An ETF Trading Right at the 50-Day Moving Average

02/05/2009 9:46 am EST

Focus: ETFS

Tim Bourquin

Co-Founder, The Traders Expo and The Futures & Forex Expo

Traders typically don’t find bond fund ETFs on their watch list very often. In fact, I find it a bit odd that many professional traders do trade bonds while the retail crowd shuns them as short-term profit tools.

Here’s your chance to trade bonds without actually buying one—by trading the ETF.  The iShares Lehman Aggregate Bond Fund (AGG) has had a rough start to 2009, and on Wednesday, hit its 50-day moving average. 

Normally, I’d expect a bounce off of that area as resistance, but with the obvious downward trend this past month, and the 200-day moving average (red line) not far below, I’d say this one is headed lower to test that 200-day MA.

This one looks like a prime shorting opportunity to me. If it breaks that 50-day MA tomorrow and shows no sign of heading back, get ready for a quick ride down to around $98, where the 200-day MA is waiting.

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