Tuesday, July 27, 2010

Continue LONG on Short and Intermediate Term Timers


As with all my images, right-click on them to open in a new window.

The price index moved up +1.40% Monday, to end the day at $26.11.  Volume was down just a tad but is within a standard deviation of the mean, which I consider unremarkable. 

The Long-Cash Ratio continues to grow by leaps and bounds, and is now at 1.682, indicating that 1598 stocks have some form of long status and 950 stocks have some form of cash recommendation.  This latter situation with the LCR is very bullish. 

The strength index continues to grow, and is now at 0.879, where a value of 1 would be completely overbought.  If your time horizon is short you may want to protect some of your gains if the market begins to reverse.


Short-Term LCR Change Timer

This timer is in Day 2 of being LONG.  I purchased positions in UWM ($29.85, up +4.1%) and QLD ($58.70, up +1.4%), both of which are just trading above their 200d EMA, which is a newly-established gate that I have for each of these ETFs.  The 200d isn't universal, but it will keep you on the right side of the market.  It's modeled on some of Larry Connor's work.  I will sell these positions if they drop below the 2-day-ago low, or if they are giving up all of their gains.


Intermediate-Term Elder Timer

This timer is LONG, but is showing some weakness.  The slope of the 13d Force Index is negative, so we are losing steam.  The 2d Force Index is positive, which means we should wait for a pullback.

Because the 13d Force Index is long, it is ok to enter stocks that on a micro-scale (e.g., evaluate each stock), meet the Elder criteria.  My scan for today shows some good candidates, if the continue higher:

Relative Strength candidates are GSB, IGTE, SY, RDWR.  Velocity candidates are GPK, DEP, SY, and IGTE.  Acceleration candidates are GPK, RCNI, DEP, and QUIK.  The chart patterns of some of these are questionable, and I'll leave that as an exercise for you.  SY is flatlined, so disregard.  Here's a hint though:  use my slope chart, and pick stocks which have upward-trending EMAs of the 65d EMA slope.  Here's GSB as an example:

Note how many of the EMAs on the 65d EMA of price slope are starting to trend down.  While GSB certainly can go higher, the 21d and 34d are out of sync, and more importantly, the shorter ones are clearly heading down.  Wouldn't you want to get into something that is heading upward?  Do this for the other stocks in the list.  So while the stocks do meet the 13d/2d Force Index criteria, they clearly need to get some momentum behind them in order to warrant our monies.


Trading Plan for Tuesday

Watch for continued strength in the Elder stocks, and add if they show pricing strength above yesterday's high on higher volume than their 10d (I posted my intra-day volume levels last week).  IDT popped up to nearly 12% gain yesterday so I intend to tighten my stop to yesterday's low on that one.    In premarket this morning it looks like it could move even higher now.  Here are the total gains per position for my intermediate-term holdings:
  • BRCM - up +0.86 
  • GMCR - down -1.84%
  • IDT - up +11.84%
  • KWR - up +6.26%
  • LSCC - up +7.70%
  • ROVI - up +3.03%
  • VLTR - up +1.73%
As I indicated yesterday, these are not equal weighted, so my total gain within this portfolio is +4.05% over two days.  I will add additional Elder candidates under the intermediate-term timer if they show strength.

I will continue to hold UWM and QLD and protect their gains.


Remember, you are responsible for your own trading decisions.  Please do your homework.