Thursday, July 22, 2010

Keeping my Powder Dry

The markets tanked yesterday, in response to the FED's statements, so we didn't whipsaw.  I suppose that's the good news.  The less-than-good-news is that we are not moving in any general direction, which makes it hard for those of us who trend-follow.

I intend to keep my powder dry today -- there simply is lack of conviction to move the markets in any direction.

Here's the status dashboard:

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

The GGT Price Index fell -1.32% to $24.64 on average volume of 2.7M shares.   Unremarkable when observed in a vacuum.

The GGT Long-Cash Ratio moved downward slightly, falling from 0.616 to 0.589, indicating a slight downward bias in the database.  The movement isn't dramatic, so we're in the "noise" -- neither up nor down.


GGT Short-Duration LCR Change Timer

This short-term timer is biased into CASH, as triggered this past Monday, but I'm holding no positions on either side of the trade.  Data at the end of the day is generally counter to the short-term direction of the timer, hence I've been precluded from entering.  As this signal is now three days old I will wait for a move to the long side before entering -- contra positions are risky at this point unless we see some clear trending to the downside.  The "yellow" on the graph above indicates a back-and-forth movement of the smoothed LCR change signal, and it's hard to make money when we have a "yellow" block indicated.

Futures are UP as I write this, so if this holds for today, we'll see ANOTHER yellow block with the close of the markets.  If the markets finish DOWN across the board, this will move back to another CASH call and limited exposure to contra ETFs could be evaluated.  I intend to wait until the last 30 minutes of the day to make a determination.


Intermediate-Duration Elder Timer

Elder continues to indicate LONG, although the 13d Force Index slope is pointing downward (bad news if this is sustained).  It's also indicating that the 2d Force Index is POSITIVE, which means we need to wait for more of a pull-back to enter stocks on a broad, long basis.  This being said, there are candidates to review.

Of interest is that of the HGSI stocks that I listed yesterday, all the "green ones" were moving up solidly yesterday until 2 pm, then their bottoms fell out.  I'm glad I waited to make a determination.  Again, I will do the same today; here's my list:


Trading Plan for Thursday

In terms of the short-term LCR Change signal, I'll enter contra positions if we continue south today, as determined by the behavior of the market in the last 30 minutes or so.

In terms of the intermediate-term Elder signal, I'm watching the list above, specifically looking for strength (higher than yesterday's high on volume greater than the 10d MA), as measured in the last 30 minutes of the market behavior.


Remember, you are responsible for your own investment decisions.  Please do your own diligence.