Delta DAL Daily Double-Euphoria Pattern creates a low-risk short

15 mag 2014

Delta's wonderful earnings, stock buyback announcement and dividend increase has bulls feeling very comfortable, but the chart is showing that the IWM is pointing down and in a corrective phase. This performance difference has brought about a wide disparity in the price of DAL versus the IWM. DAL could just hold onto these prices and IWM could rebound to catch back up to DAL. I don't know which will happen, but I like my odds here. There seems to be a low-risk trade here now that DAL is below 38 (signaling that it is rolling over) and that IWM has fallen back to multi-month lows under 108.

It takes awhile to get comfortable with pairs trades. Follow this one.

I put some older examples of pairs trades below for reference.

Tim 12:12PM EST 5/15/2014