Tuesday, May 25, 2010

Weakest "LONG" Strength Since Inception

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A bit tardy on this update, but with the close of the market on MONDAY, May 24th, the GGT system is showing that we are experiencing the weakest strength in the stock market, having hit a strength raw value of -10612 on 5/24, in those stocks that are rated LONG.  This is our new "low" since inception in August 2008, and indicates that we are tremendously oversold.  This surpasses the low that we experienced with the close of Thursday, 5/20th market, and over the longer term, should represent a buying opportunity.

As we saw today (Tuesday), the markets started out in the toilet and finished strong, showing again how volatile this market can be.  Is this a buying opportunity?  Perhaps, but I'm not off to the races at 9:30 Wednesday morning.

Although I will not have Tuesday's GGT data processed until Wednesday morning, I can say that because the GGT LCR Change Timer (fast) is still showing a CASH status with Monday's data, and because it takes two days to get a confirmed LONG call, we can't possibly see a move to the long side before the close of Wednesday's market.  Certainly, we can anticipate, and I often do, so check back in the morning (Wednesday 5/26) and see what this timer did today.   A casual check of http://www.finviz.com/ will show you that there were 2165 advancing issues and 4045 declining issues in the market today (Tuesday), resulting in significant downside pressure and this will hold the Long-Cash Ratio to a very low level.  We are clearly a day or two early before we can see ANY type of bull bounce that is worthy of my money.

Ah, the LCR.  The Long Cash ratio is low, VERY low.  In fact, it is at 0.092, indicating that 256 stocks are indicated LONG and 2789 are indcated CASH.  By itself you would think a great opportunity to buy -- perhaps.  Also, perhaps not.  The LCR trend is DOWN, across the board.  The 13d EMA of the LCR has been sloping DOWN for the last 20 consecutive days.  Until this value starts moving less negative on a day-over-day basis, or more importainly, crosses above 1.0 ( it presently is at -0.061/day), then there is no way that we can see any sustained light at the end of the tunnel (and be sure that it isn't a train).  I think it is too early to go long, according to the LCR.

Monday's GGT price index fell from Friday's value by -1.027% to $23.12, and did so on lower volume than we've been seeing.  The ONLY reason this is remarkable is because I'm starting to see volume lessen, which is amazing, especially since volume has been increasing steadily since mid January.  We'll see if this was a one-day-fluke or if we're starting to see less participation in the markets.

I'm presently holding two stocks long right now:  AMRN and AAP.  I closed my Contra ETFs today with the exception of the primary index Contras.   This includes EUO and DUG.

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

Regards,

pgd