Monday, March 28, 2005


The Dow closed up 43 points on the first trading day of the week. The question is, "Is this the end of the downtrend, or just a pause before it resumes?" According to my hypothetical trading methodology, I decided to exit when the moving average turned up after the stochastics crossed below the 20 line. Today was that day, so tomorrow I'll exit the hypothetical trade. If you look closely on the chart, it doesn't always catch all of a move, but gets me out during a sideways movement which may or may not resume in the previous direction of the trend (down in this instance). It is just a slight upward move in the moving average, so depending on how this turns out, I may want to adjust the exit strategy for future hypothetical trades.

As of today's close, the hypothetical trade is: +243 points

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