AOD Watch

Ever since the managers drastically cut the dividend payoutand the stock lost 36% of its value, Alpine Total Dynamic Dividend Fund (AOD) has languished in the doldrums, barely budging on volume, most days, of less than a million. So what to make of yesterday's volume spike -- nearly 2 million shares -- and 2.8% rise intraday?

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
AOD $5.46

My best guess: With the European debt crisis now being handled (although not solved), traders are betting that AOD's positions will recover from their losses, allowing the company to raise the dividend, certainly for October.

AOD moved to bull phase on July 22, but that has been followed by little in the way of price drama -- at least until now.

The dividend cut turned AOD from a wonderful dividend play into a dog. On July 15, I wrote: "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."

The current dividend is 5.5¢ a month, for a 12.09% annual yield. This is barely competitive with funds like JNK (9.57%) or NLY (15.61%).

AOD's managers set the 5.5¢ dividend for July, August and September. For October, presumably, they'll revisit the situation.

My strong opinion is that the managers have every incentive to boost the dividend. They're an exchange-traded fund that exists solely for the purpose of attracting trader dollars, and they from the beginning have chosen a strategy of high dividend yields to entice the dollars to flow their way.

AOD has a strong foreign exposure. If their dividend yield isn't competitive with all-domestic funds, there is no compensation for the currency risk, and AOD because a very bad deal indeed.

If the company raises yields for October, expect a nice price bounce. If they don't, then expect a drop back into the doldrums. Increasing exposure is a bet, nothing more.

Regarding the technicals: Strongly bullish, except for some deterioration in the fast stochastic, which more than most of the signals I use jitterbugs like crazy.

The Person's chart is interesting, since yesterday's rise brought the price above the monthly midline pivot, $5.26, for the first time since June 21.

Person's Table

	pps	pps open	upper pivot	lower pivot
AOD $5.46		$5.32 jul22	$5.61 2.8%	$4.63 4.6%

The price also moved above the 20-day simple moving average (at $5.38), but it stands well below the 200-day exponential moving average ($7.67).

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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.