Letters To S&C by Technical Analysis, Inc.
CLARIFICATION ON DOUBLE 7s STRATEGY
In the January 2009 S&C article, “Three Rules, One Easy Way To Trade Etfs,” Figure 2 shows point B and the caption refers to “a new, seven-day low at point B.” However, two days earlier, the price bar is lower than the bar pointed to at B (using a magnifying glass).
A check of my data shows the same results. Point B, on December 14, 2007, has a low of 50.92, but on December 12, the low is at 50.89, according to data from Yahoo! Finance. Is it possible the arrow is pointing to the next day, or do the authors mean a “new, lower close?”
Yes, in this case, authors Larry Connors and David Penn mean a new, lower close, even though the intraday low may have been lower two days ago. This is based on the second rule, which states that if the Etf closes at a seven-day low, you would buy on the close.