by Shane Ormond
On Jan 21, 2020
Now that the Chinese factory is complete (and just in time for a deadly virus outbreak), self-proclaimed “Buff Mage” Elon Musk is turning his attention to Germany, where colonies of bats and unexploded World War II bombs threaten to undermine investor confidence. (Those are not metaphors.)
Last Friday, we looked at a Daily Price chart of Builders FirstSource, Inc., and noted that the stock was in a clear bullish trend.
Today’s Chart of the Day is a 10-Month Simple Moving Average chart for SPDR S&P Aerospace & Defense ETF (NYSE: XAR).
XAR seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index by using a sampling strategy.
Now, below is a 10-Month Simple Moving Average chart for XAR.
Back in January, the XAR 1-Month Moving Average crossed above the 10-Month SMA indicating XAR was on a PowerTrend ‘buy’ signal.
And immediately after the ‘buy’ signal occurred…
Prices began to climb, and haven’t stopped yet.
If you had purchased XAR shares when the PowerTrend ‘buy’ signal occurred for the stock back in January, when the stock was around $89.51, you’d be up 23.9% by now.
Not bad, for a less-than-a-year- hold of a major Defense Sector ETF.
Now, as you can see, the 1-Month Moving Average is still above the 10-Month SMA. That means the bullish trend is still in play!
As long as the 1-Month price remains about the 10-Month SMA, the stock is more likely to keep trading at new highs in the coming days and weeks.
We’ll be keeping our eye on this stock as it continues to trend upward so we’ll know the moment the market conditions shift and the stock begins to come back down.
Additionally… we’d like to touch on how a previous Chart of the Day stock has done.
On November 8th, we highlighted iShares U.S. Home Construction ETF (NYSE: ITB), nothing that the stock had pulled back below the Upper Keltner Channel, presenting a buying opportunity.
If you happened to have purchased ITB shares on that day, you’d already be up 3.5%.
But… if you had purchased the right option contract, you would be up 41.5% in less than three weeks’ time!
That’s the power of options. You may have noticed that Chart of the Day doesn’t recommend specific options plays…
That’s what the PowerTrend Options service does. If you haven’t read about it yet, you can click here to check it out.
Editor, Chart Of The Day