| trend | adx | psar | pps | macd | macd trend | sto | sto trend | |
|---|---|---|---|---|---|---|---|---|
| AOD $6.13 |
Today's decline, with an hour and 45 minutes left to trade, has covered 10.1% high to low, touching a new low of $5.95 on the three-month chart. Yesterday's decline covered 9.7% intra-day.
All in all, an ugly sight, unsuitable for children and people with a deep love of their own money. With the fund price at 19.4% below Monday's open, the point where the decline began, a year's worth of dividend income has basically been erased -- if (big IF) the price stays at the current level of below $6.15 (at 2:13 p.m. Eastern).
A couple of observations:
I'm assuming that the early drop is in response to trading in Europe, where eurodebt fear is endemic these days. AOD has large international exposure, much of it in Europe, although many of the European holdings are outside of the eurozone.
With a closed end fund, it's hard to say what's really going on. Even more than with a mutual fund, a closed end exchange-traded fund like AOD is a black box, with several moving parts, only a few of which are continually visible.
The last complete list of holdings was issued on Sept. 30, 2009, and AOD has huge turnover, so who knows what the company's exposure is now.
The last list of the top 10 holdings was released at the end of March, and they cover only 21% of total holdings. None of them are in the eurozone, although most of them do a lot of business in Europe.
(The companies are Zurich Financial Sercvices AG, Hyundai Motor Co., Nestle SA, Avon Products Inc., Microsoft Corp., Teva Pharmaceutical Industries Ltd, Walter Energy Inc., Vale SA, Centrais Electricas Brasileiras SA and Petroleo Brasileiro SA. -- heavy on Brazil and Switzerland.)
The net asset value -- what the fund would be worth per share if it were an open-ended mutual fund -- was last posted at the end of May. The NAV was $5.47, and the market price was $6.91, a premium for the closed end fund of 26%.
The only pieces of the puzzle known daily are the price -- $6.13 or so -- and the volume -- way up to the more than 5 million shares a day, compared to a normal range from half a million to 2 million before the fall.
That sharp decline on such a huge volume spike is a bit scary, frankly. It's important to remember that for each sale there is a buyer. Half of the traders are running for the exits with shrill cries of panic and pain; the other half are quietly accumulating shares waiting for the price to recover and deliver an incredible capital gain.
Who's right? Who knows. My panic point was the previous low of $6.04, Today's decline below that level lasted only less than 15 minutes, so I'm still in the game.
A final thought: Today's decline puts the price back to where it was in March 2009, the absolute pit of the market fall in response to the collapse of capitalist finance and the ensuing deep recession.
Are things really as bad now, in the Summer of '10, as they were in that dismal spring a year plus change ago? I think not, and I'm betting money on it with my holdings.
But my marriage to AOD is of the rocky variety. When the pastor said, "Do you take this obligation freely, without mental reservation?", I said, "Well, I dunno. There's a lot I don't know about this particular bride."
Reversal Levels
- $7.59, +23.8%
- $6.13 <== You are here.
- $6.04, -1.5%
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
- 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.
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