Thursday, May 27, 2010

Head Fake? Thursday Evening Summary via GGT ETFs

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The markets clearly screamed higher today -- firing on all cylinders.  Or did they?

Surprisingly, the GGT ETFs this evening are painting a different picture -- one that is very divergent and cautionary.  Specifically, the ratio of LONG-recommended ETFs to those that are CASH fell from yesterday's value of 18.3% down to 15.8%, a level we haven't seen since February.  This was completely unexpected by me -- I was predicting that the value would have gone up, as we saw a large number of New Longs appear.

The rationale behind this -- and I won't be able to confirm it until Friday morning -- is that while the markets moved up, they didn't do it across the board, and because the ETFs represent the kitchen sink of securities -- literally -- while we did well in the US, we didn't do so well globally.

I note with some interest that 28 short (contra) ETFs signaled New Cash with today's action ... I'm tracking 94 so this is nearly 30% of the Contra ETFs flipped south.  Many of them are leveraged -2x and -3x, so they react dramatically (which is why I like them), so this could be an early warning that the bulls are awakening or it could simply be that they are too darned sensitive for our purposes.  Stay tuned.

I also note with interest that EVERY MSCI ETF that I track has some form of "cash" status associated with it.  I've never seen such bearishness around the world.  Here's the chart; the data in the columns should be self-explanatory:






























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I'll post in the morning once the stock file has updated and I've had a chance to evaluate.  Check back before the market opens.

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

Regards,

pgd