Tuesday, June 15, 2010

...and We Keep Marching to the Long Side ...

Despite the pullback in the major indices yesterday, as a whole, we advanced.  According to FinViz:

  • 3679 Advancing (55.1%), 2509 Declining (37.6%)
  • 168 New Highs (81.2%), 39 New Lows (18.8%)
  • 1747 Above 50 SMA (26.3%), 4884 Below 50 SMA (73.7%)
  • 3485 Above 200 SMA (52.5%), 3153 Below 200 SMA (47.5%)
My GGT Summary dashboard indicates the following:

As with all my charts, right-click on it to view in another tab or save to disk.

A few observations:
  • Volume (3rd column) is very low -- we've had four consecutive days of 0 change off the 50d MA Volume or below.  This is clearly a period of consolidation and the big boys are not playing.  Caution is advised.
  • The Long-Cash Ratio (LCR, 4th column) is advancing, and is now at 0.336.  Compared to the 6/8 low of 0.136 this is a significant advance and is bullish in the short term.
  • The LCR is still well below 1.0.  While 1.0 isn't magical, it does represent the point where more stocks are "LONG" compared to those with a "CASH" ranking.  We have far more stocks with a CASH ranking, and this is longer-term bearish.
  • The database "GGT Strength Index" (6th column) is now at 0.690, which is short-term bullish.  Once we cross the less-than-scientific value of about 0.7 we've noted in the past that the chance of a short-term pullback increases dramatically.
  • The GGT LCR Change Timer (fast, columns 7 and 8), is clearly pointing to the long side.
  • Elder's Force Index on the GGT database is
    1) LONG on 13d Force Index (column 7) -- get your LONG stock lists ready
    2) LONG on 13d Force Index Slope (column 8) -- bullish
    3) CAUTIONARY on 2d Force Index, because it is too positive.  Suggests that you wait for a pullback before entering stocks
    4) LONG on 13d EMA pricing slope
    5) LONG on 34d EMA pricing slope; together with 13d, these two are "go for throttle-up" on the long side, as indicated in column 15 "Aggressive Elder Signal"
    6) CAUTIONARY on the "Conservative Elder Signal", because the 13d EMA is NOT above the 34d EMA.  We are very, very early in this new bull, if it materializes.
  • Only the 8d Pricing EMA is above the 13d Pricing EMA -- all the others are inverted.  Again, we are very, very early in this new bull, and my suggestion is NOT to commit a great number of long positions at this time.
  • Only the 8d LCR EMA is above the 13d LCR EMA -- all the others are inverted.  Same comment as above.
  • The slopes of the pricing EMAs are all pointing upward, which is necessary (but not sufficient) for a sustained bull.  
Summary:  Caution is advised, as we are clearly in tide-changing waters.  We have some bullish indicators, but we also have remnants of the bears that are still hanging on.  I intend to wait and see today, with no major transactions planned.


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