With 14 Trading Days left in 2013, consider these two trend lines in DJZ. A pop above or below could give us some activity as we move into the end of the year. Trend lines are funny. Every one I know looks at them, but generally don’t admit that they look at them. They Do NOT ALWAYS WORK! So that’s enough reason for a lot of people to completely discount them.
I don’t think it makes sense to ignore something that is so blatant. Whether or not they “work” depends, as always, on how you manage the trade once you have it on.
Bullish or Bearish,, or if you want to put on a straddle and just play the range.. it doesn’t really matter. To pretend that they don’t exist, or some how t-lines are too basic or too generic for you to profit from makes no sense.
Very often Trend lines are self-fulfilling prophesies because so many folks are looking at them. Both bullish and bearish traders will look at these trend lines and come up with some rational reason for being short or long.
I always look at them and use them when deciding to enter a position exit, or just sit on the sidelines.
I have said before that December is a horrendous month to trade. The markets are thin and the swings can be nasty. A perfect example was the trade in SF13 today. Trade to a new high just above 13.50 ( a round number target for both bulls and bears) followed by a 23 cent collapse, chased by a 17 cent snap back rally. Just nasty trade punishing anyone caught on the wrong side. The computer logs and HFT traders just slice and dice.
In my opinion , there will be plenty of action after January 10th when every one is back from vacation and new $$ comes pouring into the market.
between now and then, however, if you are looking for a play, look at a move above or below these two trend lines.
What ever you do, make sure you trade smaller than usual and use stop limit orders and respect the risk.
CER