO is a buy here is to patiently wait for the oscillator to move back below the buy line followed by a turn up, that's when I would buy.