Wednesday, October 27, 2010

Elder still long, LCR continues to fall, so caution is advised

.
A number of my holdings are rolling over, and because of this, I've been slowly moving what positions remained into cash. 

I sold EWO yesterday, having bought it back at the end of September.  Here's the chart:


Althought the FI(13) is still positive for EWO, you can see that the MACD histogram is negative, and has been for several days.  I didn't see any reversal occurring in the short-term future so this was the most convincing indicator for me.  Further, you can see that the slopes of the 13d EMA and 34d EMA on price are both trending down, with the 13d slope < 34d slope.  Although both are positive, there isn't any real movement upward, hence this confirmed that it was time to sell.

Overall gain was about 9%; Hsin is tracking in real time and he can weigh in as to what the actual gain was.

I purchased SNDA a few days ago but it has gone nowhere.  Further, my position is down -2.06% and the Elder FI(13) just moved negative, hence I'll put a 1% TSL on the position and cast it to fate.

FXI is another position that I'm cutting lose today.  I purchased back in September and have a gain of 7.6%, but the MACD Histogram just moved negative with yesterday's action and with the interest rate increase in China last week, I don't see this one continuing upward from here.  We also have dropping slopes on the 13d and 34d EMAs, which is not good and indicates a complete loss of momentum.

My have 11 open positions at the present time.  Due to a order-entry error on my part, I have two positions in SKS in two different accounts.  SKS is doing the best, up +5.73%, and VXX is doing the worse, down -4.15%.    Here's the scorecard:

SKS, +5.73%
FXI, +7.60%
SKS, +2.95%
VVC, +0.86%
TBT, +0.72%
TMV, +0.97%
PLXS, +0.4%
WEC, +0.09%
SNDA, -2.06%
AGCO, -3.32%
VXX, -4.15%

VXX has been my hedge and I anticipate that it will move northward as the market consolidates.  I've only a small position in it and will add another 20% position on strength today.

=====================

Here's the dashboard:




Our price index dropped from $26.38 to $26.35, so it is barely worth noting.  Volume was constant relative to Monday as well as the 50d MA, so once again, we could state that we're churning.  Either this is a new base or it is going to drop from here.

Voltatility continues to drop, and I generally like to see this occuring when prices are actively moving higher.  I would not be surprised of a retest of support levels from here if volatility continues to drop, as more people will begin to acquire protection in the form of options since the prices will be so low.  We'll see.

The Long-Cash Ratio (LCR) dropped a slight amount on Tuesday, and our strength index dropped also.  Hence, we have a slight weakening across the board on normal volume, so we are seeing a bit of consolidation occuring in general.

I've been presenting the "slope of the LCR EMAs" over the past few days; no changes there.  We are continuing to see negative slopes in the LCR EMAs, and this means that we are decreasing the size of the pool of stocks to choose from that are moving up.  Your stock picking skills must improve when this occurs, so venture forth as your risk profile dictates.  I'm watching the contra ETF world carefully.

Early candidates that are showing price and volume accumulation in the leveraged contra world are:

DTO
DZZ
GLL
BZQ
DUG
ZSL

Disclaimer:  I purchased 20% positions in ZSL and GLL in premarket trading.

====================

Short-Term LCR Change Timer

Because the LCR did not advance higher, we are sitting at CASH-LONG (0).  If the LCR drops today (watch http://www.finviz.com/, the ADV/DEC ratio) then this will reset to CASH (-1).  If the LCR moves upward today then this will transition to LONG (+1).

====================

Elder Force Index Intermediate Timer

Elder continues to indicate that we can purchase stocks long, the continued weakening in the LCR notwithstanding.  Here's my list:

APKT
AIXG
AWF
LNT
ALY
ARBA
AWI
APL
FRA
BKT
CSL
CI
CLWR
RNP
DIOD
ENS
ERES
ERIC
EXPE
HITT
MU
NSM
POWI
SANM
SWI
STM
SNCR
SVR
TRGT
TITN
UTEK
V
XRX

Ensure that you have volume and price entry above yesterday's high before moving on anything in this list.

=======================

Remember, you are responsible for your own trading decisions.  Please take ownership for your actions.

Regards,

pgd