Tuesday, February 2, 2010

Notables from Monday, February 1st

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LCR Change Timer - Bearish

The LCR change timer, which is a very quick timer, is continuing to indicate that we should be on the bearish side.  The LCR inched up Monday to 0.381, indicating that 944 stocks in the database have a long recommendation and and 2476 stocks in the database have a cash recommendation.  This timer is up a total of 88.5% when investing in non-leveraged funds for the period September 2008 to present, so it pays to listen to this system.

LCR EMAs -- Negative, but Decelerating:  Bullish

A decelerating EMA, when it is negative, means that it is still going negative, but at a slower and slower speed.  This means that if this trend continues that it will eventually go positive, which means (in the case of LCRs) that we have more stocks in the database changing to a long recommendation than those that are changing to a cash recommendation. 

The bearish stance of the LCR Change Timer and the bullish stance of the LCR EMAs tells me that we have a divergence and that we will either continue south (EMAs will begin dropping again) or that the change timer will move back to the long side.  Only time will tell.

GGT Strength -- Bearish, but Consider Long Hedge Positions on Strength

The GGT Strength Index moved up Monday from 0.02, which is very oversold, to 0.19, which I believe is still quite oversold.  This being said, we could bounce around here for a few days, so entry into a long hedge position on strength (e.g., use Elder's method of entering long ETFs when they move higher than the previous day's high) would not necessarily be a bad move.

GGT Prices -- Rising on Increasing Volume

The GGT Price Index is back above $22 at $22.02, and is doing so on average volume of 1.46M shares, which has been steadily increasing for the last month.  Our high-point bogey is $22.71, which we set on 1/19, so we have a ways to go.  We are presently 2.2% away from the top of a pricing channel, which shows that we have some upside room, relative to the recent past, and we are 3.8% away from the bottom of the pricing channel, which shows we have considerably more downside room available. 

GGT Price EMAs --Accelerating Upward

The accelerating nature of the pricing EMAs is in step with the decelerating LCR EMAs, showing that we have upward pressure within the database.  If this continues we will see highs in prices, and we will see the LCR move upward.  We also will see the LCR Change Timer reverse.  Again, hedge positions in long ETFs are warrented, provided that we are entering on strength.

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Remember, you are responsible for your own trading decisions.

Regards,

pgd