Wednesday, April 28, 2010

GGT LCR Fast Timer Confirms Move to CASH

GGT Price dropped -2.49% to $26.24 on Tuesday on the 2nd highest volume ever recorded since we started in August 2008, 3.4M shares.  Distribution day indeed.

The question is "now what?"


For the first time since 1/22/10 the GGT Price has penetrated the upper Price 13d EMA.  While it is too early to say we'll continue, futures are a tad lower this morning, so heading for the 21d EMA is not out of the question.  Here's the chart:

A close below $26.06 of the GGT Price will take out the 21d EMA.


Tuesday was the largest, single day drop for the Elder Force Index since we started keeping track in August 2008.  While we are still above the 0-line, e.g., we're positive in FI(13) value, which is still bullish, but with a modest down day it could move this average negative.  In other words, we're on the cusp, and we could tip either way.  I hate indicision, so perhaps this will clear itsself today or tomorrow.


The Long-Cash Ratio (LCR) fell to 1.923, indicating that 1938 stocks have some form of long status and 1008 stocks are in some form of cash status.  This is down significantly from Monday's value of 3.307, which is what we expect for a heavy distribution day.  There are a large number of long-recommended stocks available so continuation of this drop is not out of the question.


The EMAs on the LCR are still aligned in a bullish stance, with the 13d > 21d > 34d > 55d.  A crossing from above of the 13d x the 21d would be another bow shot, and this is the next bogey that I'm watching for out of this indicator.  Failure to achieve this crossing would be a bullish sign and we'd have a buying opportunity on the long side ...


ALL LCR Rates of Change (ROCs) have moved negative, which is a clear warning shot.  They have done so decisively, which makes me think that they will actually relax, e.g., they could remain negative but less so than the present values, e.g., moderate the decline in LCR.  Here's the chart:

Perhaps my colleague Ray is correct: "... something feels different this time ..."


I wrote about the emergence of Contra ETFs in my VectorVest blog; if you are inclined to play that side of the market you may want to review.


As always, do your diligence.  You are responsible for your trades, not me.  Comments and questions are always welcomed.