Tuesday, August 10, 2010

ST Timer = CASH, Elder Timer = LONG, Buying Opportunity?

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GGT Price increased +0.78% to $25.96; we've not been above $26 since 7/26.  Volume is vaporizing into nothingness -- we were down -22% compared to the average of 2.4M shares, this is OUTSIDE a standard deviation and indicates people are keeping their powder dry.  Rising prices on abnormally low volume is not a buying opportunity, so my cautiousness is peaked.

The GGT long-cash ratio moved upward +2% and ended the day at 1.614.  For such a strong move in price, we're not seeing the corresponding moves across the database, so again, my cautiousness is peaked.  Remember, volume is not required to move the LCR downward -- only a drop in price -- so if we start to see an avalance of CASH recommendations the foundation may be in jeopardy.

GGT strength moved upward on Monday, ending the day at 0.65 on a 1.0 scale.  This indicator is drifting between 0.59 and 0.78, indicating neither a strong market nor a faltering one.  I want to see either a major move upward (the bull has legs) or a drop south (the bears have awaken).  Until this occurs, I'm anticipating more of the same market.

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Short Term LCR Change Timer

This timer moved to CASH with the close on Friday so we missed yesterday's gains.  Futures are very weak this morning as I bang this out, so we appear to be on the correct side of the market.  I will remain in cash for now since none of my contra ETFs with volume are above their 200d MA.

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Intermediate Term Elder Timer

This timer is indicating LONG, primarily due to the 13d Force Index being positive.  See yesterday's post for a more detailed rationale. 

I purchased BTN (up +3.83%) and EZCH (down -0.45%) yesterday due to these two hitting price and volume targets intraday.  The Intermediate-Term Elder Portfolio is up +3.5% on this leg.  

The boat anchor in this portfolio is LSCC, who lost their CEO yesterday to KLIC.  My position is down -8.3%, and although Elder is still long on the 13d FI for this one, the EMA slopes are going negative and this spells doom in the short-term.

A number of stocks have recently seen their 13d slope drop below the 34d slope:
  • KWR, presently up +11.41%
  • NLC, presently down -1.52%
  • LSCC, presently down -8.3%
  • IDT, presently up +10.31%
  • F, presently down -1.20%
  • CCE, presently up +1.14%
  • ARUN, presently up +5.48%
All are still positive in absolute slope values, but are not moving upward (prices are not accelerating to the upside). 

Based on the above, I will prune LSCC today, placing a 1% TSL on the position.  I will continue to hold the others, but NLC and F are the next candidates if they continue lower. 

I'm not able to clip images but there are Elder candidates for consideration, both on the ETF as well as stock front.  Identification of these is left to you.  Look for:
  • price above 200d MA
  • price above $1
  • 50d MA volume > 100K shares
  • Elder 13d Force Index > 0
  • Elder 2d Force Index < 0
  • 13d price slope > 0
  • 50d price slope > 0
You want price action to be higher than yesterday's high to ensure you're clearing resistance.  Ensure that there is volume present (see earlier posts for prorated volume levels as a function of time of day).

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Trading Plan for Tuesday

Short-Term LCR Change Timer:  sitting pat in cash.

Intermediate-Term Elder Timer:  Selling LSCC with a 1% TSL; sitting pat on other positions, will pick up Elder candidates if they show strength in price and volume.

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Please, take ownership for your own investment decisions.  I am not responsible for your actions.

Regards,

pgd