Thursday, July 8, 2010

LCR Change Timer Transitioned to LONG

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Before I forget, there is a good chance that there will be no blog update the morning of Friday, 7/9, as I will be traveling and it will be difficult for me to access data.  I'll try, but no guarantees.

Here's the status dashboard:

























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

The GGT price index soared Wednesday, finishing the day up 3.19% at $22.96.  This was accomplished on  volume that was -12% lower than the 50d MA of volume.  Despite this lower number, -12% is within the standard "bell curve" and can be considered normal.

The GGT LCR Change Timer, which is a very fast timing system, has moved to LONG, as predicted in yesterday's blog entry.  If you have been following along with my trades you would have been faced with a difficult decision near the close of yesterday's market:  all the 2x leveraged ETFs were UP, but they were substantially below their 10-day MA on volume.  This is quite worrisome overall for any sustained bull.  Nevertheless, I did pick up positions in UWM, the Russell 2000 2x leveraged ETF, as well as QLD, the NASDAQ-100 2x leveraged ETF, in accordance with plan rules.  If I see strength in the others I may follow with additional long entries, but for now, I am content to hold these two.

GGT database strength, which fits on a scale of 0 to 1, moved from 0.231 to 0.537, which places it firmly in no-man's land.  This tells us that we have nearly 1:1 odds on failing this breakout, as well as possibly moving higher.  Of significance is that there are many currents working against the long side right now, but only a few in support of moving higher.  Of the ones that are pointing us higher, the upcoming earnings season, as well as being down here in the oversold area for some time are both significant psychological triggers that could overcome the lower volume and bleak economic picture for growth.

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Elder

The Elder setup is still quite bearish:
  • the 13d Force Index is negative, precluding any intermediate-term long positions
  • the 13d EMA on price slope is negative
  • the 34d EMA on price slope is negative
  • the 13d MA is below the 34d MA
These four bullets cause me to hesitate in committing any substantial positions to the long side.  Here's what HGSI has to say about Elder, when applied to the entire GGT universe of stocks.




Of significance in the above Elder graph are the following:
  • Bull power is becoming less negative, which is bullish.  I want to see this move above 0 though
  • Bear power is becoming less negative, which is bullish.  It appears bigger than bull power, so we need to see bear power "get smaller", relative to bull power.  The bears are still in control.
  • Elder 13d Force Index is pink, indicating that it is negative.  This is bearish.
  • Both the 13d and 34d slopes are negative (the car is driving backwards), but they are just starting to point upward, becoming less negative (the car is driving backwards, but is slowing down).  This is the first sign of a possible bull leg (necessary, but not sufficient for you math types)
  • The 13d slope line is below the 34d slope line.  Until these cross, we are not in any form of a bull run.
  • Prices are trading BELOW the EMAs.  This is bearish.

Elder's methods are clearly telling us to wait for intermediate-term positions on the long side.

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There was no substantial change to the status of the pricing or LCR EMAs yesterday, save one:  the 8d slope of the GGT system has now started to point upwards (whippee!).  Again, a very weak indicator, especially when all the others are pointing down, so I intend to keep the majority of my powder dry for now.

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Trading plan for Thursday

I may add to my long ETF positions that are tied to the LCR Change Timer.  I need to see higher prices than yesterday on volume that is higher than the 10d MA of volume.  A good benchmark that I use for this is the following:

@ 10:00 need to see 12% of the 10d MA Volume
@ 10:30 need to see 25%
@ 11:15 need to see 33%
@ 12:15 need to see 50%
@ 1:15 need to see 60%
@ 2:15 need to see 70%
@ 3:15 need to see 90%

Admittedly, neither UWM nor QLD met this criteria yesterday -- but because of the signal change, I had to have something in play (I believe in my own timers).

Watch MVV, DDM, UYM, UGE, UCC, UYG, URE, USD, and UPW to see if they meet the criteria.

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

Regards,

pgd