Thursday, August 12, 2010

Elder Intermediate-Term Timer --> Cash????

As predicted yesterday, the Elder intermediate timer, when using an exponential moving average on the 13d Force Index, has signaled a move to cash.  It was expected, as all we needed was average volume and a 1% decline in the GGT price to take the timer into cash.  The impact on the intermeidate portfolio was significant and deep, with the intermediate-term portfolio now down -2.3%, or a loss of -4% in a day.  In accordance with my standard liquidation rules I have placed a 1% TSL on the stocks before the open and will let the winds take them where they go.

Before any of you get critical on the Elder timer, I remind you of the following periods where it signaled long and the GGT index prices:
  • 7/14/10 to 8/11/10:  $24.94-$24.82, loss of $0.12
  • 6/24/10 to 6/29/10:  $23.85-$23.10, loss of $0.75
  • 6/11/10 to 6/22/10:  $24.35-$24.30, loss of $0.05
  • 2/16/10 to 4/28/10:  $22.83-$26.30, gain of $3.47
  • 1/25/10 to 1/29/10:  $21.94-$21.53, loss of $0.41
  • 11/13/09 to 1/22/10:  $19.16-$21.74, gain of $2.58
  • 10/13/09 to 10/26/09: $19.36-$18.97, loss of $0.39
  • ...
You get the idea.  I have data back to 9/11/08.

Point here is that we have to play to win, and over the longer term, this timer does keep us on the right side of the market when the stars are aligned.  I'm not taking a -2.3% loss in this portfolio as any indication of a problem, nor should you.


HGSI Elder view of the GGT Universe

The graphic above shows my Elder view of the GGT database.  The Elder signal has moved to cash, as evidenced by the "pink" area in the ribbon bar (Elder 13d Force Index < 0).  This signal whipsaws, but overall, it is a great indicator to see if we should be long or short. 

Money management 101 -- live to fight another day.


Trading Plan for Thursday

With the Short-Term Timer in Cash, I'm happy that I pulled up a chair on Friday and was able to watch the carnage from the sidelines.  I will continue in cash.

With the Intermediate-Term Elder Timer signalling a move to the sidelines, I have placed a 1% TSL on my positions and will let fate take them where they go.


Remember, you are responsible for your own trading decisions, not me.  Please take ownership of your decisions.