Wednesday, January 20, 2010

GGT Notables from Tuesday, January 19th

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Summary

I am playing it relatively safe today.  The GGT price index is at an all-time high and is over 8.5% from the bottom channel -- over bought.  The GGT LCR Change timer is indecisive, but could move long today if we move upward on the major indexes.  Database strength, as well as index strength is unimpressive and is indicisive, causing me to want to lean more towards protecting profits.

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GGT Price has hit another all-time high, $22.71, on volume of 1.84M shares, which is 40% over our average volume of 1.38M shares.  As would be expected with a strong day all the pricing EMAs and their day-to-day deltas are pointing upward and accelerating.  The GGT price is now 8.5% above the bottom channel line discussed this past weekend in the blog, which is an overbought condition.  While upward pointing prices and EMAs is very bullish, we are in territory where we normally see a pull-back, so caution is advised.

The GGT Long-Cash Ratio (LCR) jumped from 1.727 to 2.124 and is now indicating that 2445 stocks in the database have a Long recommendation with 1151 stocks showing a cash recommendation.   The 13d EMA on LCR is still pointing down, which is bearish, but the 21d, 34d, 55d, and 65d have resumed their upward slopes, a bullish sign.  Together, this action is bullish, but we need to see the 13d point upward for the "all-in" confirmation.

The GGT LCR Change Timer is indicating Cash-Long and has a value of (0).  If Wednesday is an up day, this timer will move back to the Long side (+1).  One way to get an advance on this movement is to watch the ADV/DEC line of the three major indexes around 10 to 10:30; if we are up by a non-scientific ratio of 1.8:1.0 by this time most likely it will be safe to enter long positions.  Note that this timer, when applied to the GGT index, has returned a total return of 87.5% since September 2008, so it pays to listen to this timer.  This is a fast moving, short-term timer, so if you follow it, then make an effort to follow it.

In terms of strength of short-term ranges, all the major indexes are in mid-scale strength areas. Here's the chart, superimposed with the GGT LCR Change Timer signal:






The challenge that I have with where we are as indicated by the above graph is that we are neither overbought, nor are we oversold.  Consequently, this lack of directional strength gives me pause, and although I may go long today if the major indexes are up, I will not be fully investing my powder keg.  I want to see several days of sustained up movement to above 0.7-ish, or a sustained drop to 0.2-ish.

Remember, you are responsible for your own investment decisions.

Regards,

pgd