AOD Watch

Today's 6%+ decline in the Alpine total Dynamic Dividend Fund(AOD) wipes out everything gained during the bull phase lasting seven trading days from June 11.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AOD $6.80

The fund went ex-dividend today with a June 24 record date, so any trader hoping to collect this month's installment of the 21% annual dividend must hang on through Thursday.

Today's decline clearly reflects the ex-div adjustment of a very high-yield equity. The nice thing about monthly distributions is that the ex-div drop is usually quite ephemeral -- recovery happens in a few days.

However, the magnitude of the decline is an indication of investor expectations. A small chart tells the tale:

Ex-Div	Change
6/22	-7.1%
5/20	-8.2%
4/22	-1.3%
3/23	-1.2

The impact of the dividend in June is less than it was in May, at the peak of the Greek debt crisis in the eurozone. However, it is far greater than during the relatively stable months that preceded the crisis.

At this point, I'm happy holding AOD. The price so far at least remains well above the swing low, and the decline seems to be specific to AOD: The 30-year treasury fund (TLT) and the corporate high-yield debt fund (JNK) are trading within a third of a percent of Monday's close.

And most of the decline came in the first hour of trading (amateur hour); thereafter the fluctuation has so far been sideways.

Reversal Levels

• $7.59, +11.6%
• $6.80 <== You are here.
• $6.42, -5.6%
• $6.04, -11.2%

If AOD were to break below $6.04, or if long-term interest rates in other funds showed sharp declines, then I would be inclined to run for the exits.

The all-time low for the fund, since it began trading as an exchange-traded fund in February 2007, was $4.22 in March 2009. The all-time high was $21.88 in April 2007.

---

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we remerge from the wreckage.

---

Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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
• sto - Fast Stochastic

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

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple 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.