Friday, January 23, 2015

New Long Signal for All Timers, 1-22-2015

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Summary:  The strong action on 1/22/2015 has turned all timers long -- short-term, medium-term, and long-term.  Targeting 100% equity investment.

Timers:

Short-term timer:  LONG
Intermediate-term timer:  NEW LONG
Long-term timer:  NEW LONG

Long-Cash Ratio:  0.774, jumped 25% on Thursday, a very strong day.  The 2d, 3d, 5d, 8d, and 13d slopes of the LCR are all pointing upward, with the 8d and 13d newly positive.  This is a buy signal.


The table above indicates that again, we dipped a shallow dip over the last trading month and now conditions are favorable for entry into the markets.

LCR Slopes:


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

The Long-Cash Ratio jumped +25% on Thursday, which is a significant move.  In ranking it is the 157th strongest move since 2008.  Note that the LCR slopes for the 2d, 3d, 5d had been positive, and now the 8d and 13d turning is to be considered a follow-through.

This is my trigger to get back in the markets.

Cumulative Tick:

There was strong buying on Thursday on the NYSE:



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

With the close on Wednesday, the cumulative tick just barely crossed the longest moving average from below, indicating a positive tone to the markets.  As you can see to the right of the "+" symbol, yesterday was strong and now all the slopes are upward.

This is a necessary condition for me to purchase stocks.  This is a (temporary?) rising market.

Strategy:

The obvious question is "which stocks should be considered?

The GGT Stock file, located in the shared Dropbox folder for subscribers, has the latest updates.  Here are the stocks that are quality stocks that are rated "Long":


To save you the time of typing the list, here it is:

AGIO
AMBA
BFR
CARB
CAVM
CORE
DXCM
EVLV
FPRX
HDB
HNI
HPP
ICLR
JNS
LTS
LXFT
PACB
PEB
PLKI
PPC
RCL
SAVE
SMCI
SWKS
TASR
UA
UAL
UVE
VIPS
ZUMZ

If any of these stocks take out yesterday's high plus 0.1% I'm seriously considering making a purchase.

From a momentum / Effective Volume point of view (see www.effectivevolume.com), these are quality stocks that are worthy of entry:

BFR
CORE
VIPS
AAPL *
HDB
SKX *
EVLV
HPP
LXFT
PEB
UEIC *
ZUMZ
SAVE
UA

Note that any stock listed above with a " * " means that it is not a GGT long but is a serious candidate.  Also note that AAPL reports earnings in 4 days and there is a significant movement into the stock occurring.

These stocks are beaten down but again, have great fundamentals.  Unfortunately, they are not rated GGT "Long" except for RENT, which has been moving upward for the past 2 days and is a relatively new entry to my list (it is rated "Affirmed Long").  All the others are in a CASH status but are improving rapidly.  They also are quite strong in terms of EV.

LEAF
RENT
SAIA
EPAM

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Any stock that breaks out today from the lists above and that are GGT "Long" of some sort will most likely be purchased.

I typically purchase if the price goes over 0.1% of the previous day's high.  I also like to see volume above the 10-day volume of the greatest drop in price, e.g., the buying today is stronger than the selling over the past 10 days.

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

Regards,

Paul






Sunday, January 11, 2015

Still on a 33% Equity Signal, Close of Friday, January 9

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  MIXED and WEAKER
Long-term timer:  LONG
Long-Cash Ratio (LCR):  0.687, falling


As you can see above, the short-term timer is in cash and has been so since the beginning of the year.

The intermediate-termed timer is in "mixed" status, which means that internally things are not confirming.  This occurs in a weak and/or uncertain market, and basically, on an intermediate term basis (2-6 weeks or so), we're really choppy and if this is your typical holding time frame, you're probably better off in cash.

The long-term timer is still long, so on a 1-4 month time frame, we're still in positive territory.  It's important though to understand DELTAs, and this is what the next table does:

Long-Cash Ratio (LCR) table, aka the "slope table"



From the left:

The long-cash ratio (LCR) is at 0.687, which means that for every 1000 stocks that are recommended to be in CASH, only 687 are recommended as potential candidates (subject to further screening).  The key here is that the trend is downward, except for 1/7 and 1/8, so the market trends are not with us.

This is not a buying climate, at least not yet.

The left side of the table, which is red, simply tells me that on multiple time frames that the LCR slopes are negative, e.g., more stocks are moving to CASH recommendation on a day-over-day basis relative to stocks that are moving LONG.  If you believe that a "rising tide lifts all boats" then the ebbing tide is lowering all boats -- this is what we're seeing now.

More importantly is the right side of the table -- we had two solid days upward BUT you can see that the slope of the slope, or the change in slope on a day-over-day basis, was mixed to negative.  This isn't good, and it certainly is NOT buying time.

Cash is king, at least in my portfolio.  You do what you want.

Just to stir it up a bit is the following:

Cumulative Tick Chart:


Despite recent performance in the markets to the downside, this set of indicators tells me that the markets are buying, at least in an underlying sense.  From the upper right:

1) the green line over the red line tells me that the 52 week New Highs is greater than the 52 week New Lows on a daily basis.  This is necessary for me to buy stocks.
2) in the middle graph, you see the reversal in algorithmic buying, which ended up with a positive slope for the day.  This too is a good sign

In the lower pane, note that

a)  note that all the slopes are positive.
b) note that white is over red, e.g., the short-term instantaneous cumulative tick is above the moving averages.

Both of these indicators are good.  Hence, the "gates" are enabled, but we are still weak in the markets.

Strategy

I'm targeting 25%-50% equity with the rest in cash.

With the Cumulative Tick setup above, we're a go for buying, BUT, I need to see the LCR stabilize and start moving upward.  It's not doing that, so as far as Monday is concerned, I'm not buying.

Take the day off and enjoy something else.  If we see positive action Monday then we'll probably get a buy signal.  I'll post if that occurs.

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Regards,

pgd


Monday, January 5, 2015

Signal Change, Close of Monday, Jan 5

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Short entry here since I'm traveling.

With the close of markets today the intermediate-termed timer transitioned to "Mixed" mode.  This is an early warning sign, and continued dropping in the markets will most likely cause this to move to "Cash".  We're not there yet, but it's close:

The table indicates that the short-term timer also transitioned this past Friday, so clearly, it's time to raise cash.  I'm dropping back to 66% invested with the signals indicated above.

The LCR table is still strong, despite the intensity of the sell off from today:


Noteable is that out of nearly 1000 down days recorded, today was the 57th strongest down day in terms of LCR (Long-Cash-Ratio) change.  This is significant.

Strategy:

Simply put, the short-term signal combined with the "mixed" intermediate-termed timer indicates that we should be 33-66% invested.  I'll get there by selling my weakest positions, and I'll use a 1% trailing stop loss, GTC, effective after 9:45 a.m.

Regards,

pgd

Sunday, December 21, 2014

Moving Long as of Close of Markets on 12-19

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Timer Table:


The timer table indicates a short-term entry signal for Friday, and while this was valid, it was not strong and I chose not to get aggressive with it.  Friday's action though pushed all the timers to the long side, which is bullish.

Notable here is that the long-term timer, the right column in the table, only spent 3 days in Cash.  This has never happened in the past, with the historical average length of this being nearly one month and the shortest time in Cash being 8 days.  3 days in Cash is a new record.

LCR Slopes


The LCR slope transition of the 8d to green (Long) is what has triggered entry on Monday.  This is a high probability entry, so pay attention.

Note that the LCR ranking on Friday was the 65 strongest 1-day jump relative to all the positive moves since 9/11/2008,  Again, strong, so pay attention.  I think this was more than just short covering or options expirations day.

Cumulative Tick


For those of you who follow me regularly, you know I watch the preceding figure very closely.

We're still early in this effort, and the number of 52 week New Highs, as shown at the very top right of the figure, is barely above the number of 52 week new Lows on the NYSE.  This is NOT ideal, and does not support the huge moves we had during the week.  Nevertheless, I don't look at the value, just whether the 52NH is > 52NL, and it is, so we're good.

Mid-day on Friday the buying algos started kicking in in terms of bid/ask on the next transaction. Prices moved up constantly and consistently until just late in the day, which is bullish.

Finally, as far as the cumulative tick is concerned, "white above red" and all the slopes are positive on all measured time frames.  As long as this holds I'm a buyer in this market.

Strategy:

The obvious question is what to buy?

Here are my Greenfield Leaders and Greenfield Bargains:


All of these are good stocks, and the Greenfield Bargains at the bottom all have solid fundamentals but are beaten down quite a bit.

Here is the list to save you time from copying the list:

~Greenfield Longs
AAPL
AFSI
AMBA
ANIP
BFR
BIDU
BMA
CARB
CAVM
CORE
CSCD
DXCM
ECHO
ENPH
EPAM
ISIG
LEAF
LTS
MDXG
NKTR
NOAH
PLNR
RCL
RFMD
SAIA
SAVE
SMCI
SWKS
UA
UAL
UEIC
UVE
ZUMZ

~Greenfield Bargains
APOG
APT
BITA
EVLV
FLTX
HDB
HSTM
ICLR
LCI
LXFT
PACB
RENT
SANM
SKX
VEEV
VIPS

There are a lot of stocks there, probably more than you want to choose.

What I do in this case is find the mixture that optimizes the efficient frontier.  That list is as follows:

AAPL 37.96%
BMA 11.42%
LEAF 9.56%
DXCM 5.83%
LTS 5.66%
BIDU 5.28%
RCL 4.83%
SMCI 3.75%
MDXG 3.70%
UAL 3.45%
ECHO 2.42%
SWKS 2.36%
NKTR 1.77%
SAVE 1.59%
UA 0.42%
An expectation for these stocks, based on the last 100 days of performance (or so), yields an estimated 3.5% better than holding just the SPY but at an increased volatility. Whether you choose to do this is up to you.

Further to this, note that not all of these stocks are rated "GGT Long".  Hence, they don't get my money:

AAPL Long
BMA Aff. Long
LEAF Aff. Long
DXCM Aff. Long
LTS Long
BIDU Long
RCL Long
SMCI Aff. Long
MDXG Aff. Long
UAL Long
ECHO Long
SWKS Aff. Long
NKTR Cash
SAVE Cash
UA Long
Hence, NKTR and SAVE will have to wait.

My buying on Monday is simple.  Buy at the allocations above, using the HIGH of the value on Friday plus another 0.1%.  So, I take the high price, multiply it by 1.001, and that becomes my new buying threshold.  I buy using a Good Til Canceled order, and I adjust the price downward for the GGT LONG-rated stocks (in green above) if they do not fill on the order day.  As long as they are green, they will eventually fill.

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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



Tuesday, December 16, 2014

All Timers Signal Cash - Dec 16 Close

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With the close of markets today (Dec 16) all my timers -- short, medium, and long-term, are now indicating cash.

I'm liquidating all remaining positions with a 1% TSL, GTC.

Buy Strength:


Buy Strength, as shown above, is very, very negative and as you can see, is entering a historic period of being oversold.  It could rocket upwards quickly, or it could linger in this area longer.  Buy Strength is an internal indicator that I do not discuss much as it's derived from a number of parameters unique to the GGT system of ranking stocks.  There is no equivalent metric on the "outside world" so I don't talk about it much (if at all).  Nevertheless, I watch it, and I watch it daily.  Right now it's telling me we could be oversold -- certainly more chance of going upwards than going drastically downward from here.

Remember though - we could linger and churn.

Cumulative Tick:


No matter how you look at it, there is nothing in the CT chart above that is positive.  Nothing.  I've been saying this for some time, so if this blog entry surprises you, then you've not been paying attention.

LCR Slope Table


The LCR is below 1.0, meaning out of 3000+ stocks in the database, we have more that are ranked as CASH than LONG.  This is a good reset for the next leg up.

The slopes of all measured time frames (left side) are negative.  They've been negative for some time, and this means you should not be buying stocks.  Period.  No argument.  We could go lower from here.

The right side of the table is the rate of change of the slopes.  We're seeing some abatement on the shortest of time frames, so PERHAPS (and only perhaps) we're approaching a turning point.  It won't be Wednesday, so Thursday would be the earliest to consider.

I'm looking for the 2d, 3d, and 5d slopes on the left to turn positive before I buy.

Strategy

Out of the market.  No telling how long this will last -- 1 day, 2 days, or 2 weeks.  Cheap oil this fast isn't good, and until that clears, we're going to put pressure on equities.  From my chair, best to do this from the sidelines.

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

Regards,

pgd



Tuesday, December 9, 2014

Target Cash Level to 67% as of close of Monday, Dec 8

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Summary:  Continually eroding of the indicators show that raising cash is required.  The greatest short-term worry is the ongoing cumulative tick indicators -- we're continuing to see more transactions end with a lower price, which means the big boys and girls are selling large positions.

Timer Table: A look back 3 months for perspective:


The only "long" timer is the long-term timer, which actually is converging to also go negative if the present market trend remains down.

You can see that even though we had a entry signal Friday (12/5), it was negated with the "Avoid8d" indicator, showing that historically, the signal is prone to failure.  I had already posted about this same type of warning around the 11/21 and 11/24 timeframe so I didn't report on the change.

The bottom line is that I believe that this cycle is weak, and has been since around 11/13, so I'm not inclined to do much in the markets except cash in on profits.

LCR Slope Table:

The Long-Cash Ratio continues to fall, and is now at 1.008.  This means that for every 1008 stocks that are rated long, there are 1000 are rated in cash recommended.  The trend is down, and has been for a week.

Short-term, we're resetting.  As long as the longer-termed slopes remain green (65d, 88d, 143d) we will not be experiencing a full reset, and consequently, the ability to start a new cycle will be limited.

Cumulative Tick:



The number of 52-week new lows exceeded the number of 52-week new highs.  This is inverse of what I want when I am buying stocks.

Around mid-day the selling algos kicked in.  For over an hour we were experiencing greater then 500 stock transactions / min that were ending on a down tick, meaning that there was more supply than buyers (on the NYSE).  This is indicative of unwinding larger positions in a controlled and steady manner.

Finally, the cumulative tick line (white) is well below the cumulative tick moving average (red), and the CT ribbon has negative slopes, indicating that the trend is down in buying and selling. I don't buy stocks when white is below red, and we're failing to move higher on any measured time frame.

Strategy:

I'm raising cash.  I'm selling my weaker positions first, with a target to 33% equity and 67% cash.  My selling is simple -- a 1% trailing stop loss that activates after 9:45 a.m., good til canceled (GTC).

If the rout continues today I may unwind all my positions simply to lock in gains.  This latter statement is in conflict with my trading rules they say I should keep equity in the market, but I also want to protect my gains and not see winning positions turn into losing positions.  My remaining holdings have a high beta (AAPL, AFSI, EW, JBLU, JKHY, LKQ) and they can go down quickly.

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

Thursday, December 4, 2014

Timers Whipsaw - as of close of Dec 3

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A short note here; no action required.

With the close of markets on December 3 the markets have caused most of my indicators to move to the long side.  The back-forth nature of this is called a whipsaw and it occurs when we are right at the margins.


The slopes of the long-cash ratio (LCR) moving averages are quite mixed.  We're back to the scenario that I discussed a few blogs ago -- the mixed nature of the LCR slopes is not considered "clean" by my system and consequently, is not a solid buy (or sell) signal.

On a positive (long) side, the LCR value is moving back up, indicating that stocks are flipping to the "New Long" side on a day-over-day basis.  This means PRICE, VOLUME, and RATE OF CHANGE OF PRICE are all favorable.  This is necessary for a solid buy signal.

Here, "solid buy" means more green on the left side of the table.  I'd like to see ALL the LCR moving averages flip to green/positive in one day, but certainly, will consider the 5d and 8d moving positive, as these are generally key entry points in the market.  This being said, the "green" at the 55d, 65d, and beyond tells me that this is a mature market, so rocketing off to the moon from here is highly unlikely.

Strategy

I'm presently sitting about 40% invested in the markets.  The ideal target is 50%.  I'm not a buyer today; 1) I'm on travel and have client responsibilities, and 2) 4 out of 5 times, when backtested, entry at this point has failed in the past (as measured to the next down signal).  The risk/reward isn't there for me until we start seeing solid positive slopes on the left side of the table.

I've removed all pending sell orders on all accounts.  This will keep me at 40% invested.

Regards,

pgd