Friday, April 30, 2010

Gotta Love (Hate) Whipsaws ...

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The LCR (Fast) Change Timer has moved back to LONG with the close of Thursday's action, signalling that we should be considering only long positions.  If you've been following along this timer went to CASH this past Tuesday, so back and forth we go.  For those of you following my daily trades in the VectorVest blog, this timer is in sync with what I'm seeing in the Contra 13x21 portfolio, so frustrating as it may seem, it's not too far from reality.

The LCR (Slow) Change Timer is still indicating CASH (actually, it is CASH-LONG), so if today is a strong day it will transition to long.

Remember, the fast change timer has a time constant of about 6 hours of trading action, whereas the slow change timer has a time constant of about 4 days.  Only use these timers if you can be nimble in your trading.

GGT price moved up 1.7% on solid volume of 3M shares.  Volume has been quite heavy lately -- significant participants in the market.  If anybody has an explanation I'm listening.  Pricing EMAs have resumed their upward march, and the GGT price is now above all the pricing EMAs, which is bullish.

Elder's Force Index is just barely positive, which is a major warning for stocks.  A significant down day will certainly take this indicator below 0, which will turn us from bullish to bearish.  Be advised.

The Long-Cash Ratio moved upward again, and is now at 1.833, up from 1.700 but down from where we started the week.  1906 stocks are indicated LONG, and 1040 are indicated in CASH.  This is a net change of 51 stocks to the long side and oddly, -51 stocks to the cash side.  Don't read anything into the balance.

The LCR EMAs are still very negative, but are moving upward, e.g., becoming less negative.  This means that the tide has reversed and when this is happening, we can expect prices to move more positive.  Note that they're not moving upward very fast, and since they are still negative, over the long haul we are certainly seeing a decrease in bulls and increase in bears.  Keep this in mind.

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Emotion is telling me to hold onto my contras, but the indicators are telling me to sell them.  As I'm trying to drive emotion out of my trading, I'm placing 1% TSLs on all my contras, and will continue to play the long side as indicated in my VV blog.

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Remember, you are responsible for your trading actions, not me.

Regards,

pgd