Friday, April 24, 2015

Fully Long Signal, Close of April 23rd Markets

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NOTE:  Please subscribe to this using the "Follow by Email" link to the left.  Nobody gets your email except me, and I promise that I won't email you.  It helps me see the number of folks reading this as well as ensuring you get the signals on a timely basis.  If you miss a signal this system will most likely produce sub-par results, which isn't my fault.

Summary:  With the close of markets on the 23rd, my indicators are showing that it's time to be fully invested in the market.  As always, there are warning clouds on the horizon, but there rarely is a perfect blue-sky environment when it comes to investing ...

Timers:


Taken in isolation, all indicators are now long which directs me to become 100% invested.

Long-Cash Ratio Slope Table:


Right click on the image to open in a new tab or window.

The LCR table has transitioned to fully long, with the LCR moving from 1.193 to 1.263, or a move of 6% upward.  This is NOT a big move -- out of all the positive moves since September 2008 it ranks at 575 -- the lower the number the better.  Contrary to the news headlines about the NAS making new 15 year highs, etc. this is not a strong market when we look under the hood.  The "island" of red on the left side of the table indicates that we had a slight pullback, but not everything transitioned so we did not get a "full reset".  Investing in markets that are NOT coming off a bottom is risky business, and my model does not contemplate this specific scenario (but I do...)

You'll see in the next section that we're still in a risky position but certainly, indicators are more positive than negative.

Percent Longs

 Right click on the image to open in a new tab or window.

The takeaway from the figure above is that we're closer to where we have historically sold off (light red) than where we make major advances (light green).  This simply means that while my short/intermediate/long term timer models are saying to jump in with both feet, the reality of the situation is that we should be a bit more cautious.

Transitions Edge


I keep track of the success of signals given various conditions of the LCR table.  The figure above paints the current scenario.

Coming into yesterday morning the 2d, 3d, 55d, and 65d moving average slopes were positive with respect to the LCR.  We transitioned to a fully-long market with the close last evening (close of 4/23), so we had a transition of the 5d, 8d, 13d, 21d, 34d moving averages.  The table above indicates that the likelihood of investing today in the GGT index (a simple average of all the stocks in the present database and closely resembling the S&P500 or the Russell 2000) would likely work out between 13% and 41% of the time.

These aren't bad odds, but of course, actual mileage may vary.  This simply tells me that investing in breakouts today as well as other stocks that are moving long probably is a good risk, at least for the short term.

Note that table above uses ANY timer transition to stop the evaluation.  Hence, if the short-term timer moves south, the numbers are calculated, OR, if the intermediate-term timer moves south but the short remains long (possible in this environment) then we terminate the calculations.

Strategy:

I'm a buyer today.  Here are the candidates in my various watchlists:

Steady Eddies:
AZO
CERN
DLTR
HSIC
MD
NVO
ROL

Greenfield Accelerating Dividends:
AAPL
DL
HAR
MATX
MKTX
PZZA
Greenfield Bargains:
AXN
DL
TNET

Greenfield Leaders:
AEC
AFAM
AHS
AMAG
ANIP
APOG
ARIA
BABY
BONA
BSFT
CBM
CDXS
CHGG
CMPR
CNC
CORT
CVTI
CYNO
DEPO
DXCM
EIGI
ELLI
EW
HALO
HAR
HILL
HOFT
INFN
IPGP
ITG
KMX
LGND
LXFT
MACK
MASI
MATX
MKTX
MMS
MNTA
NLNK
NTES
NXPI
PZZA
QLYS
RAX
SCMP
SKUL
SWKS
TNK
TSEM
TWTR
ULTA
USPH
UTHR
VIPS
VRX
XON
BJRI
ISIS
KIRK
RAD

Greenfield Dividend Champions:
AAPL
AOS
ARMH
BNS
BR
CHE
DIS
EFX
FDS
JCOM
LAD
LEA
MCO
MKTX
NKE
OXM
OZRK
PRE
RY
SBUX
SCI
SIAL
SIG
SYA
TSCO
UDR
V

Breakouts on any of these stocks has to be checked in terms of earnings and when they report.  I'll try to buy any price/volume breakout that has already reported.

A breakout for me is taking out the previous day's high plus another 0.1%.  This has to occur after 9:45 a.m.  Volume predictions for the day need to be 100% or greater of the volume of the largest DOWN day in the previous 10 days.  

I am alerted in breakouts using a texting service.  I have room for two more FREE slots if you are interested -- send me a note at pduncan { a t ] V t _dot_ edu (removing the appropriate characters and using the appropriate symbol for at) with TEXTING in the subject line and I'll try to add you as soon as I receive.  Try to send this before 9:45 a.m. ET as once the service starts for the day I do not want to stop it to add your cell number.  I need your cell number as well as your carrier (e.g., 703-123-4567, AT&T).

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As always, these signals are for me and are provided to you for education purposes.  You are responsible for your own actions, and I am not.  Please do your own research, diligence, and thought processes, and please take ownership for your actions.

Regards,

pgd


Sunday, April 19, 2015

Short- and Intermediate Model Transitions to Cash, Close of Markets 4/17

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NOTE:  Please subscribe to this using the "Follow by Email" link to the left.  Nobody gets your email except me, and I promise that I won't email you.  It helps me see the number of folks reading this as well as ensuring you get the signals on a timely basis.  If you miss a signal this system will most likely produce sub-par results, which isn't my fault.
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Summary:  The GGT system saw a significant pullback on Friday with the GGT index falling about -1.26% on heavier than normal.  The short and intermediate-term timers have transitioned to CASH,  which means that it is time to raise cash to at least 66%.

Back-forth-back-forth.  Choppy waters indeed.

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Timers:



With the transition of the short-term and intermediate-term timers to CASH, I'm forced to raise cash to at least 66% of my holdings.  For those of you familiar with my state flow diagram for money management, we have a transition that looks like this:



The entire state flow for money management looks like this in case you're interested:


Click on the image to open in a new tab or window.

It looks complicated, but it's really not.  We're now sitting in the "66%" bubble and there's only a couple of options from here:  everything goes "LONG" which means get to 0% cash,  the long-term timer flips to cash and we move to 100% cash, or either the short OR the intermediate move long and we move to 33% cash.

Don't worry about it if you can't follow it -- I keep track of it so you don't have to .

The end result is to raise cash from my present holdings.  66% is the target.  To do this:

1) sell all "cash" rated stocks using a 1% trailing stop loss (TSL), good til canceled (GTC), effective after 9:45 a.m. ET.
2) progressively sell the worse performers in each portfolio until each portfolio is at 66% cash.


Long-Cash Ratio Table:


Click on the image to open in a new tab or window.

The LCR drop of -29 in one day is significant -- this was the 70th strongest drop in the LCR since September 2008.  The left side of the table didn't fully capitulate --we still have the 88d and the 143d slopes of the LCR showing (barely) positive.  On the other hand, the right side of the table, which shows accelerations of each of the slopes, is clearly showing a picture that points down and to a large amount, so caution is advised.

This all being stated, when you look at the raw numbers on both the slopes (left) and accelerations (right), you see these are REALLY NEGATIVE numbers.  Too negative actually.  Because of this I am expecting a bounce upward on Monday.  What happens beyond Monday is anybody's guess.

Cumulative Tick:


Click on the image to open in a new tab or window.

The Cumulative Tick chart is weak.  Starting at the upper right, the number of 52 week new highs is about the same as the number of 52 week new lows.  We want the 52wNH to dominate the 52wNL, and this is not the case.  If we end up with 52wNL > 52wNH I will not buy.  Period.

The middle plot shows lots of selling throughout the day.  There was a bit of buying at the end of the day, in the last 30 min, but the damage had obviously been done.

The bottom plot shows that we are precariously close to dropping below the red line, which is a longer moving average of the cumulative tick.  If the white drops below the red all the slopes of the cumulative tick will be negative within a day or two, and this is a TERRIBLE buying environment.  I will not buy if white is below red, period.

Strategy:

1) I'm selling all my "New Cash" and cash-rated stocks.  Period.  1% TSL, GTC, eff after 0\9:45 a.m. ET
2) I'm selling my worse performers in each portfolio until I get to 66% cash position in each portfolio.

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Relatively simple at this point.

As always, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd


Thursday, April 16, 2015

Risk Model Moves Into Higher Short-Term Risk Area

NOTE:  Please subscribe to this using the "Follow by Email" link to the left.  Nobody gets your email except me, and I promise that I won't email you.  It helps me see the number of folks reading this as well as ensuring you get the signals on a timely basis.  If you miss a signal this system will most likely produce sub-par results, which isn't my fault.

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Summary:  The GGT model is fully invested.  The short-term indications are that we have entered a higher probably of a short-term pullback from here, implying that we should not be buying at the present time.

Timers:


All the timers are LONG, which implies in the money management model that we should be fully invested (0% cash target) at this time.  Anywhere between 0 - 33% is probably okay, as we've been bouncing in this range for a bit.

LCR Slope Tables:



Right click on the image to open in a new tab or window.

The LCR is looking relatively good on a macro scale.  The left side of the table is solid green, which means we should be long and not considering any type of short position, and the right side of the table indicates that we're still accelerating upwards.

Of course, all of this could change.  If we start seeing more red on the right side we know the left side will be changing soon.  I'm watching this and will post a note if we start seeing more red on the right.


Percent GGT Longs



Right click on the image to open in a new tab or window.

This is one of two indicators that I have that tell me we're in overbought territory and that on average, we've experienced reversals.  The current level of GGT % Longs is 61.1%, and levels above about 57% are generally indicating that we shouldn't be buying until we drop back into the green zone (below ~43 %).

Consequently, if you're not fully loaded (0% cash), keep your powder dry and wait for a pullback.

Historical Turning Points


Right click on the image to open in a new tab or window.

The figure above is a histogram, which counts the number of times some parameter is within a specific range.

In this case, the parameter is the 8d slope of the LCR.  Why I picked this is a topic for a different time, but suffice to say it does not whipsaw very often and once it turns south (or north), the trend generally continues.

Further to this, in general, when the 8d slope of the LCR falls into the range of 0.1095 to 0.1889, the market 5 days after it hit this range was lower.

On 4/15 the 8d slope of the LCR hit 0.133, so it was in this bin, and today (4/16), the LCR fell to 0.0995.  It's anybody's guess to whether the trend will continue, but be aware, we may just have experienced a local maximum and perhaps the market needs to pause here -- your crystal ball is as good as mine.

Summary:

We're in a short-term, medium-term, and long-term uptrend.  We're entering a point in the % longs that says we could reverse -- history is on our side as we have reversed from these levels in the past.  A perfect scenario would be to reverse down to below ~ 43% % Longs and this could present a buying opportunity.

The histogram presented above shows that history tells me that we've seen reversals from this level.  In fact, the highest occurrence of reversals has occurred in this range since I started keeping track of this in September 2008.

Even though I'm not fully loaded in my portfolios, I'm not buying on Friday.

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Remember, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Tuesday, April 7, 2015

Systems Signals All-In, but ...

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NOTE:  Please subscribe to this using the "Follow by Email" link to the left.  Nobody gets your email except me, and I promise that I won't email you.  It helps me see the number of folks reading this as well as ensuring you get the signals on a timely basis.  If you miss a signal this system will most likely produce sub-par results, which isn't my fault.

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Summary:  the GGT timer system has transitioned to an "all-in" signal, but past history suggests this could be short lived.  I'm starting with my longer-term / more-conservative dividend portfolio holdings first.

Timers:



I missed the signal at yesterday's close due to late travel.  This being stated, it does not appear that much was lost in terms of today's action, as the sell-off at the end of the day negated most gains.

LCR Table:


Right-click on the image to open in a new tab or window.

The LCR table is showing that we're in a good zone for buying.  You can see that on the left that all slopes are positive (green), which triggered the "all in".  On the right we have a good paint of green, again indicating that we are accelerating upwards in terms of the number of stocks, on a day-over-day basis, that are moving from a CASH status to a LONG status.

Taken in isolation, there is nothing in the table above that tells me to be cautionary.

Percent Longs:


Right-click on the image to open in a new tab or window.

If you listened to the weekend recording I discussed how the percent long value within the database can give us some indication of chance of success of trades to the long side.  In the figure above the key takeaway is that the present value of percent longs in the database is still very close to 50%, which you can see is neither in the buy zone (approx less than 44%) nor is it in the sell zone (approx greater than 58%).  This means that we're still quite uncertain in the direction of the possible trade.  I could make an argument that picking some short ETFs here could be prudent.  I'm not doing that in my trading, but I could make a good argument ...

Cumulative Tick:


Right-click on the image to open in a new tab or window.

On the long side, the top right of the figure above shows that we're strongly achieving a number of 52-week New Highs on the NYSE.  This is one of my criteria for buying.

The middle plot, again discussed this past weekend in the webinar and available for download in the Dropbox file, shows that at about 3 pm we started to strongly sell off.  This effectively negated many of the day's gainers.

The bottom plot is the Cumulative Tick.  The long-term CT moving average (red) is moving higher and has a definite slope upward, which is good.  The majority of the moving averages above it are still with a positive slope, which again, is good.  The instantaneous CT value (white) shows the sell-off in the late afternoon, and that pulled a few of the shorter CT moving averages down, causing them to trend downward in slope.

This latter condition is the first stage of a break down.  Your crystal ball is as good as mine, but if the behavior continues then we should not be buying.  On the other hand, pull-backs like this, as long as the LCR and long-term CT are with a positive slope (and as long as we are achieving new 52 week new highs), are all buying opportunities.  It's this latter position that I'm running with at the present time.

Strategy:

I'm a buyer, but I'm going to edge into this one a bit slower than I normally would.  My pause here is due to the percent-long value that is right at mid-scale; if we were down in the green I'd be going all in on this pull-back, but we're not.

I'm focused on my Accelerating Dividend portfolio first, as I typically hold these stocks the longest.  The stocks in this portfolio can be found on the "Dashboard" tab of the shared Excel file in the Dropbox.  Not a member of the Dropbox?  Post a note and I'll send you an invite AND force add you to our Yahoo web site (the latter being the only way I can communicate with you).

I've placed orders to buy every LONG-rated stock in the Accelerating Dividend list, GTC, effective after 9:45 a.m ET, at 1.001x the HIGH of today's market.  Hence, I buy breakouts.   If the stock does not trigger tomorrow then tomorrow night will find me adjusting the BUY STOP to the new (lower) level.

I've also placed orders using the Dividend Champions listing, again which can be found in the stock file.  This time I'm focused on the stocks with a Calmar Ratio that is much greater than 3.0 AND are LONG-rated.  The first criteria indicates how well the stock recommendation is in sync with my system, with the higher numbers indicating greater synchronization.  To save you some hassle here's my buy list (in addition to the Accelerating Dividend list not provided -- you can do a little work here), from most attractive to not-as-strong-as-the-top-stock ...

CLB
SIAL
KR
EFX
ROST
FDS
WGL
MKTX
JKHY
LB
CVS
COR
DIS
OXM
SCI
NKE
AOS
LEA
UDR
ISCA
SBUX
LAD
BR
PFG
BLX
ROP
GK
THG
SNA
MCO
USPH
LMT
MLR

Note that there are some duplicates in this list from the Accelerating Dividends list, which you would expect.

Some of you are receiving breakout emails or text messages.  I will be adding these to my portfolio too, as they occur.  For example. today I added TWTR.  If these are racing away from when the signal occurred I'll typically enter an order at the VWAP and let it be active for only the day.  If a pullback occurs it often is to the VWAP so you may be able to catch a run-away stock before it completely breaks loose.

So, general disclaimers apply here.  You are responsible for your own decisions and I am not.  Do your own diligence, and please take ownership for your actions.

Regards,

pgd

Wednesday, March 25, 2015

Short-term and Medium-term timers transition to CASH, 66% Cash Target, March 25 Close

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This was entitled "Uptrend continues - March 24th Close" as I wrote the blog this morning (Wednesday).

For continuity, I've included the early-morning March 25th entry (describing March 24th) below since it's been posted all day.

What a day a market makes....

The LCR took a significant hit today, dropping nearly 20% in 1 day from it's previous value.  This has had a dramatic impact on the LCR Table:


With the 2d, 3d, and 5d LCR slopes transitioning negative we have a change in the short-term timer and as such, raise cash to at least 66% of total portfolio value.

"Trade the market presented, not the one you want."

This was a severe move today and the volatility will cause me to pause about being long in this market.

Timer Table:


The table status tells the story.  Not much to add.

Strategy:

Even though I'm a medium to long-term investor, it's important to react to these signals as the model is based on next-day execution.  All the metrics I've developed presume that I've obtained the next day's close (or better) in my pricing on exit.  Hence, time to act.

1) I will sort my holdings from weakest to strongest
2) I will place a 1% Trailing Stop Loss (TSL) order, Good 'til Canceled (GTC), effective after 9:45 a.m., on all positions that are underwater.  Period.
3) I will place a 1% TSL GTC order on all positions above the water line that get me to 66% cash position when fully executed.
4) No buying, not even for my Greenfield Dividend portfolio.

Your crystal ball is as good as mine.  We could have a 1-day dip or this could be something deeper.  It's not worth holding on to.

Execute flawlessly and live to make money another day, to paraphrase the well-known saying.

Regards,

pgd

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BLOG ENTRY FROM EARLY WEDNESDAY, MARCH 25, BEFORE MARKET OPEN:

No changes to the model.  The uptrend continues and the short-term weakness is abating.


The LCR nudged upward +3% to 1.489.  This means that there are 1785 stocks in the database who have some form of "long" recommendation and 1199 who have some form of "cash" recommendation.  The numbers are increasing day over day for the past 7 consecutive days.

All slopes are positive through the 143rd day moving average.  The slope angle is increasing, which means that the trend is presently strong.  It could change, so this is only a day-over-day observation.

On the right side of the table I see that the slope of the slopes are negative from the 2d through the 13d, BUT, note that the values of the 2d through the 8d are less negative (more positive) than the action on 3/23.  This means that although the slopes (on the left) are trending down, they are doing so less and less on a day-over-day view.  This is a normal setup for a short-term reversal higher.

Again, no changes to strategy.  Just an update.

Sunday, March 22, 2015

Confirming 100 Percent Equity Target, Friday, March 20 Close

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Summary:  Friday's action caused the LCR to move positive on all measured time frames.  Correspondingly, this confirms that I should be 100% invested in equities at this time.

Timer Table:



The table shows that we are "long" on all timers -- short term, medium term, and long term.  The "optional actions" column also indicates that when this particular setup has occurred in the past the chances of trades from this point forward being profitable are diminished, hence, adding to my positions at this time is not advised.  So, if I'm not 100% invested (I'm not), then pending buy orders should be canceled or otherwise removed from consideration.



LCR Table:


The LCR table shows that we had a huge day on Friday.  Some of this is certainly due to options expiration, but not all of it.  Friday's action was the 59th strongest LCR move upward since 2008, which is significant.

The fact that the LCR shows that all measured moving averages have a positive slope tells me that we're firing on all cylinders, options expirations or not.

Cumulative Tick:




The cumulative tick, which shows the net buying/selling with an uptick/downtick per min of transactions, rocketed in the early morning and stabilized by lunch/afternoon.  This is a buying chart, and it shows that on net that stocks traded on the NYSE are being bought and are doing so on higher and higher prices.  This is good.

Strategy:



The chart above shows the GGT price index overlaid with the GGT Percent Longs as indicated in the database.  The chart shows a new high in terms of GGT price, and it also shows that we've entered a zone where historically, the markets have pulled back.  This is indicated by the pink zone.

This is not a predictive chart.  It simply shows that the market is entering a zone where a pullback is possible, so buying at this point could be a losing proposition.  This chart is NOT related to the recommendation above that I not buy any more stocks -- but two separate indicators are telling me to be careful here, so I'm not going to chase going to 100% equity until we get some sort of pullback.

It's all part of the game.  Buy breakouts as the market absorbs gains.

I'm cancelling all open buy orders except those that are related to my dividend portfolio (which tries to stay 100% invested unless the long-term signal has transitioned to cash).  Stocks that break out on price AND volume may be purchased, but they will have a marginal impact on percent invested.

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Remember, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd


Thursday, March 19, 2015

All in... March 18th close

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Timer Table:

All timers are now long.  Targeting 100% equity investment:




Nothing much to say here -- it's apparent that we're back on the long side.


LCR Table:


Click on the image to open in a new tab or window.

A huge jump for the LCR -- this was a deep move in the number of stocks participating to the up side.  The right side of the table shows that "green" led the left side, as expected.

The left side of the table shows that we are now long through the 8d; look to see that the 13d goes in a day or two.  Thursday may be a pause, which I would consider normal behavior.

Cumulative Tick:


Click on the image to open in a new tab or window.

White crossed red from below and finished strong -- this was one of the last indicators I have that was not signalling "all in".  It now is confirming.  As long as the white stays above the red line, and the red line keeps a positive slope, I'm buying.

Strategy:

Here are the leading greenfield stocks:

AAPL
AHS
AMAG
AMBA
ANIP
BABY
BBW
BJRI
BMA
BSFT
CBM
CBRL
CDXS
CELG
CHGG
CMPR
CNC
COR
CRTO
CTRN
CVTI
DENN
DEPO
DXCM
EIGI
ELLI
EVLV
EW
FNHC
HALO
HAR
HDB
ILMN
INFN
ISIS
ITG
JNS
JRN
KR
LB
LCI
LTS
LXFT
MACK
MASI
MATX
MDVN
MDXG
MKTX
MMS
MMSI
MNTA
MOH
MRCY
MTSN
NHTC
NLNK
NXPI
NXST
PATK
QLYS
RAX
RMD
ROST
SCMP
SKUL
SMRT
SQBK
SURG
SWKS
TNET
TNK
TSEM
TTGT
ULTA
USPH
UTHR
VASC
VIPS
VRX
XON
ZAGG

Here are the greenfield charts:


Here are my present holdings:


I intend to keep buying GGT-long rated stocks.  The stock file has been updated in the shared Dropbox folder for those of you who have access.

I intend to buy breakouts on volume and price.

I intend to buy only stocks that are taking out their previous day's high and a bit more.

I intend to sell stocks that move to a GGT "cash" rating.  OMC is one that I am unloading Thursday with a 1% trailing stop loss.

My goal is to get as quickly invested as possible.  I'm only about 35% invested at the present time, so this will take some work.

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Remember, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd