Friday, May 15, 2015

Signal Transition - Short-term timer fires LONG; Close of Markets May 14

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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:  The short-term timer has transitioned to a LONG status.  This reduces the cash target from 66% to 33%.  Time to deploy capital.

Timer Status


With Thursday's action, we were pushed over the top and now the short-term timer is LONG.  The combination of both the short-term and long-term timers being LONG indicates that we should be buying the markets at the time, with a cash target of 33% / equity target of 67%.

LCR Table


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

The transition of the 5d and 8d to "green" kicked the short-term timer into gear.  The green on the right side of the table gave me confidence to start buying.

Cumulative Tick


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

The cumulative tick chart above is as of 11:49 a.m ET on Friday.

The trend since the 5/12 low has to come off the bottom in a controlled manner.  Overall, the transition of the "white" above "red" in the cumulative tick pattern shows me that buying is continuing today although the indexes are not showing the gains.  I like this setup, and I'm working hard right now to identify positions and place appropriate orders.

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Strategy

As always, I am placing BUY STOP orders on all candidates.  The level for the buy stop is 1.001% above the previous high.  The order is active after 9:45 a.m. ET.  If the order does not fill then I reduce the buy stop to the next level, provided that the stock or ETF still has a GGT long recommendation.

Pickings are thin right now, so I'm having to double up on size of positions in the transition from 33% equity to 66% equity.  This is okay, but it's not ideal.

All watchlists are updated and are in the shared Dropbox folder.  Stock and ETF transactions are also in the shared Dropbox folder.  If you are not a member, send a note to me at pduncan [ at } v % t } dot [ e d u   (fix the address as necessary - I messed it up because of the web bots who crawl for email addresses).  Use "DROPBOX" in the subject field.  Also expect to be added to my Yahoo! group, as it's the only way I can communicate with you.

Most of you know I attended Virginia Tech many years ago so the vt.edu after my name should be obvious.

Regards,

pgd




Tuesday, May 5, 2015

Quick Update, as of May 5 Close

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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:  Tuesday's action was strongly down in terms of sustained selling.  While the talking heads will point to a number of reasons, it mostly is irrelevant.  Trade the markets presented and don't try to anticipate the action.

Timer Status:



Both the short-term and intermediate-term timers are in CASH, indicating that I should be 66% in cash.  Note that the long-term timer is close to transitioning to CASH, so we may be oversold and could bounce here OR we're going to continue lower.  There is plenty of room to go lower.

Percent Longs


I've been harping that we needed to "reset" to the green zone as shown above in order to have a valid buy signal (when it occurs).  With today's action we've moved to 40% long-rated stocks in the database, so we're entering a good area.  I'd like to see it lower from here, with a good hook upward when the buying starts.   We're not there right now.

Long-Cash Ratio Table



The left side of the table -- the slopes -- indicates that we're moving lower on a day-over-day basis.  This is not a buying market at the present time.  The row of reds on the right side of the table shows that today's action caused an acceleration downward in the number of stocks moving from LONG to CASH, and again, this is not a buying market.  'Nuff said.

Cumulative Tick


This chart tells us that we should be defensive, not offensive.

Aside from the top plot, which shows that the number of 52-week New Highs is BELOW the number of 52-week New Lows, the lower plot is telling us to stay away from new positions.

The lower trace has a downward-sloping red trace, which is the cumulative tick trace averaged over about 10 days.  This negative slope means that on a day-over-day basis there is far more selling than buying, and hence, not a good entry point.

I'm waiting for the white trace, which is the real-time cumulative tick, to rise above the red cumulative tick trace.  Once this happens we'll start pulling the longer (red) trace upward, and finally, it will have a positive slope.  Until this occurs it's not worth buying this market.

Strategy:

66% cash position is my target.  What's yours?


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Standard disclaimers apply.

Regards,

pgd



Wednesday, April 29, 2015

Back to 66 Percent Cash, 4-29 Close

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No graphics here - moving the family this week and it's a bit of work.  This will be short.

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With the close of markets on 4-29, the GGT timer system is indicating a move back to 66% cash target.

The short-term and medium-term timers are in CASH.

The long-term timer is LONG, so as of now, the long-term timer is intact.

This is a rudderless market -- we've not made any real progress in either direction in a couple of weeks.  We are at 51% Long-rated stocks in the database -- we need to drop to 43 to have any comfort about going long with abandon.  See my warnings about Percent Longs from earlier posts.

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Strategy:

Same as usual when we hit this state.  Cash target is 66% -- I'll get there by selling the weakest positions first.

Sell-side money management is to place a 1% trailing stop loss, good til canceled, to execute after 9:45 a.m. ET.   Let it go until either the stock breaks out OR we get a master timer reset where the short-term timer moves higher.

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Standard disclaimers apply.

Regards,

pgd

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