Delta's wonderful earnings
, stock buyback announcement and dividend increase has bulls feeling very comfortable, but the chart is showing that the IWM
is pointing down and in a corrective phase. This performance difference has brought about a wide disparity in the price of DAL versus the IWM
. DAL could just hold onto these prices and IWM
could rebound to catch back up to DAL. I don't know which will happen, but I like my odds here. There seems to be a low-risk trade here now that DAL is below 38 (signaling that it is rolling over) and that IWM
has fallen back to multi-month lows under 108.
It takes awhile to get comfortable with pairs trades. Follow this one.
I put some older examples of pairs trades below for reference.
Tim 12:12PM EST 5/15/2014