Wednesday, December 16, 2009

Notables from Tuesday, December 15th

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... and the beat goes on ....

Do NOT let the appearance of yesterday's indexes fool you -- although they were down, the underlying database of stocks continues to march upward, which is bullish (let alone amazing).  Here's the rundown:

The GGT Price index has made another new high of $20.10 on volume that was 13% above average at 1.54M shares.  This is a strong signal, and I'm impressed.  ALL price EMAs (13/22/34/55) continue to march upward, and even the rate of change of the 55 DEMA (the slowest of the ones I track) is at an amazing level of $0.035/day.  Even though this is a trend-following system, it's pointed upward on all pricing indicators, with no apparent slowing even though the indexes were down, so I'm staying long.

The GGT Long-Cash Ratio *is* slowing, but still eeked out another gain yesterday, moving from 1.325 to 1.364, and thus indicating that 2648 stocks are LONG and 1942 stocks are in CASH.  While all LCR EMAs are pointing upward, there is a bit of deceleration in the 13 and 22 DEMAs, simply indicating a pause in the upward march.  If the *change*  in the LCR DEMAs turn down I'll become a tad more bearish, especially if prices continue upward.  As long as the LCR and pricing DEMAs are pointing upward I am short/intermediate-term bullish.

The GGT LCR change timer continues to indicate a LONG stance.  No surprises there.

The GGT database strength FELL on Tuesday, from 0.79 to 0.69.  This of itself is not too worrisome, but we'll have to watch it over the next few days to see if it continues to decline.  A continued decline from increasing prices cannot be sustained and the divergence would signal action on our part.

I did not discuss it over the weekend or yesterday but with Friday's action the GGT database is intermediate-term LONG, as measured by the LCR being above 1.00 and prices continuing to march higher.  I like to see this be "sticky", especially in sideways markets, and so with last night's close we have 3 consecutive days of being LONG.  For those of you familiar with VectorVest this is roughly equivalent to the Confirmed Up signal that is often issued on the VectorVest Composite index.  Note that VectorVest issued a Confirmed Down signal on 12/3, whereas our CASH signal was issued way back on 10/23.  The two signals are very different...

Large Caps, as measured by the DJ30, did not participate yesterday in the underlying increase of the LCR, falling in strength from 0.64 to 0.54.  The primary index was down, and since this strength is derived from the stocks of the primary index, there are no surprises here.  I'd like to see a bigger pullback before entering anything here.

The NASDAQ 100 dropped from 0.73 to 0.59.  Again, the primary index was down, and since this strength is derived from the stocks of the primary index, there are no surprises here.

Brazil was hammered on Tuesday, dropping from 0.60 to 0.427.  My position in ERJ is underwater.

Russia is showing strength off of their all-time low last week, closing Tuesday at 0.47.  I did NOT play the RSX for a reason, but obviously, it's been gaining ground on a short-term (3-day) basis.  My vote is to stay away from Russia for now.

India continues to slide, finishing at 0.166, down from 0.226.

The S&P 500 fell from 0.823 to 0.691.  The primary index was down, and since this strength is derived from the stocks of the primary index, there are no surprises here.

The S&P 400 is impressive.  It barely fell yesterday, finishing at 0.898.  Midcaps are certainly showing strength.  Correspondingly, my watch of MZZ yesterday DID NOT TRIGGER.

The S&P 600 fell from 0.97 to 0.86, and is showing strength like it's mid-cap brother.   My watch of SDD DID NOT TRIGGER.

Finally, the Russell 2K moved down from 0.885 to 0.770, and my watch of TWM DID NOT TRIGGER.

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It's early, but futures are pointing higher, so we appear to be in sync.  I'm holding my long positions, and may even add new positions as my research indicates.

Stay tuned.

Remember (in my best Smoky-the-Bear voice), only YOU are responsible for ... your investment decisions.

Regards,

pgd