Robert, I consider the current trading range of RMBS to be $217 to $247. Today's action is quite common, forming a narrowing triangle (higher lows and lower highs). Such triangles are often resolved by breakout in the direction of the current trend, which is up. However, I do not trade in a vacuum, the market in general has its own dynamics and determines flow of funds into situations like RMBS. Thus, despite the fact that we did not go under $226, that is not truly a support, and the fact that later in the day we did not go much above $235 does not make it an overhead resistance (the NAZ did not make a new daily high either). If in the next few trading sessions, the daily highs become lower and the daily lows lower as well, we will run the danger of this new uptrend being aborted. On the other hand, a pattern of new higher highs and higher lows, will indicate that a breakout above $247 is "imminent". Until that happens, we could trade in a range from few days to few months (see last November).
Zeev |
