Tuesday, April 27, 2010

GGT LCR Fast Change Timer has Transitioned to Long-Cash (0)

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With the close of Monday's markets, the GGT LCR Fast Timer has transitioned to Long-Cash.  If today is a down day with respect to the ADV/DEC ratio (more declines than advances), it is highly likely that this timer will move to a full-cash signal.

Given the strength of the small caps, TWM, the ultra short to the Russell 2000 should do well when the market reverses.  Same with the TZA, which is the TRIPLE short Russell 2000 from Direxion.  You have to be absolutely nimble to play these ETFs.

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The GGT price index fell -0.3% on Monday on volume that was 19% above average.  This is within the daily statistical noise so I wouldn't read too much into this. 

The distribution of stock classifications -- New Long, Aff. Long, Long, Cash, Aff. Cash, and New Cash -- are all within their norms so again, yesterday was a yawner in terms of change in database structure.  Stocks with a Long recommendation (lower volume but prices still higher than historical optimum levels) grew from 1444 to 1564, which is notable -- more stocks are nearing the edge of the "cash" cliff and a down day in the markets will force them to jump to the red side.    We'll see.

The actual Long-Cash Ratio (LCR) fell just ever-so-slightly on Monday, again, within the noise of daily movements.  It is now at 3.307, indicating that 2262 stocks are long and 684 stocks are in cash.  Put another way, ~77% of the database is in some form of long status, and we've been here for some time.

I'm not seeing anything in the pricing or LCR EMAs which suggests that "Tuesday is the reversal day".  Everything is marching upward, and aside from the warning sign of the LCR Fast Change Timer telling us that we could move south, all other indicators are still north of the border.  Don't bet the farm on TWM or other short ETFs just yet.

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

Regards,

pgd