Thursday, July 8, 2010

AOD Watch

You know how it is in the doctor's office, when the doc says "Follow my finger with your eyes", so Doc' can test whether your vision is tracking properly?

That's sort of what the Alpine Total Dynamic Dividend Fund (AOD) is doing, except Doc' is holding up a €20 bill. For the euro, having been the instrument of AOD's fall, is now the hope for its redemption.

AOD $5.32

To look sequentially at the chart for AOD and the one for the EUR/USD currency pair to experience a profound sense of dejá vù all over again.

AOD has been been marching up in a series of higher highs and higher low since July 1. The euro began its recovery in a serious way, with a big price gain, that same day.

The EUR/USD pair is in bull mode for all indicators. AOD hasn't gone quite so far, but the signals are moving in the bullish direction. The one hold-out is the parabolic sar, which remains in bear mode.

AOD had a large exposure to the euro-zone as the currency began a steep decline amid debt crises within some member countries and paranoia over whether the single European currency could survive at all, given the divergence of national interests.

In the end, AOD sharply cut its dividend to ho-hum levels, which are not really competitive with other dividend-paying alternatives.

Traders on balance are assuming that AOD has kept its euro-zone exposure, and as the currency recovers, so will AOD's holdings.

There is, of course, no way for traders to actually know whether AOD is hanging on in Europe.

If the fund managers have mis-read the chances of a euro recovery, then AOD's next big surprise may be that the fund didn't recover at all in step with the currency.

Stay tuned.

Reversal Levels
  • $7.59, +42.7%
  • $5.32 <== You are here.
  • $4.83, -9.2%

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 reemerge from the wreckage.

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.
  • 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.

No comments:

Post a Comment