timwest

PAIRS TRADE: BUY US STEEL (X), SELL SHORT GM (GM)

BATS:X   UNITED STATES STEEL CORP
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See chart:

Risk 10% overall. X is volatile. Upside potential is roughly 20%. 5-10% downside in GM and 10-15% upside in X.

I like this setup. You can see that the pair of stocks is volatile and there is a lead-lag relationship that shifts back and forth. Given how GM is leading higher, it gives me confidence that X will find a bottom here and hold.

Cheers.

Technical Tim, Saturday 6:13PM EST, Sep 22, 2012
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Comments

This pair is working very well now with X driving the gains.
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I still like this pair. Sometimes pairs take a little longer to get going. GM was boosted last week by the Einhorn comments. So, X has a little more room to play "catch-up" now.
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25% of X shares are short....
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GM short entry 24.51.... 23.13 (up 1.38 pts or 5%). X entry 19.37 ... now 19.06 (down .31 or 1.5%) for a net profit of 3.5% so far.
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Followed.
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GM short entry 24.51 (open today), X long entry 19.37 (open today).
GM last 24.32 (19 cent profit) , X 19.62 (25 cent profit) as of 12:03PM EST.
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Followed.
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Agreed.
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X looked like it is forming a head and shoulders to me. I was wondering if it could tank?
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timwest varuntomar
A head & shoulders pattern, by definition, is a "reversal" pattern. A reversal pattern "reverses" the previous trend. What you are really saying is that it is forming a consolidation of the previous downtrend.
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