Friday, February 19, 2010

Notables from Thursday, February 18th

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Summary

The GGT price index continues to hit all-time highs on solid volume, which is bullish.  The GGT long-cash ratio continues to climb, which is bullish.  The LCR change timer is telling us to be LONG.  The GGT strength index has shown one-day weakness, which is divergent from the increase in price and increase in LCR, and if this continues on Friday, is indicating that we should protect gains and enter a contra hedge position as necessary.


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GGT Price and Volume Index

GGT price hit an all-time high of $23.08 on Thursday on 1.8M shares volume, which is 9% over average volume.  Note that we're decelerating on price changes day-over-day, and if this continues, we'll certainly reverse.  Nevertheless, we're still bullish -- higher prices on solid volume is good.

GGT LCR

The GGT Long-Cash Ratio continues to increase, now with 1521 stocks indicating LONG and 1792 stocks indicating CASH.  This gives a ratio of 0.849, which is up substantially from our low on 2/8 of 0.232.  Continued upward movement in the LCR is bullish, and we need to be positioned accordingly. 

GGT LCR Change Timer

The LCR Change Timer is still indicating that we should be LONG.  The LCR changeEMAs are decelerating from negative values or are positive in their indicators, which is bullish.

GGT Strength Index

The GGT Strength Index fell on Thursday from Wednesday's peak, which means that the stocks in the underlying database are weakening in price and/or volume.  This divergence from the Price Index as well as the LCR could be general noise, or it could be an early indicator.  Long-term, either the strength must improve with LCR for prices to keep increasing OR the LCR must reverse to match the decrease in strength, which signals a local top.  The strength index is at 0.79 on a scale of 0 to 1, and indicates that we are weakly overbought.  While we certainly could go up from here, if this action continues today, we should protect gains and/or enter contra positions near the close.  Look for higher market indexes today but on mixed, nearly 1:1 ADV/DEC levels by the end of the day to decide what to do.

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Remember, you are responsible for your own trading decisions.

Regard,

pgd