From an investors perspective a move in the GSTI Software Index (GSO.X) from current levels at 193 to 204 doesn't seem like a lot, but for a trader it means everything. This morning in the "hot list" on PremierMarkets.com, we were guiding traders long in the pre-market to be buying Informix (NASDAQ:IFMX) at $4.63. Those that did some pre-market buying in this stock want to see the GSO.X move higher here and run to $204. That type of move might just get IFMX to our bullish target of $5.25.
GSTI Software Index (GSO.X) Chart - 60-minute interval
Hour by hour we can test a trade and look for things we feel need to happen for our trading plan to unfold in our favor. Currently I'm looking for the GSO.X to break above earlier session highs to influence more buyers in the group.
Informix Corporation (IFMX) - 60-minute chart
We can correlate a trade with IFMX with the GSO.X. Informix is a "software stock" and we want to see bullishness in the group as that should help our probabilities for making money in IFMX. At the same time, we're drawing on our experience from a $1 loss yesterday in our short on ADBE (another software stock). You don't need to beat me over the head with a pan to get me to play a trend. If I lost money on the short side in the group, I'll turn on a dime and play the other way if I think I can make money. But in order to get me to play long, there had better be some technicals that work in my favor. I thought we had that in IFMX this morning and still think so.