Thursday, October 22, 2009

GGT Notables from Wednesday, October 21st

GGT Price fell to $19.35 from $19.51, a decrease of -0.82%, on above average volume of 1.64M shares. The 13d price EMA is hitting a peak and if today is down, the trend line for the 13d price ema will be negative. We would be watching for it to bounce off either the 22d or 34d, depending upon your time horizon. The upper channel of GGT price just cleared $20.01 and we are now about 3.4% below that value. The lower channel of GGT price is now at $18.81 and we are 2.9% above that level. I'm looking for GGT price to drop to this lower channel and be supported.

Elder's Force Index, when applied to the GGT universe, is very negative and is trending lower. This is not a time to enter new longs -- not yet.

The Long-cash ratio (LCR), which is a measure of the number of LONG recommendations (2618) to CASH recommendations (2398), has dropped to 1.092 and is indicating that the bears are winning in the short term. Every EMA applied to the LCR is in a down trend, so cash or contra ETFs are favored.

GGT strength has dropped to 52%, and tells us that we have equal probability of a rise or a fall from here. Of particular importance is that the CHANGE in strength seems to be "less negative", meaning that we could see a bounce here.

Given everything that we're seeing, I think we're in the middle of our downward channel and we should be sitting in short-term contras. If you followed me the past couple of days you're looking at some nice single-digit (and soon-to-be double digit for some -2x leveraged) gains on each of your contra positions.

Here's the strength index numbers of various indices:

DJ30: 0.541, down from 0.658. Do you have a position in DOG or DXD?
NDX100: 0.378, down from 0.573. Do you have a position in PSQ or QID?
Brazil: 0.446, down from 0.605
Russia: 1.00, up from 0.833. Talk about bucking the trend!
India: 0.176, down from 0.411
China: 0.653, down from 0.844. Do you have a position in FXP?
S&P500: 0.481, down from 0.669. Do you have a position in SH or SDS?
S&P400: 0.403, down from 0.560. Do you have a position in MYY or MZZ?
S&P600: 0.380, down from 0.463. Do you have a position in SBB or SDD?
Russell 2K: 0.341, down from 0.409. Do you have a position in RWM or TWM?

It's probably too late to jump on the contras for these indexes if you are not already holding. PAPER TRADE at this point. If these values drop to 0.2 or lower, it'll be time to start hedging to the long side.

India, with a value of 0.176, is already a candidate for looking at long positions. GGT stocks in India that could be attractive IN TERMS OF GGT RECOMENDATION (I've not checked the charts, that's a job for you) are: SAY, IBN, TTM, and MTE. All are getting beat up relatively hard compared to their peers, and could bounce back fast. The strongest Indian stocks are PTI, RDY, WNS, WIT, SIFY, SLT, HDB, and INFY. Do your homework.

Enough for now. Futures are down slightly at a bit after 7 a.m. EDT; we'll see how the day unfolds.