Tuesday, November 24, 2009

Notables from Monday, November 23rd

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As expected, my contras hit their lower stops and I tripped out.  I know that I've stated in the past that I typically do not use hard stops, but I'm trading this choppy market with a fast-entry, fast-exit methodology, so intra-day stops are warranted.  I'm also using the 2x and 3x leveraged funds, and because of their intrinsic volatility, I think I'd be foolish not to use intra-day stops compared to extrinsic, end-of-day stops.

My success at this latest in-out with contras was 100%, although the gains were not remarkable.  I need more trades to see if this strategy will work for me.

I moved into the long-side yesterday, mostly stacking on 3x leveraged funds.  Today's horizontal futures has me "concerned" that my realized contra gains may be vaporized, but it is what it is.  My stops are 0.98 * yesterday's low in each of my positions.

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The GGT price index jumped from $19.16 to $19.45, a 1.5% change to the upside, on low volume of 1.16M shares.  This is still 20% lower volume than the 50d MA of volume, which is pitiful.  This alone tells me this "rally" cannot be sustained, and more horizontal-trending is likely.

The GGT LCR moved from 0.685 to 0.775, and is now indicating that 2143 stocks are recommended as LONG and 2765 are recommended as CASH.  This is nearly the exact values of Thursday, which is simply a coincidence. 

The rise in the LCR has caused the LCR change timer to move from a CASH (-1) position to a CASH-LONG (0) position.  We will know if this is a whipsaw today -- if the markets are up as indicated by the ADV/DEC line by 10-10:30 the LCR will move to the long side as long as there is no reversal, and I will follow accordingly (but reluctantly ...). 

Our overall-gain tracker using the LCR has fallen from 88% gain on 11/18 to 86% on 11/20 (Fri) to 84% with Monday's close.  This is not unprecedented: on 7/23 we had a gain of 68%, and by 8/20 we had lost nearly 6% to a gain of 58%.   Have patience and be tolerant of some drawdown.

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As expected, the GGT strength index moved upward from 0.389 to 0.612, a significant jump.  This in turn has caused many of the indexes I follow to jump accordingly.  Here are the strengths of the various indexes:

  • DJ30:  major jump from 0.555 to 0.811, and now suggests a hedge position in DXD be considered if price moves above $29.82.  Will continue to hold DDM if market continues higher, but do have a SL set at 0.98 of yesterday's low.
  • NDX-100:  major jump from 0.141 to 0.475; QID contra was stopped out yesterday, and will continue to hold QLD if market continues higher.  SL set accordingly.
  • Brazil: jumped from 0.296 to 0.533; GFA and TSP are the strongest New Longs, TAM and TNE are the strongest Affirmed Longs.
  • Russia jumped from 0.16 to 0.72, but realize that there are only 5 stocks in the Russia index.  VIP, MBT, and WBD are all strong candidates here.
  • India jumped from 0.296 to 0.642; SLT and WNS appear strong, as does IBN.
  • China jumped from 0.301 to 0.650; ATAI, LTON, SDNA, WH and CHL are the New Longs, JOBS, CNTF, BIDU, VIMC, YZC, SSRX, CYOU, GRO, LDK, LFC, and JRJC are all Affirmed Longs, and CEDU, CHU, and SCR all appear very strong.
  • The S&P500 jumped from 0.292 to 0.541; the list of interesting stocks is very long so email or text me at 703-509-5332 if you want it.
  • The S&P400 jumped from 0.110 to 0.441; ditto above.
  • The S&P600 jumped from 0.266 to 0.709; ditto above.
  • The R2K moved from 0.283 to 0.666; ditto above.
Get ready to move long if the market moves that direction, as indicated by the ADV/DEC lines.

Leave a message below, if so inclined.

Regards,

pgd