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Entry signal given on Mexican trade

May 14, 2012

14 May

On 16 April, I presented a trade set up on a Mexican stock pair, which you can see here. The pair was Coca-Cola FEMSA (KOF) versus iShares Mexico (EWW) and was an example of my Bollinger band breakout method.

The entry criteria were an end of week close above the upper band, with the band width starting to expand and these have now been met.

Kofeww140512

The ratio was consolidating above a rising moving average, so expectation was for continuation higher. With KOF being a consumer staples stock (defensive), the ratio will tend to rally when the market is falling, or at least not rising strongly.

You could run this trade now with a stop loss below the mid February low. That low is 9.4% lower as of Friday’s close.

 

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