Thursday, July 15, 2010

AOD Watch

Update: The bear signal on AOD has not reappeared at the close of trading, so by the rules, AOD remains in bull phase on the pps.

Update: Followers of the pps know that the indicator is prone to "ghosting", where it appears, then disappears, like the Cheshire Cat in Alice. This morning's bear signal has disappeared. when that happens, as the day progresses, the signal can just as easily reappear. What counts by-the-book is whether the signal is in place at the close. [1:30 p.m. Eastern]

Alpine Total Dynamic Dividend Fund (AOD) is the gift that keeps on giving, but only for traders who are into tears and pain.

The high-yield dividend fund moves into bear phase today on Person's Proprietary Signal, after six days in the bull column gave some small hope of the first seeds of a capital recovery. But 'tis not to be.

AOD $5.32

Moreover, the fast stochastic slipped from overbought territory down into the neutral zone, a bearish sign from a signaler that jitterbugs a lot but generally leads the pack.

AOD's managers, their portfolio beset by euroangst in the eurozone, on June 24 cut the monthly dividend sharply, and the price declined to reflect the lower return. From paying an annual dividend in the 20%, AOD has fallen to the 12% level.

It has foreign exposure, which means exposure to currency exchange risk, and yet its dividends are less than such domestic high-yield alternatives as the monthly payout from JNK (corporate debt) or the quarterly from NLY (real-estate).

At its high point in the most recent rise, AOD failed to push above the high of June 25, the day the stock gapped down after the dividend cut was announced. Until that $5.55 level is breached, no purported bullishness surrounding AOD can be taken seriously.

Another key level is the point midway between the pre-gap close and the post-gap open, as prices will often fill in that level.

The pps bull phase produced a 5.7% gain over its lifetime -- nothing to sneeze at. The fast stochastic and the macd also showed bull signals.

The parabolic sar has remained bearish throughout the post-cut period, and the 14-day trend has been down throughout.

Reversal Levels
  • $7.59, +42.7% (pre-cut swing high)
  • $5.74, +7.9% (midpoint of gap)
  • $5.55, +4.3% (post-gap high)
  • $5.32 <== You are here.
  • $4.83, -9.2% (post-cut low)
The managers' announcement set the current, lower rate for the July, August and September payments. They are bound to be under some pressure to raise the yield in order to be competitive with other funds. Look for an announcement in September setting the fourth-quarter dividends.

    The Great Reflation: How Investors Can Profit From the New World of Money
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    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.

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