Tuesday, June 22, 2010

LCR Change Timer Signals a Caution Flag

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Let's get right into this, because I want to get this posted in order to be timely this morning:
























GGT price has now fallen two consecutive days on continued lower-than-average volume, with yesterday's volume being incredibly poor.  Downward drifting prices on lower volume is not a cause for concern to the primary trend -- the big boys are not playing when this occurs.

Of interest is that the Long-Cash Ratio (LCR) fell for the first time since 6/9, and is now sitting at 0.894.  If you have been reading the past entries you will understand this to mean that prices, volume, and LCR should be in sync to the upside, and prices/LCR should be in sync to the downside.  We are now achieving that, so the world is whole.  Seriously, the LCR only dipped -3% on Monday, but it was enough to cause a few indicators to flash a caution sign.

GGT strength continues to weaken, and is now at 0.557.  This is no-man's land -- the database has considerable room to move up (0.443 to be exact) as well as considerable room to fall.  At this level the indicator is relatively useless.

Of importance is that the LCR Change Timer (fast) has moved to 0 from +1, which is now a LONG-CASH position.  IF TODAY IS A DOWN DAY AS FAR AS THE ADV/DEC line is concerned (watch http://www.finviz.com, upper left-hand corner on the home page), then this timer will transition to CASH with today's action.  THIS WOULD BE THE TIME TO CLOSE LONG POSITIONS that are tied to this timer.

Elder is still indicating long, and if the particular stocks you are interested in are clearing previous highs, this could be a good entry.  Note that the 13d is < 34d EMA, which means the confirmation for Elder Force Index has NOT triggered.

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Trading plan for today:

1) if the market is down near 4 pm I intend to close my long ETFs, mostly for a gain of a few percentage points.
2) if the following contra ETFs are above yesterday's highs I may purchase small positions of each:  TWM/SDD/QID/DXD/SDS/MZZ

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

Regards,

pgd