Friday, June 18, 2010

Elder 2d Force Index is Negative, LCR/Price/Strength Divergence

A neutral day for prices, but not for the underlying database.  Here's the status chart:

As with all my charts, right-click on the image to open in a new tab or window.

GGT price was unchanged for Thursday, literally finishing at 0%.  Volume continues to be in the toilet, down -23% from the 50d MA.   The Long-Cash Ratio (LCR) continues to move upward, which is a divergence from price, increasing 9% to 0.717.  This tells me that although the database, as a whole, is not appreciating, there are stocks that are gaining strength on appreciable volume, which is significant.  This cannot be sustained -- either the database price action must continue upward or the LCR must begin to stabilize and align with price action.

Further worrisome is that the database strength - an aggregate rollup of the individual strength of 2800 stocks,  continues to fall, having done so for the past two days and is now resting at 0.683.  Again, increasing LCR, unchanging price action, and falling strength do not point to a robust bull leg.  It can go either way though, so don't turn too pessimistic at the present time.

The LCR Change Timer (fast) continues to indicate LONG, and this continues to work nicely.  UWM is up 8.51% in the past 5 days, SAA is up 7.66%, QLD is up 8.96%, DDM is up 5.31%, SSO is up 5.42%, and MVV is up 6.68%.  My actual gains are a bit less because I did not enter until Monday morning of this week. Nevertheless, it pays to watch this timer -- as $1 on 12/31/08 has evolved to $2.48, although this is down from the 6/2/10 peak of $2.60 (we did hit a low of $2.42 on 6/10/10).  I intend to do nothing today with my positions.

Elder's 13d Force Index is positive, which is bullish.  The slope is heading down though, over the past two days, so caution is advised.  The good news is that Elder is signaling a possible entry into LONGs via a newly-negative 2d Force Index, if your selected stocks move upward today, clearing their previous day's high.  The 13 and 34d EMAs continue to point upward, which too is bullish, but note that the 13d < 34d, which is very cautionary.  This is a longer-term timer system and entry is always a bit unnerving -- something like jumping into a known cold lake.

The Pricing EMAs are continuing to sort themselves out, with the 13d > 21d as of Thursday's close.  This is bullish.  Note that the 34 and 55 are still inverted under these, so we're not in a full up leg at this time.


My trading strategy today is to sit pat on my LCR Change Timer ETFs, and although the 2d Force Index is signaling a possible entry into longs, I'm going to hold off entry today until I can spend some time this weekend looking at the BRICs, PIIGS, commodities, and other highly-rated HSGI stocks.


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