SUN oversold and in a bullish trend
Mean reversion trade for 7/6/10: Sunoco (SUN)
Company Description Sunoco, Inc. (SUN) is a holding company that, through its subsidiaries, operates as a petroleum refiner and marketer, and chemicals manufacturer with interests in logistics and coke making.
Relative Strength The relative strength for Sunoco is positive. For 2010, the shares of SUN are up 26.05% as of Friday’s close while the broad market as measured by the S&P 500 index is down 8.30%.
Short-Term Reversion to the Mean Data
- Stock: Sunoco Inc (SUN)
- Price: 32.55
- Trend: Higher (based on the price in relation to the Ichimoku Clouds indicator)
- 2-day RSI: 3.41(below 5 is oversold)
- Risk: 2% of account equity
- 20-day Average True Range (ATR): 1.293
- 3 times ATR: 3.88
- Target price: 36.43 (three times ATR plus the current price of 32.55)
- Stop loss: 28.67 (current price of 32.55 minus 3 times ATR)
- Position size: 16.78% (2% of equity risk divided by the 3 times ATR times the price)
Trading Strategy for Tuesday, 7/6/10
Buy SUN at 32.55 with a target price of 36.43 and an initial trailing stop of 28.67. If the stock moves higher but has not reached the target price, the stop loss should be raised beneath the highest closing price.
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Note: All articles are for educational purposes only. This information should not be interpreted as a recommendation to purchase, sell or hold any security at any time. Always consult with an investment advisor familiar with your financial goals before making any investment or trading decisions.