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Mean reversion trade for 7/6/10: Titanium Metals (TIE)


TIE is oversold and in a bullish trend

Mean reversion trade for 7/6/10: Titanium Metals (TIE)

Company Description Titanium Metals Corporation (TIE) is a producer of titanium melted and mill products. The Company has titanium production facilities in the United States and Europe.

Relative Strength The relative strength for Titanium Metals is positive. For 2010, the shares of TIE are up 37.94% 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: Titanium Metals (TIE)
  • Price: 17.27
  • Trend: Higher (based on the price in relation to the Ichimoku Clouds indicator)
  • 2-day RSI: 3.99 (below 5 is oversold)
  • Risk: 2% of account equity
  • 20-day Average True Range (ATR): 0.989
  • 3 times ATR: 2.97
  • Target price: 20.24 (three times ATR plus the current price of 17.27)
  • Stop loss: 14.30 (current price of 17.27 minus 3 times ATR)
  • Position size: 11.64% (2% of equity risk divided by the 3 times ATR times the price)

Trading Strategy for Tuesday, 7/6/10

Buy TIE at 17.27 with a target price of 20.24 and an initial trailing stop of 14.30. If the stock moves higher but has not reached the target price, the stop loss should be raised beneath the highest closing price.

For more information on this strategy and other profitable trading and investing strategies visit Grail Investing at grailinvesting.com.

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.

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