Tuesday, May 20, 2008

Keep An Eye On This Group Of Stocks



Just a reminder to keep an eye on the mortgage financial stocks. These stocks have been very quiet over the past few weeks which means many traders are not paying too much attention to them but my advice is to watch these stocks closely.

In the above chart you'll notice the very low ADX reading which was below 10 earlier this month. My interpretation of this indicator is that a large trending move is about to materialize and an expansion in volatility will take place.

Notice also how the MFX index has developed a large descending triangle. In my opinion I feel we will see a down move take place in the very near future.

As always, nothing works 100% of the time but I just wanted to share with all of you what I am watching BEFORE the moves happens.

8 comments:

Anonymous said...

Hi Kevin,
Thank you for all this information. Very useful as usual. I have noticed that the XLF is following the same pattern as well for the ADX indicator. The indice has just crossed the 50MA today and the trend for the brokers is slowly coming down. It looks like the entire "financial" sector is under pressure one more time.

Anonymous said...

I forgot to sign my name Kevin. This was "Remi". I apologize.

Anonymous said...

Kevin,
What are some components of the mfx.
Great blog by the way.

jerry

Anonymous said...

Kevin,

What are some of the components of the mfx.

Always enjoy your views.

Jerry

Aurelien said...

Hey kevin,

very interesting chart. I am wondering how you would trade this one seeing as it doesnt seem that you can trade MFX itself. Is there an ETF that follows it closely? XLF's chart didn't look quite as appealing so I don't think I want to use it to trade.

Kevin said...

Some of the components are FRE, FNM, CFC...etc I would trade the stocks within the index that have a similiar chart formation as MFX.

Dave said...

Kevin, this is a real service. I have subscribed to pay services before that do not give as clear trading signals as you do for free. Since they charge, they have to worry too much about making bad calls which makes them become politicians - never a clear answer.

Let me ad my thanks to all the others before who have expressed appreciation for your work.

Kevin said...

Thanks Dave,

I agree with you...A lot of the pay services never give you a clear answer. I call it as I see it. I'm not always going to be right but I do feel I've been correct on the majority of my calls. Lets hope it continues this way we ALL benefit.

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