Friday, June 4, 2010

200d Resistance on the $SPX and $INDU

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Status:


  • LCR Change Timer:  Has transitioned to LONG (+1).  The original LONG call was the close of Thursday, 5/27.
  • GGT Price EMAs are changing.  The 13d EMA is now trending up (bullish).  The remaining slower EMAs are still trending downward (bearish).
  • GGT Price ($24.30) is trading above the 13d EMA ($24.06), and this is bullish.  It is still below the next Fib EMA of 21d ($24.34), but just barely.  I still consider this overall bearish.
  • GGT Price ROCs are mixed.  The 13d EMA on the Price ROC is positive now for two days (bullish), which means we have an upward trend to price over the last 13d.  The 21d EMA on the Price ROC is almost positive -- it is at ($0.004)/day.  If today is an up day this could move positive, which would be bullish.  The remaining slower EMAs on the Price ROCs are negative (bearish).
  • Slope of 65d EMA of GGT Price is negative (bearish) but has been pointing UPWARD for 2d (bullish)
  • GGT Volume was -15% below the 50d MA on Wednesday, but this is within a normal distribution (neutral).  We are seeing less participation in the market, as the "below volume" trend is becoming more prevalent.
  • Elder's 13d Force Index on the GGT Price continues negative (bearish) @ (251K) but is moving more positive day-over-day, which is bullish.  Note that weaker volume on strong price movement days is not very positive for a bull.  We need strong volume and strong price movement.
  • GGT Long-Cash Ratio (LCR) jumped from 0.227 to 0.291. This is bullish.  We had a low of 282 stocks indicating LONG on 5/25, and with Thursday's close, we now have 668.  The short-term trend is upward in the LCR.
  • GGT LCR EMAs are all inverted (13 < 21 < 34 < 55).  The 13d EMA on the LCR has just started to trend upward (bullish) but all the others are still trending downward (bearish).
  • GGT LCR ROCs are negative (bearish) with the exception of the 13d EMA on the ROC, which is moving upward.  
  • GGT Strength Index jumped to 0.57 from 0.5, and continues to float in no-man's land.  This indicator is relatively useless at this point, with a 43% chance of moving upward, and a 57% chance of moving downward.  This is indicative of a trending (horizontal) market.
  • GGT Equity Curve based on the LCR Change Timer jumped from $2.4874 to $2.5080 with Thursday's action.  The day-of-the-signal (5/27) value was $2.4812 as a point of reference.
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Commentary

Although we are seeing some bullish indications (13d EMAs trending upward, ROCs moving upward, Elder FI(13) moving less negative), it is still too early to aggressively move into long positions.  Take a look at the following chart on the $SPX, which is the S&P500:
































The $SPX closed at 1102.83, after reaching a high of 1105.67.  Note that the 200d MA is 1106.24, so the $SPX was unable to penetrate the 200d.  Also note how volume is lower than the most recent period.  Until we close above the 200d MA the markets will perceive this as weakness.

Take a look at the same chart, now applied to the Dow Industrials:

































Essentially, we have the same story as the S&P500.

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Yesterday, my position in QLD hit it's profit target and I sold it.  In accordance with the GGT timer I am still holding positions in DDM, SSO, and UWM.

I did not purchase a position in DUG, contrary to The Stock Owl's recommendation, because it did not show strength by closing above the previous day's high (let alone close).  $70.15 is my new bogey for entry.

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Being Friday, I'm not very optimistic about holding long positions across the weekend.  If we close above the 200d MAs we will have a very strong confirmation of a new bull; if we fail to do so we will be in trouble.

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

Regards,

pgd