Thursday, December 24, 2009

Notables from Wednesday, December 23rd

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Our GGT Price index has made an all-time high of $20.71 on Wednesday, on volume that was 30% below average at 960K shares.  All price EMAs are pointing upward, but with such low volume, I think we have to discount the relative strength that we're seeing.  The rate of change (ROC) of the EMAs is incredibly high -- we're seeing levels approaching the peaking around January 2nd-5th 2009, and we all know what happened on January 6th, 2009.  Nevertheless, as I always say, trade the market we have, not the one we want, so from all pricing indications you should still be on the long side.  Note that I've been slowly taking money off the table over the past week.

The GGT Long-Cash Ratio (LCR) is at the highest value it has hit since October 19th -- 1.517 -- and indicates that 2717 stocks have a Long recommendation and 1791 stocks have a Cash recommendation.  The trend for the LCR is up on all accounts, again supporting that we are on the long side of the market.  The ROC of the EMAs is not unbelievably fast, so we may still have some life in this bull, we'll see.

The LCR Change Timer is indicating "LONG" and has been here or at "LONG-CASH" since 12/14.  Since that time the GGT price index has gone up about 3%, so the call is solid.

The Cash-Strength oscillator is at a very high level of 0.87 and the Long Strength oscillator is at a somewhat weaker level of 0.78.  Every instance since September 2008 of the Cash-Strength oscillator closing above 0.9 was followed by a decline within 2 days that lasted on average just over 3 days; we still have a bit to go with respect to the Long Strength oscillator telling us the same thing.  I consider this a divergence, so just be aware.

LargeCaps, as indicated by the DJ30, are not participating in this rally.  The strength of the various indexes I track is as follows:

  • DJ30:  0.477, down from 0.533.  The down has not been above 0.6 since 12/2.
  • NDX100:  0.745, up from 0.691.  The trend is a gradual up for the NASDAQ-100, and I'd give close consideration to a hedge position in QID.  Use Elder's methods to enter.
  • Brazil bottomed on 12/18 and is now at 0.378, with a gradual up trend.  I own a position in ERJ, a Brazilian stock, that is presently underwater by 2%.  Elder's methods do not always work.
  • Russia bottomed on 12/23 at 0 and to say it is in an uptrend is a misnomer.  Avoid.
  • India bottomed on 12/22 at 0.214 and is now at 0.559.  Very volatile.
  • China bottomed on 12/17 and has been showing strength since, with a strength of 0.599.  The trend is upward; watch FXI and FXP if you do not want to choose individual stocks.  My position in BIDU is down 3% since entry.
  • The S&P 500 is chunking higher, with a strength of 0.722.  The trend is upward.  Watch SDS (-2x leveraged) or SH (-1x) if the strength continues; we should hit a local top and reverse if the trend continues.
  • The S&P 600 is near an all-time high of 0.9964 and a contra position is warranted.  Contra for the S&P600 is SDD (-2x leverage) or SBB (-1x).
  • The Russell 2000 is at a value of 0.923 and a contra position is warranted.  Contra for the Russell 2000 is TWM (-2x leverage) or RWM (-1x).
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A full summary will occur over the holiday weekend.  Enjoy time with family, friends, and loved ones.  Thanks for following along.

Remember, you're responsible for your own investment decisions.

Regards,

pgd