Wednesday, February 24, 2010

Potential timer signal change ...

GGT has developed a timer that is based on the change of the Long-Cash Ratio (LCR).  The LCR is exactly what it sounds like -- the ratio of the number of stocks in the database with a LONG recommendation, relative to the number of stocks in the database with a CASH recommendation.  The current signal going into Tuesday, February 23rd was long, and Tuesday was the start of the 9th consecutive trading day with a LONG status.

With the close on Tuesday, February 23rd, the signal has transitioned to a Long-Cash (0) value.  If today (2/24) is a down day as far as the database is concerned, then I expect it will further transition to a CASH (-1) level, which would be bearish for long positions in equities.

Pay particular attention to the ADV/DEC in the major exchanges today.  One way to do this is to watch the data on the home page at, and you'll see an aggregate of all action for the day.  Individual index action is largely irrelevant, although the S&P500 index does contain the most stocks hence will be closer in representation to the ADV/DEC performance.

For the record, the LCR closed below 1.0 on Tuesday after hitting a high of 1.099 on Monday.  1568 stocks are indicated LONG going into Wednesday, and 1586 stocks are indicated CASH.  While the 13d/22d/34d EMAs of the LCR are all positive in direction (bullish), the day-over-day change is decelerating (bearish), and we need to watch this for a change in market sentiment.  Furthermore, the 55d and 65d EMAs of the LCR are trending DOWN, which is intermediate-term bearish.  We need these all to line up, either all pointing upward, or all pointing downward, to call a definative market trend.  Right now we are in transition, so I intend to protect profits.


Remember, you are responsible for your own trading decisions, not me.  Do your homework.