XLE psar bull signal

The energy-sector exchange-traded fund XLE is showing a psar bull signal this morning, a whipsaw after two days in bear mode.

I dislike it as a directional trade.

First, there's the whipsaw. A whippy psar is an evil psar. You can put that over your door as a truth for all time.

Second, the adx is way low, at 13. That means there's not a strong trend, increasing the chance of further whipsaws. The chart confirms the trendlessness. XLE has traded between 54 and 60 (with a few breakouts) since last autumn.

Third, the sto this morning moved from the neutral zone into overbought territory, setting up the possibility of a bear signal if it moves back into neutral.

Fourth, the current trading price, at $59, is in an area of congestion with many reversal points. A break past $60.87 would clear that area, but that's some distance away.

Having said all of that, it could perhaps be traded as an iron condor, $60 and $56 as the strikes for the short call and put, respectively. That range produces a 50¢ premium on the April expiration, not too shabby.

If its played as an iron condor, there's no need for a "You are here" box. The exit points are $60 and $56.

By the way, I haven't done a study of it, but it seems to me that my biggest losses of late have come on directional trades. Perhaps it's a result of the VIX being so damn low, below $17.

Give me the Old Time Volatility. It's good enough for me.

This signal will be followed in the daily Watchlist, which is posted beginning around 2:45 p.m. Eastern. Look for it at www.timbovee.com.

Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic