Tuesday, October 20, 2009

GGT Notables from Monday, October 19th

Sorry that I have not yet posted the summary from the weekend; I had a hard drive die with a power surge on Sunday (no, not a GGT machine, thank goodness!) and recovery has been hampered by not having recent backups... Grrrrrrrrrrr

GGT Price has topped out at $19.70, which is just above the values of last Wed/Thurs of $19.68 and $19.69 respectively. Resistance? When three points are this close to each other, and we don't seem to have volume to push it higher (volume was 1.32M shares, down 10% from average). I'm concerned that AGAIN prices jumped 1.129% higher Monday but volume fell -- I can't help but feel that this is a sucker's rally. Sure, we can make some money in the news, but the risk is getting higher and higher ...

Note that the upper channel line formed by the GGT price is now at $19.939, so with Monday's close, we're 1.2% below the upper channel and 5.1% above the lower channel value of $18.74.

The GGT LCR, which is a measure of the number of long recommendations (3061) to the number of cash recommendations (1955), is relatively unchanged (+0.013 points) from Friday's close. Folks, this is a HUGE divergence ... rising prices when the database is churning is a big warning sign. It is impossible to maintain rising database prices but keep the LCR constant ... something has to give. Either we will see higher prices on higher LCR or the converse.

The LCR change timer is whipsawing, and is now moving towards a CASH/LONG --> LONG call. If today is up significantly we will see it move to the long side (+1), and should be positioned accordingly. Last week's performance in GGT using this timer was less than stellar: we only moved upward 0.08%, hardly worth the risk, and certainly so when commissions are considered. This is getting to be a hard market to invest within.

Finally, when we look at GGT strength from an overall perspective, although we THINK we're overbought, we're really not, especially when compared to historical levels. GGT strength is indicating 0.70 on a scale of 0:1, and this suggests that we have room on both the upside as well as downside areas to move.

Here are the strengths and trends of the various markets:

DJ30: 0.76, down from 0.80
NDX100: 0.688, up from 0.525
Brazil: 0.640, down from 0.728
Russia: 0.777, up from 0.722
India: 0.441, down from 0.529
China: 0.98, up from 0.609
S&P500: 0.813, up from 0.726
S&P400: 0.754, up from 0.62
S&P600: 0.68. up from 0.590
Russell 2000: 0.684, up from 0.583

Of particular note here is China. I plan to purchase another 25% position in FXP as a hedge today, since we're seeing so much strength right now in the China market. I already own one 25% position in FXP.

The S&P500 is interesting too -- I will purchase a 25% position in SDS as a hedge against my SSO position, since the oscillator jumped nearly 10%.