Wednesday, December 30, 2009

Notables from Tuesday, December 29th

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Summary:  Short term strengths of mid-cap and small-cap stocks are falling from their lofty highs, putting the rally under tremendous pressure.  My earlier purchases this week are down 1-2%, yet my contra purchases yesterday are poised to rocket upward.  I intend to purchase additional contra positions this morning on any sign of weakness.  Based on intermediate and long-term trends I intend to hold onto my positions that are on the long side.

GGT Price Index

The GGT price index moved up $0.02 to $21.00, on low volume of 812K shares.  All price EMAs are decelerating, but are very positive, e.g., still upward but at a lower rate.  Intermediate and long-term trends are very much intact, so on those time frames, stay the course.

GGT Volume Index

Volume continues to dry up, and when combined with lackluster pricing, is generally no cause for concern.  Volume Tuesday was 812K shares, with average now falling to 1.32M.  We're in a historically slow period of volume, so we have nothing out of the ordinary.

GGT LCR

The GGT Long-Cash Ratio (LCR) inched upward to 1.87 from 1.82, indicating that 2826 stocks have a long recommendation and 1511 stocks are recommended as cash.  Like the GGT Price, EMAs are all decelerating or topping out, but mostly are pointing upward, so we'll continue to keep an eye on these.  The 13d EMA is obviously going to be the first to break down, but since we have a long way to go before crossing (LCR(13) = 1.441), we're still intact for this bull market.

LCR Change Timer

The LCR Change Timer is still indicating LONG at +1.  Given the pending New Year holiday, we will be here until at least Monday, January 4th.

Index Strengths

The following indexes fell on Tuesday: DJ30, NDX100, Russia, India, China, SP500, SP400, SP600, Russell 2K, leaving only Brazil with an incremental increase.  On a short term basis the lofty values within the SP400, SP600, and Russell 2K are indicating a downward movement.  I suggested contra positions yesterday as a hedge; any further decrease in the markets early today could be a good entry.  I'm holding MZZ and TWM, and will look further at others that represent the indexes.  For me, these are presently a short term trade.