This COW Says MOO. Translation: I’ve Got 5 Trade Ideas

• Posted by Greg Harmon
• on March 2nd, 2011

Below are 5 trade ideas to use with MOO and COW. Of course these are the Market Vectors Agribusiness ETF, MOO, and the iPath Dow Jones-UBS Livestock Subindex Total Return ETN, COW. How about if we just use MOO and COW.

COW, Daily Chart

COW was in an up trend from mid December through to mid February. At that point someone went COW tipping and it has been in a free fall since. After breaking through the previous support at 31 it now looks destined to head to the 100 day Simple Moving Average (SMA) at 30.21 or support lower at 30. The falling Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD) indicator, and the expanding Bollinger bands also support a move lower.

Trade Idea #1 You can still short this stock to the support level above and then tighten a stop as it could still head lower

MOO, Daily Chart

MOO was in a much longer uptrend from July through to mid February before moving lower. It found support at 54 and bounced up to resistance near 56.50 before retreating to near the 50 day SMA again. The MACD is improving with all the SMA’s sloping higher, but the RSI has bounced off of the mid line and remains in bearish territory.

Trade Idea #2 On a hold of support at the 50 day SMA or the 54 level, a long entry with a target of at least 56.50 and then new highs over 58. A stop can be placed at the support where you entered.

MOO vs COW ratio chart, Daily Chart

This ratio chart of MOO vs COW shows it near the top of a consolidation channel that it has been in since early December. The MACD is crossing bullishly higher but the RSI is struggling just above the mid line. Also the SMA’s are flattening in the middle of the range. Combining the information from the other charts above and this chart there are 3 trade ideas to watch for.

Trade Idea #3 Play the range. On a confirmed rejection at the top of the range sell 1 lot of MOO and buy 1.84 lots of COW (6:11) and hold for a retrace to the bottom where you reverse and buy 1 lot of MOO and sell 1.69 lots of COW (3:5) for the ride higher.

Trade Idea #4 Play the break of the channel higher. Using the 1.84 ratio as a stop, buy 1 lot of MOO and sell 1.84 lots of COW (6:11) with an initial target of a ratio of 1.99 and then a measured move of 2.34.

Trade Idea #5 On a fall below the channel at 1.69 sell 1 lot of MOO and buy 1.69 lots of COW (3:5) using the channel as a stop and an initial target on the ratio of 1.54.

Listen to the MOOing of the COWs and trade’m well.

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