Monday, February 8, 2016

Latest Short-Term Entry Signal Under Pressure

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If you are on the blog page, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

To get the GotoMeeting information you must register with my Yahoo! group:

GreekGodTrading@yahoogroups.com

If you are a member I'll post the info later this week.

Summary

As I write the market is setting up for ugliness this morning.  Futures are down hard, so I expect the positions that I hold to be under pressure.  We are still within a short-term buy but longer-term cash signal (33% invested, remainder in cash), so the present weakness should be no surprise.  Buying will be opportunistic and only if it meets conditions.

Long-Term View

Cash.  I have a large amount of cash and am on the sidelines.  My money management guidelines are pointing to 33% equity / 67% cash right now.   With little exception any positions that I hold (aside from cash-secured puts) are dividend-paying stocks with historically good track records.

Cumulative Tick

The cumulative tick indicator is a short-term indicator.  It does nothing for the long-term view of the markets.

Friday's CT presentation shows that the sell-off was broad and deep:

Click on the image to enlarge

The middle trace shows that algorithmic and/or strong selling started at the open and was more/less constant until the mid afternoon.    The impact on the present signal can be seen in the lower plot -- we are within a close range to the white, instantaneous cumulative tick dropping below the red moving average, which will pull everything downward.  If white crosses red from above we could certainly retest the lows of January.

This chart suggests to me that I should not be entering any positions.

LCR Table

The LCR table provides me a short-term and intermediate-term view of the markets.

Presently, the LCR table is showing short-term weakness in the present buy signal:

Click on the image to enlarge

On the left side, for the first time in weeks, the LCR moved downward.  This weakness was not overly strong but it stopped the run upward.  The LCR fell to 0.358, and although one-day-does-not-make-a-market, I take it as a warning shot over the bow.

Combined with the CT presentation, we are certainly under selling pressure.

The middle of the table shows the first sign of red in awhile.  This "red" means that the slope of the 2d LCR is downward, so on the shortest of measured time frames we have weakness.  The rest of the slopes are still positive, which is good but as you can see, the values are less than Thursday's values.

The right side of the table shows the first deceleration of the LCR in some time, again on all measured time frames.  Continued "red" on the right side of the table will bring red to the left side, and this will negate our short-term buy signal.

Strategy

My long-term view is unchanged.  Cash is king.

On a shorter-term basis, my existing positions are going to see weakness.  GGT "New Cash" signals fired for the following holdings and I need to decide if they are in a "follow the sell signal" or "hold due to dividends and yield" category:

CTSH
CUBE
HEI
IOSP

I've linked the symbols to their charts; if you click through you should see why I really like CTSH (no dividend but EPS growth is perfect) and HEI.

I've done an analysis on CTSH and HEI and you can find them here and here respectively.  Not recommendations to buy/sell/hold, and of course, do your own diligence.  CTSH announces earnings today (Feb 8) and HEI on Feb 23rd.  CUBE announces earnings in 10 days (Feb 16) and IOSP in 8 days (Feb 16).

Looking forward, my position in SSS is probably next to fire a "New Cash"; we'll see how today goes.

~~~~~~~~~~~~~~~~

Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

Here's how to find me:

InvestFeed/Twitter:  grems8544
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As with all my ramblings, 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, February 4, 2016

A Tale of Two Mindsets

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If you are on the blog page, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Summary

The Long-Cash Ratio (LCR) value continues to strengthen, indicating that buying is occurring, driving both individual price and volume upward.  The buying is selective though, because average prices are not in sync.  This is a cautionary indicator which supports the present call of being on a short-term buy signal but longer-term "raise cash" signal.

Price Slopes

As you probably can imagine, I have numerous indicators with the system that I don't expose on a daily basis -- not because of anything proprietary, but simply because too many indicators causes too much noise.

In the end, price is what matters -- it's what we bank, it's what we retire with, and in the end, it's the end goal despite the myriad of ways to get to higher prices.

One of my indicators is a parallel of the LCR table -- it's a price slope table.  The construction is simple:

1) take the average, equal-weight prices of all the stocks in the database.
2) apply various exponential moving averages (EMAs) to the price series
3) look at the slopes (rise, fall) of the individual EMAs
4) look at the rate-of-change of the slopes, which is also known as acceleration.

Doing all of that magic, we have the following conditions:

Click on the image to enlarge.

The left side presents the slopes of the moving average of prices, and the right side presents the rate of change of the slopes.

For the left side, green means a positive (upward-trending) slope, which means prices are increasing.
For the right side, green means a positive acceleration upward in the rate of change, compared to the previous day, which means that if the right side has lots and lots of green, we will start seeing green on the left.

We don't have this scenario.  What we do have is a bunch of noise -- some days prices move forward, some days they move backwards.  You can see this on the left side of the table.  This being said, the right side looks relatively solid -- lots of attempts at moving higher, but only to be negated the next day or so.

As a comparison, here is a chart from 2014.  This is 2014, 2 years ago:


Click on the image to enlarge.

The key takeaway here is that the red/green at the top of the right side of the table eventually set up the sea of green on the left side of the table (area "1" led to area "2").  Note that during the period of rising prices (area "2"), we saw the right side of the table go back and forth -- this is normal market behavior as the market digests gains (area "3").

Again, we don't have this.  Prices are struggling to move higher, despite the attempts of the market to force things higher off the lows.

As I stated above, the rally off the bottom is selective, not broad.  How do we know this?

Long-Cash Ratio Table

The LCR table measures the number of stocks in a "long-recommendation" state, e.g., they have price and volume growth, relative to the number that are in a "cash-recommendation" state, e.g., those that have decreasing prices with or without volume.

Here's the LCR table:

Click on the image to enlarge.

Of significance here is that that despite the market's gyrations in price, we now have had 10 consecutive days of day-over-day gains in the LCR.  If you look back at 1/21/2016 you'll see that the LCR was at 0.085, which means that I was recommending that only 238 stocks in the database were worthy of our hard-earned money, while 2785 were in some form of decline below their historical performance records.  Note that 1/21/2016 is one day off the bottom as I measured it, and we've climbed steadily since.

We are now at 769 to 2243 stocks, or a LCR value of 0.343.  25% of the stocks in the database are now in a "long" status, and this value has been growing on a day-over-day stance.

Here's the "so what?":

The LCR gives us a view that stocks are either being acquired or sold.  Right now the growth of the LCR, as shown on the left (increasing green in the slope portion) tells us to actively be acquiring stocks.  In fact, I'd say that we're a bit deep into this present cycle so we may be a few days late for the initial entry.  That being said, note that the RIGHT side of the table showed a whole-bunch-of-green before the LEFT side of the table turned.  I've written over and over about this -- we have a view that we can enter the market at turning points -- and the LCR gives us this view, independent of what we see the major indexes doing.

(I hate the major indexes, just like I hate my own GGT average.  NONE of the price indexes, including my GGT average, give the full picture.)

Cumulative Tick

The CT resumed it's upward trend, indicating broad buying on a short-term basis:


Click on the image to enlarge.

Wednesday started relatively ugly with a jump of new 52-week lows (upper trace).  Mid-day the algos started buying the dip, resulting in sustained buying that pulled sentiment around (middle trace).  The CT (white) and the longest moving average of the CT (heavy red) are positively trending upward, pulling the other moving averages upward with a positive slope, so there is a clear indication that folks are buying, ON THE SHORT TERM, this market.

Of course, today could see a reversal.  Your crystal ball is as good as mine.

Strategy

Having established that a) the indexes and GGT price index is flat and choppy, that b) the market is being bought as far as selective stocks, and c) the market is resuming an uptrend, now what?

I'm buying what I consider quality stocks with good fundamentals.  My combined holdings, in all portfolios, are with the following stocks:


Duplicative symbols appear because they are in separate accounts.  Note my entry into NHTC is probably an error in judgment on my part -- we'll see.

I also own some CSPs, which are doing okay:

Symbol                     Position Open P/L %
WBA 160219P70     Short            0.00%
FSLR 160219P57.5     Short            77.84%
BURL 160219P44     Short            35.29%
ADBE 160219P85     Short            31.69%

These expire in February and I still have time to decide what to do with them.  I purchased these at the recent market bottom when the LCR was in single digits but we saw lots of green developing on the acceleration portion of the LCR table, giving me some indication that the local-bottom was forming.  These positions allow me to collect some premium to boost overall performance.  I would not mind if these stocks were put to me when we hit expiration, but I think the likelihood is very low at this point (except for WBA).

For those of you who are following the "greenfield" methodology that I've developed and read the blog from a few days ago, here is the greenfield presentation for my holdings:


Click on the image to enlarge.

Note that I've included estimated earnings report dates/times, and sorted the list accordingly, so be careful if you consider any of these stocks for purchase.  Do your own homework -- I'm not recommending that you follow me at all.

Field descriptors for the greenfield chart above can be found on this blog entry.  CTWS is the only one that has marginal volume -- all the rest meet my overall criteria.

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Here's how to find me:

Stocktwits/InvestFeed/Twitter:  grems8544

Greenfield Dividends: https://www.collective2.com/details/94780986
Greenfield Accel Sales, EPS, and Pre-tax Profits:  https://www.collective2.com/details/95702992

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

New Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As with all my ramblings, 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







Monday, February 1, 2016

I trust that your shopping lists are ready

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If you are on the blog page, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Summary

Thursday triggered an initial entry and Friday's strong action confirmed a short-term buy signal.  My target equity level is around 33% or so, perhaps a bit higher because we were so oversold.

Long-Cash Ratio Table

In a word, bullish:


Click on the image to enlarge.

The LCR jumped 74% from 0.159 on Thursday to 0.277 on Friday, confirming entry into the markets.  I've been writing about this for many days so this should not have been a big surprise.  The growing staircase of green in the middle of the table indicates that stocks are moving into a "new long" recommendation (volume plus price appreciation), and the right side indicates that on all measured timeframes that we are accelerating upward on a day-over-day basis.

Futures are down as I write this so I'm expecting a day of pullback / digesting gains.  I consider it healthy in that it helps to keep us from moving upward too quickly.

For new folks reading this, the table is bullish but in a young stage of growth.  Any red on the right side of the table would indicate short-term slowing (prices decreasing), and if sustained, would put the middle of the table under pressure.

Note that a reading of 0.277 is incredibly oversold.  We have a long way to go upwards just to reach parity (1.000), where the number of long-rated stocks equals the number of cash-rated stocks, let alone higher.  Expect some pullbacks.

Cumulative Tick

As previously mentioned in other blog entries, Friday's CT presentation was classic confirmation:



Click on the image to enlarge.

After messing around on Wednesday and Thursday with a tight range (the moving averages all converging and tight), Friday's explosive move upside and "fan" presentation of the moving averages to the upper right shows that buying was strong and sustained on all fronts on the NYSE.  This is a great confirmation presentation.

The middle plot shows that algorithmic buying was present and sustained at over 500 stocks per minute ending on an uptick.  Given the number of stocks on the NYSE you would think this is relatively easy to accomplish, but as I've shown in the past, it is not.  this sustained upward-moving trace shows that markets were stepping in aggressively.

As long as the white remains above the solid red line in the lower plot we are in an uptrend, albeit a short-term one (for now -- your crystal ball is as good as mine).

"Greenfield"

I'm initially focused on two primary portfolio constructions.  The first is the classic "Greenfield Dividend" portfolio, which has dividend-paying stocks as the primary criteria, and the secondary criteria being that the stock show constant to accelerating dividends, revenues, and EPS in the recent time frame.  Here is a subset of the stocks making this cut:


Click on the image to enlarge.

The list above is not exhaustive and subscribers to my Dropbox have access to the full list, with other important information.

The field titles should be self-explanatory, but here is a fast breakdown:

c-50: how far the close is from the 50d moving average
RevYoY: same year-over-year revenues  percent change
RevQtr-1: revenues in the present reported quarter compared to 1 quarter previous
RevQtr-1y: revenues in the present report quarter compared to the same quarter a year ago
%TTMRevChg:  trailing 12 month revenue change compared to the previous year's TTM rev change
QREV -- what the quarterly revenue is

EPSYoY: same year-over-year EPS percent change
EPSQtr-1: EPS in the present reported quarter compared to 1 quarter previous
EPSQtr-1y: EPS in the present report quarter compared to the same quarter a year ago
%TTMEPS:  trailing 12 month EPS change compared to the previous year's TTM EPS change
QEPS -- what the quarterly EPS is.  Negative isn't bad if the trend is upward.

YoYDivChg -- how much have dividends changed for the equity in the present year compared to the previous year?  Same as TTM
Score - an internal system I use to rank the stock.  Don't ask, and red/negative does not mean what you think it does.  I simply sorted it this way for the presentation.
V - does the stock have at least 100K shares 50d moving average volume?

The "yellow" in the table indicates that Tradestation does not have a value for that specific stock.  I've I'm familiar with the stock I typically ignore partial omissions from Tradestation.

If you are a Tradestation user the indicator is available.  I ask that you consider a donation (using the link on the web site, left side) if you are interest in the indicator.  Note that it is locked to your customer ID and network ID, so I'll need that information if you want a copy.  The most recent version is 2.1.4, which is shown above.  It runs flawlessly under Tradestation v9.1 and v9.5 still gives it intermittent fits.  I'm running v9.1 and expect many of you are too.

Within this dividend paying strategy I'm looking for stocks that would be adequate to be timed with the GGT timing system, as well as those that would work as long-term holdings and that do NOT use the GGT timing system.  Because time is limited, and because risk is presently high I am only investing in Greenfield stocks that meet both criteria, although this will not be the case as the market matures.

Strategy

I'm a buyer within this market, targeting 30-40% equity in all portfolios.  Note that I already have positions in a number of the stocks that I am going to discuss, as I entered over the past week as conditions improved.

My February cash secured puts are all massively in the money, as I bought them when the markets were at the extreme local lows but when we had "thawing" occurring on the right side of the LCR table.  Go back a few blog entries -- perhaps 1-2 weeks -- and you can read when I was buying them.  The LCR can provide a good indication when to collect some premiums but of course, it is possible to continue to fall when the LCR is in the single digits, so the stock could be put to you at expiration if the price has dropped that far.  Only write a CSP on a stock that you would want to own at the lower value.

As a gimmee, here is a sampling of the stocks that meet my dividend criteria and are in tune with the GGT system:


Click on the image to enlarge.

These are not recommendations and you should do your own diligence on these stocks.  Note that I own a few of these and have orders pending for others on this list.  Note that ANFI does not pay a dividend but is on the list due to a possible significant undervalue criteria being met.  All the stocks meet the Greenfield criteria I discussed earlier.

This list, as well as others, are available (for free!) to my Dropbox subscribers.  Instructions on how to subscribe are below.

Independent of time frame for holding, my entry methodology is the same:

1) BUY STOP LOSS entry only
2) entry price is 0.1% higher than the previous day's high (buy strength)
3) delayed entry until after 9:45 a/ET
4) if buy stop loss does not fill, then I adjust the price downward, never upward.
5) with little exception, the stock will be a GGT "long"-rated stock (New Long, Affirmed Long, or Long)

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Unless something really remarkable happens Monday, I will not be blogging on Tuesday due to travel.  My next blog entry will most likely be Wednesday morning.

~~~~~~~~~~~~~~

Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

Subscribe to my twitter feed if you want intra-day observations:  grems8544

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As with all my ramblings, 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, January 28, 2016

Near an initial buy signal but limit exposure

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If you are on the blog page, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Summary

The Long-Cash Ratio is marginally improving, and strength today (Thursday) will most likely trigger an initial entry signal.  Other confirming indicators I have are not as bullish, so caution is advised.

Long Cash Ratio

The LCR Table shows the thawing that I discussed all last week:


Click on the image to enlarge.

The LCR is improving despite the downward days that we've experienced in the markets.  This means that there is buying on price and volume action, so people are stepping in.

The middle of the table shows growing "green", or positive slopes that stocks are improving on a short-term basis.  The red in the middle of the table indicates a huge pool of stocks that are beaten down, and we need continued, day-over-day improvement off the recent low for this area to turn green.  One of my internal signals is triggered when the 8d slope turns green, but note that this action was not confirmed by other internals, so I did not post it.

The right side of the table shows the problem.  Foward-backwards-forward-backwards is the characteristic, and the red shows weakness in the buying of the bottom.  This being said, as a longer-termed investor, the green on the right shows that we are not aggressively moving downward (in fact, we are moving upward, albeit slowly), so the bottom is clearly in.

This being stated, we can dawdle here if the markets decide to do so.  I'm seeing lots of churning, or turnover occurring, so I'm not convinced that we're out of the woods.

I've placed orders in the longer-termed portfolios at C2 and in my personal holdings, but am limited in committing resources to less than 30% or so in investments.

Cumulative Tick


Click on the image to enlarge.

The cumulative tick is not as strong as I'd like to see.  The white trace, which is the instantaneous value, is mixed in with the moving averages, and the result is a tightening of the band and a possible break above or continued drop below the longest moving average, which is in heavy red.  The implications here are that it's hard to tell if we have short-covering occurring or if this is actual buying of this market.  If short-covering, I would not be surprised if we resumed a downward slope and that selling would dominate.

Hence, extreme caution is advised based on this chart alone.  I like to see clear buying of the bottoms with this chart, and we do not have this.  

Strategy

I'm staring to place orders in stocks that I want to hold for the longer-term.  These orders are BUY STOPS, set to 0.1% above the previous day's high, and effective after 9:45 a/ET.  If they do not fill I will adjust the entry value downward, never upward, after the market closes and to prepare for the next day.

Stock selection is found in my stock files, specifically on the Portfolio tab of the shared Dropbox files.  Instructions on how to access those files follows.

~~~~~~~~~~~~~~~

Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

Subscribe to my twitter feed if you want intra-day observations:  grems8544

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

New Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As with all my ramblings, 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

Monday, January 25, 2016

The bottom is being bought but could be short covering; care right now is prudent

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If you are on the blog page, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Summary

The Long-Cash Ratio *just* moved out of single-digit territory, and is now indicating a value of 0.100.  We have had 2 full days of buying off the bottom; indicators are significantly improving but we are operating on a buy signal yet.

Long-Cash Ratio:


Click on the picture to enlarge.

The left side of the table shows that the LCR now has a value of 0.100, up from a low two days ago of 0.084.  273 stocks are rated as "long" or worthy of our consideration, 2743 are in some form of "cash" and are "avoid".  Internally, and not visible to you, is that there are subrankings and the number of stocks that are positioned to move to "long" jumped from 513 on Thursday to 1207 on Friday -- all they need is volume.

The two green cells in the "Slope of LCR EMAs" section tells me that on a short-term basis, the number of stocks moving to a "long" status is improving.  The 5d and longer slopes are still negative (pointing downward), so we are super early in the start of a new trend.  Risk is quite high, and we may simply have short-covering.

The right side of the table is a sea of green, which I've been writing about almost daily.  This is a great presentation (on the right), and continued green over there will force green in the middle part of the chart.

We do NOT have a buy signal going into Monday. Any purchases are to be considered very risky -- short-covering spurts typically last 2-3 days, so we need a solid performance on Monday, January 25 and perhaps on Tuesday before we can call an entry signal.

Cumulative Tick

The CT shows dramatic improvement:

Click on the image to enlarge.

The "V" reversal on Wednesday is classic and a trait that I love to see at market turning points.  Both Thursday and Friday have upward trending CT lines, and this is pulling the moving averages upward.  If the white CT line (which is the real-time, non-averaged value) crosses the solid red line from below all the slopes of the CT moving averages will turn positive, which is a good initial entry signal.

Strategy:

It is important to not get too trigger happy at this point in the turn.  While this is a great opportunity, it can also be related to short-covering.  We have lots of room to go down from here if the market desired to do so, so a retest would not surprise me.

I will be making limited purchases for stocks that I intend to hold for the longer term (e.g., "Long"-rated value picks).  If you are a subscriber to my Dropbox you will have access to the list.

My short-term momentum indicators are telling me not to move in on Monday.  Tomorrow (Tuesday) may be the day.

I only buy strength, so I will place a BUY STOP order for 0.1% above Friday's close; if the order does not fill it will be adjusted downward to be 0.1% above the high of the day.  The order will be effective after 9.45 a/ET.

~~~~~~~~~~~~~~~~

Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

Subscribe to my twitter feed if you want intra-day observations:  grems8544

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

New Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

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As with all my ramblings, 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, January 21, 2016

Continuation...

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If you are on the blog page, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Summary

The Long-Cash ratio continues to move lower in the single-digit range, indicating that whatever stocks are left on the long side (235 out of 3023) are falling apart in terms price.  Volume was extraordinarily high on Wednesday, perhaps pointing to capitulation.  We had a "V" shape occur on the Cumulative Tick which supports an intraday reversal, so we have more signs of buying stepping in.

Despite all of this, risk is extraordinarily high.  Sidelines are king, at least for now.

Long-Cash Ratio

Click on the image to enlarge.

Out of 1860 observations since 2008, we are at the 31st lowest reading in the LCR ever recorded.  We have always rebounded from here, but note, it could take a week, a few weeks, or a couple of months.  See my post from a few days ago -- we had one event last 70 days until the number of stocks hit parity (equal number of Long/Cash-rated stocks in the database).

The value of 0.084 means that 8.4% of the database is rated "long" -- the remaining stocks are in "cash" or "avoid".  This number can continue to drop, although it becomes harder and harder because rotation begins to appear as people bottom-feed.

The middle of the table shows the continual "sea of red", indicating that on a day-over-day basis, the number of stocks that are rated as "long", or worthy of consideration in this market, is dropping.  Put another way, "cash" rated stocks are dominating, and movement out of stocks that are rated cash continues (as evidenced by increasing supply and subsequent dropping prices).

Nothing in the middle of the table tells me that Thursday is a buying day.  Take it off.

A note came in yesterday asking "whether the LCR acceleration is pointing to a bottom?  If so, when should we consider buying?  If not, what is the LCR showing that is useful?"  The LCR on the right is showing more green -- in fact, we've had two consecutive days where we have solid green on all measured time frames.

Remember, the LCR measures the transitions of stocks from "long" ratings to "cash" ratings and visa-versa.  It implies (by the sheer number of cash-rated stocks) that prices are dropping.  A falling LCR indicates that prices can continue to drop -- keeping the stocks in a "cash" rating.  When we get to extremely low levels, like now,  the day-over-day change in LCR will actually begin to slow, showing that the NUMBER of stocks making the transition is abating.  This is where we are today.  There simply isn't a great deal of fuel left to transition from "long" to "cash", hence, we have an abatement of the transitions.  Is this calling a bottom?  Sure, to a degree.  Can prices continue to fall?  Absolutely, and they are.  As long as the "net" -- the sum of the New Long and New Cash values on a day-over-day basis favors the New Cash side of the assignments, then it's a fair bet that database prices are falling.

The following chart may help to better understand:


Click on the image to enlarge.

The chart shows the daily assignments of "New Longs" (blue), "New Cash" (red), and the resulting GGT database average price (green).  If you look closely you see that when red (New Cash) falls, blue (New Longs) typically rises, and the result is that the database price (green) also rises.  This makes sense -- the number of stocks that are jumping from a cash rating to "New Long" implies that price and volume are increasing across the board, hence the GGT database price increases.  The converse is true too:  the number of stocks transitioning from a "long" rating to "New Cash" implies that prices are dropping across the board, and of the pool of remaining "long-rated" stocks, fewer and fewer remain to make the transition to "New Cash".

Here's another chart that makes the point a bit clearer:

Click on the image to enlarge.

This chart shows the same data except I've netted New Longs with New Cash values.  The net will be negative (below the solid red line) when New Cash > New Long.  Conversely, the net will be positive when New Long > New Cash.

As you can see from above, we still have a net negative (New Long - New Cash), so the value is negative.  BUT, you also see that the number of day-over-day transitions is abating -- indicating that we are approaching a bottom of some sort.  You also can see that the GGT price is continuing to fall, indicating falling prices.  Because people are bottom feeding we have some "New Longs", and because the market as a whole is falling, we have some "New Cash" assignments.

Remember, there are 30 lower values of LCR in the database out of over 1800 observations -- we can certainly continue to drop.  This being said, the data doesn't support it -- we're seeing people step in and buy the dip, which is the definition of a bottom.

If this isn't clear send me a note and I'll try to explain a different way (lots of ways to address the question!)

Cumulative Tick

The CT showed an interesting "V" reversal that started about 12:50 p/ET:


Click on the image to enlarge.

The reversal needs to be sustained -- futures are all over the map as I write this, so your crystal ball is as good as mine for what is going to happen today.  Suffice to say though that this is the first step in achieving a local bottom, so we'll simply have to wait and see.

Note that the level of 52-week New Lows (top plot) dominates everything prior -- some would call this combination with the "V" reversal capitulation, some would simply say it was a severe down day.  Both are correct, and only time will tell what the correct descriptor is.

Note that buying/selling was an equal bull/bear war into the close (horizontal white line).  This isn't ideal -- what I'd like to see for a continuation pattern is that we have strong buying into the close.

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Strategy:

Sitting on the sidelines on Thursday, getting ready for our blizzard on Friday/Saturday.  By some models we're going to get 2-3' (yes, feet) of snow in the Northern Virginia area.  Denver can handle it -- we can't.  Can you say paralysis?  Fired up the generator yesterday so it's working.  Have over a cord of seasoned wood ready to go, and will move the snow blower to the main level and get it primed.  Bring it on....

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Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

Subscribe to my twitter feed if you want intra-day observations:  grems8544

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New Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As with all my ramblings, 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

Wednesday, January 20, 2016

Sitting on the Sidelines on Wednesday

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Please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me see the number of folks reading this.

Summary

The Long-Cash Ratio continued to fall with Tuesday's action, keeping the status quo.  Downward forces are abating though, so the selling is not as severe as previous days.  I'm sticking to the sidelines for Wednesday.

Long-Cash Ratio

Click on the image to enlarge

Tuesday was the second consecutive day of single-digit LCR values, indicating that out of a database of over 3000 stocks, less than 10% are worthy of consideration here for medium-to-long-term buying.

The left side of the table shows that the new LCR value is 8.9% and is falling.  The LCR has fell every day this new year, and this alone is remarkable.  Don't fool yourself though -- it can continue to fall.

The left/middle portion of the table is a sea of red.  The LCR moving averages, all with different time scales, all have negative slopes.  The moving averages are all pointing downward, again, not a buying environment.

The right side of the table is showing some continued abatement of the downward slopes of the LCR.  The emergence of green, and the completely green row on the bottom of the table shows that the day-over-day rate of descent is slowing (which is good).  Continued green on the right will lead to green on the left.

We're not there yet, so I'm taking Wednesday off.

Cumulative Tick

I tweeted the following chart mid-day Tuesday:

Click on the image to enlarge

It basically shows that the upward movement in the major indices were being sold on the NYSE, and that the "rally" was false.

Here's the end-of-day chart:

Click on the image to enlarge

After the mid-day peak we sold off until about 3 p/ET, where we then saw some buying stepping in, offsetting the selling (horizontal white line from 3 p/ET).

With the severely downward-pointing moving averages, and the white trace (instantaneous cumulative tick) well under all it's moving averages, nothing here says to buy.

Again, I'm taking Wednesday off.  Risk is wayyyy to high, even for short-term trading.

~~~~~~~~~~~~~~~~

Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

Subscribe to my twitter feed if you want intra-day observations:  grems8544

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

New Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As with all my ramblings, 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