Wednesday, July 7, 2010

LCR CHANGE TIMER signals "GET YOUR LONG LIST READY"

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First, the dashboard:



























As with all my images, right-mouse click on the image to open in a separate window or tab.

Tuesday's action saw the GGT Price Index fall another -0.5%, ending the day at $22.25, a level it has not seen since February 12th, 2010.  Volume was -15% below the 50d MA at 2.3M shares, which is actually in the "bell curve" of being normal, so consider this a standard market day.

Of interest is that we squeeked out an almost insignificant gain in the Long-Cash Ratio (LCR), one that I attribute more to mathmatics than market behavior.  What is significant though is that this 2% increase from 0.142 to 0.145 on a day when the prices fell indicates that we are apparently holding our low-ground.  Is the bottom in?  Your crystal ball is as good as mine.  What I do see though is that across the entire database, the average price fell, but at the same time, we're seeing volume increase, resulting in an increase in the number of long-status stocks.  Indeed, Tuesday's action saw the largest number of "New Long" stocks since 6/25.

Also of note is that the database strength index increased from 0.208 to 0.231.  This is an oscillator that runs between 0 and 1 inclusive.  Values near 0 indicate weakness and oversold, and values near 1 indicate strength and overbought.  A movement UP in strength, but on falling prices, indicates that within the database numerous stocks are starting to appreciate in terms of rate-of-change (ROC), price, and volume, relative to where they have been in the recent past.  This is a big deal, and suggests again that we may be bottoming.

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LCR Change Timer Transition to CASH-LONG

Whether mathematical or not, the LCR moved up.  The increase was enough to trigger a transition change from cash to CASH-LONG, which means that IF TODAY IS UP, we will have a long signal with the close of Wednesday's action.  Here's how to deal with this:


























If today (Wednesday, 7/7/10) is up near the close of the markets (say after 3:30 p.m. EDT) as determined by the home page at FinViz (http://www.finviz.com/), specifically the ADV/DEC bar shown above (we want more ADV than DEC in the last few bars of the day), then we have fairly good assurance that the LCR will continue higher.  At this time I will move into my favorite long ETFs that I tie to this timer:  UWM, QLD, MVV, SSO, SAA, EFO, DDM, etc. if they are showing strength on higher volume.

[Caveat:  look at the FinViz image above:  note that there were 110 new highs and 262 new lows on Tuesday.  We could EASILY fail in any bounce here, as the currents are unquestionably against us on the long side.  Trade at your own risk.]

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Elder Intermediate Timer

Back to the GGT Status Figure. 

Elder's methods for the intermediate-term trend continue to look ugly. 
  • The 13d Force Index is negative, which is BEARISH and blocks us from holding any long positions for any extended length of time. 
  • IGNORE the fact that the 2d Force Index is negative -- it is negated by the 13d status. 
  • The 13d Price Index slope, as well as the 34d Price Index slope, are both heading downward, which is BEARISH. 
  • The 13d rice Index is below the 34d Price Index, which is BEARISH.
The status of these indicators tells me that it simply is not in my best interest to be long on an intermediate-term basis.

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Other EMAs

While I'll not dwell, ALL the pricing EMAs are inverted, e.g., 8d < 13d < 21d < 34d < 55d.  This is simply the wrong direction for a bull market, independent of the LCR Change Timer transitions (which is a very short-term timer!!!!).    I note too that the slopes of each of the pricing EMAs are trending NEGATIVE.

The LCR EMAs are the same as the pricing EMAs, so the DATABASE is heading more negative, relative to the respective EMA time frames, than not.  Same thing here:  the slopes of each of the LCR EMAs are trending negative.

Again, the macro currents are against long positions.

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Trading Plan for Wednesday

I intend to jump onto long ETFs as noted above IF the ADV/DEC bar at http://www.finviz.com/ indicates that we are up across the market, as measured at the end of the day.  I acknowledge that this is a risky set of trades, as the currents are decisively bearish, not bullish.  I also acknowledge that I am swimming up stream if I choose to go long right now.

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Remember, you are responsible for your own trading decisions, not me.  Please do your own homework and diligence, and always check my work.

Regards,

pgd