Monday, August 23, 2010

LCR Change Timer Moves to CASH

Let's start with our dashboard:

A sea of red ...

The GGT price index continues to fall, ending the week at $22.92, it's lowest level since July 7th.  We started at $23.83, and hit a high of $24.27 on Wednesday, but the breakout was not sustainable.    Volume has been weak and decreasing all week, with the 50d MA volume now at 2.4M shares.  Falling prices on weak volume  is not a recipe for making money in the long haul, so caution is advised.

The GGT Long-Cash Ratio (LCR) continues to drop, and it ended the week at 0.456, indicating that 908 stocks have some form of a long status and 1992 stocks have some form of cash status.  This is nearly the same level that we started last week, so we seem to be hitting some form of a bottom here.  We'll see if it holds.  Nevertheless, this is a low value, and on weaker volume it will be harder for stocks to move upward.  CASH recommendations only require an erosion in price, while LONG recommendations require price and volume.

Database strength continues to hover in the 0.3 range, on a scale of 0-1.  This isn't overly bullish (oversold), nor is it bearish (overbought).  This is an area of limbo-land that is hard to glean a trend, and with poor volume, I'm not overly optimistic for a solid bull rise.

Short-Term LCR Change Timer

I missed this because of my work obligations/travel on Thursday/Friday, so I hope you were watching and making your own choices.  Of significance is that I'm still holding long ETFs, and will place a 1% TSL on each position today.  From an equity point of view this hasn't been a good series of trades, as I'm underwater in each position (QLD, UWM, and DDM).  If today is strong I will poke my head above water and will take my pennies off the table.

Intermediate-Term Elder Timer

The Elder 13d Force Index is solidly negative, blocking any movement into intermediate-term long positions.  The 13d and 34d pricing slopes are NEGATIVE, which is the wrong direction for these to be pointing.  The 13d slope line is below the 34d slope line, and as the faster of the two, shows that we are going down in an intermediate-term, not up.  Bearish-bearish-bearish.  If you are holding anything on the intermediate-term you are certainly playing with fire.

Here is what HGSI has to say about the GGT Universe from Elder's perspective:

In case there was any doubt about Elder, observe the following:

  • Bull power is presently negative.
  • The 13d Force Index is PINK (my version), indicating that it is presently less than 0.  This effectively stops any intermediate-term holdings
  • Both the 13d and the 34d MA slope lines are negative (the car is moving in reverse), and they are both pointing downward (we are accelerating in reverse).  This is completely the wrong direction for long positions.
  • Price is trading below the 13d and 34d EMAs.  This is bad.
  • Note too that volume as been vaporizing.  This indicates a lack of the big boys being present in the market.
I presently hold no intermediate-term stock holdings, and I suggest you consider this too.


Back to the GGT dashboard....

Of the major pricing EMAs that I follow (8, 13, 21, 34, 55), only the 34d is above the 55d.  All the others are inverted (8 < 13, 13 < 21, 21 < 34), indicating that we are moving the wrong direction on those time scales.  Note that the slopes of the pricing EMAs are all pointing downward, which is bearish.

With Friday's close, the LCR EMAs ALL INVERTED, meaning that we have a wonderful setup for a bear run, as from a database point of view, every intermediate-term metric within the LCR world is pointing downward.  Note that the slopes of the LCR EMAs are all pointing downward, which is bearish.


Trading Plan for Monday, August 23rd, 2010.

This market is relatively easy:  sit in cash.  On a short-term basis I will try to poke my head above water on my 2x long ETFs, and on a long-term basis I will sit happily in cash.

IF TODAY AND TOMORROW ARE UP STRONGLY, it is possible that we could whipsaw back to the long side with the close of the markets TUESDAY.  Watch ADV/DEC lines to get a view of this.  If the ratios are close near the close on TUESDAY, then I would sit pat, as the longer-term trend is clearly downward.


Travel Notice

I am traveling again all week, finding myself in Philly tonight (Monday) and then back to Ft. Worth Tuesday-Friday.  THERE WILL BE NO GGT UPDATE THE MORNING OF TUESDAY, AUGUST 24th, as I have a late night tonight and a very early start to my Philly meetings.  Sorry, but it's obvious that no major decisions on your portfolio have to be made today or tomorrow.


Remember, you are responsible for your own trading decisions.  Please do your own diligence and please own your decisions to trade/invest.