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New Strategy and Trade of the Day

July 30, 2009

Create ratios of near arbitrage and near substitute pairs and use the RSI2 for entries and exits.

For longs: when the RSI2 of the ratio of the pair is below 20, go long and cover above 50

For shorts: when the RSI2 of the ratio of the pair is above 80 go short and cover below 50.

Trade of the Day:

VNQ:IYR  (The REIT index vs the Real Estate Sector)       RSI2=88

Short VNQ Buy IYR
Cover when the RSI 2 of the ratio of VNQ:IYR crosses below 50 (type in VNQ:IYR on http://www.stockcharts.com its free)

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