Tuesday, 21 August 2007

Filled: Bought Midcaps

Just bought the Canadian Midcap iUnits fund (symbol XMD in Toronto) on the move out of this morning's opening range. I had gotten a bullish signal for the S&P 400 Midcap index from the Aug. 10 Commitments of Traders report.

My setup for this index - based on the COTs data - calls for the trade to be executed with a one-week delay (i.e., for the open of trading on Aug. 20). But I had a few hesitations because the Midcap index COTs data has had a few interruptions in recent weeks, so I wasn't sure about the signal's reliability.

I decided to do the trade on technical grounds, using the TD Seq indicator I learned about at Stephen Vita's excellent AlchemyOfTrading.com website. The S&P 400 hit a TD Seq Countdown buy on the 60-minute chart a couple of days ago, but I wanted also to get confirmation from an opening range breakout. Looks like it happened a short while ago, but there's a bit of a throwback right now. We'll see how it resolves itself.

I used XMD because it has 99-percent correlation with the S&P 400 and gives me something to do with some of my loonies. I'll use a technical stop until enough COTs data kicks back in for me to revert to trading it just off the COTs.

In other news: I invite you to check out my COTs-inspired take on precious metals which was just posted at Kitco.

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