XRT psar bull signal

The retail sector exchange-traded fund (XRT) show a psar bull signal this morning, with the price at $41.32, at the top of yesterday's broad trading range.

By the book, there's a lot to like about this signal. The strong adx, at 47, suggests little likelihood of bullish whipsaws. The fact that this bull signal comes after a one-day bear whipsaw reinforces that conclusion. The stock has been trending upward since Feb. 5.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
XRT $41.32

Yet, there are also grounds for caution.

The uptrend is old. A fine wine or whiskey may improve with age; a stock-market trend, rarely so. After so many weeks of soaring, XRT is overdue for a downward swoop.

The macd, although in bull mode, has been falling toward the zero-line since March 9, with the exception of one day.

The sto has been in overbought territory since Feb. 16, with a couple of dips below. A decisive fall into the neutral zone would be a signal, under my rules, to close the position.

You are here:

• Reversal
• $45.51, +10.1%
• $44.47, +7.6%
• $41.44, +0.3%
• Now $41.32
• $40.18,  -2.8%
• $37.92, -8.2%
  
• $36.33, -12.1%
• $34.11, -17.5%

 Past the present trading range the price enters a congested reversal zone set in 2007, and I think that will slow upside progress considerably. Notice also how sparse the downside resistance levels are, as is expected in a long period of steep price increases. This means the price has a long way to fall before it encounters shares on the table that might reverse a downward trend.

So, bottom line, I like it, and it makes me nervous. The price today has barely moved. I would want to see some movement before opening a directional position.

About the glance:  The colors indicate the state of each signal.

• trend: green for up, red for down, yellow for sideways
• adx: green for above 30-up, red for 20-down, yellow for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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

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.