Monday, February 11, 2008

XAL - Giving Us A Bull Market Return In Under A Month

We have had a very nice return off the Airline Index (XAL) so far.

Up 20.8% since purchase and climbing.

There are some signs however that the advance may be getting tired and so some precautions
should be put into place.

The next major short term move in the index should be based upon the outcome of the Triangle break.

This being the case, I am going to suggest a stop of half the position upon a break on the lower side of the pattern.

The reason I only say half the position is explained in the 2nd chart below.

The probability model has been simply incredible during this advance in the Airlines Index.
As you can see, the model calls for yet higher prices as we have not even hit the halfway mark
according to the model.

It is because of this model that I am only going to part with half of my position should the triangle break to the downside. I will let the remaining half ride as gthe model dictates higher prices.

If the triangle breaks to the upside all the better for us as we will remain in our full position and continue to ride the index higher.

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