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Internet overload: InterActiveCorp no longer an outperformer

December 3, 2012

03 December

InterActiveCorp, or IAC (ticker: IACI), has been an outperformer during this bull market but a sharp drop in October and early November took it below a previous low for the first time since basing in 2009.

I scanned for sectors and ETFs for which, when shown as a pair against IACI, met the criteria for the moving average crossover method.

The results were centered around the consumer staples sector. Here is one example:

Dow Jones Food Index vs. IACI.

Dj8iaci-macd031212

Points to note:

  • The moving averages crossed in October 2008 and did not cross again until mid November 2012. That meets the criterion of there being four years since the last crossover
  • There is divergence on the MACD indicator at the low. My MACD takes account of the fact that values are getting smaller as the chart progresses. That makes the divergence genuine rather than just being because values are shrinking
  • The RSI never got far above 50 or for very long during the downtrend but now it has gone decisively above 50
  • The method does not give a precise entry method like my RSI divergence or Bollinger Band methods. It just tells you something has changed. You’ll need to watch for signs of this pullback into the moving averages ending and a base forming

Example stocks versus IACI

Many of the consumer staples sector indices and stocks look similar against IACI, whether they are cover producers or retailers. Stocks examples are:

Kroger (KR)
Pepsico (PEP)
Proctor & Gamble (PG)
Sysco Corp (SYY)

Quick summary of the other trades being followed

  • Kubota (KUB) v Nippon Telegraph (NTT): Now shows an 8.0% gain after entry two weeks ago!
  • Well Fargo (WFC) v Boston Properties (BXP) (26 Nov): Entry signal not given yet
  • Banks v Railroads (19 Nov): Entry signal not given yet

 

 

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