|Oneok (OKE) has risen by more than 250% since the major March 2009 lows, and for all we know, it may decide to tack on even more gains before a late spring correction occurs. Here's a look at the latest RMO swing buy signal for this stock (see Figure 1).|
|FIGURE 1: OKE, DAILY. Buy high, sell higher? Sometimes this really is the best pathway to profits, particularly in a strong relative strength stock with a compelling buy signal. Limiting risk with an initial and/or trailing stop and modest position sizing can also help a trader stay with the trade through final closeout.|
|Graphic provided by: MetaStock.|
|Graphic provided by: Rahul Mohindar RMO indicator from MetaStock 11.|
|First off, this is not a good covered-call candidate, as the bid-ask spreads are very poor for OKE options. However, since we're still dealing with a stock that has excellent 13-week relative strength versus the broad market (the .SPX), that fresh RMO (Rahul Mohindar oscillator) swing buy signal still might be of special interest to short-term swing traders. The stock has above average long-term Chaikin money flow (CMF)(100), which is also another attractive feature for speculative longs at this juncture.|
Managing a trade entry ought to be a pretty simple affair. For example, you might consider going long a couple of ticks above Monday's high ($67.59) and then trailing the remainder of the move (if there is further upside) with a two- to three-bar trailing stop of the daily lows until the final stop.
|Modest position sizing can also help minimize the damage to your account, should the stock turn south soon after you purchase it; risking no more than 1% of your cash equity in your stock trading account might be one way to do this. In trading, just as in pro sports, putting up a good defense should always be viewed as job #1.|
|Title:||Writer, market consultant|
|Company:||Linear Trading Systems LLC|
|Jacksonville, FL 32217|
|Phone # for sales:||904-239-9564|
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