Tuesday, October 12, 2010

LCR FELL Monday; Intermediate-Term Elder Timer is LONG

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Greetings from Spokane, WA.  I'll be traveling all week so entries will be on an "as possible" basis.

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The dashboard:



GGT Price moved up on Monday on very low volume due to the Columbus Day holiday.  We can largely discount this action.

The GGT Long-Cash Ratio (LCR) FELL on Monday, despite a 200-stock difference in the ADV/DEC line at http://www.finviz.com/ which favored the ADV side of the equation.  As I've indicated in the past, when the ADV/DEC numbers are close to each other, then we have to err on the side of the status of the LCR Change Timer.  The ADV/DEC is NOT the same as the LCR, but they are highly correlated.  Monday's action was a day that this correlation was not 1:1.

The GGT strength index fell, relaxing some of the overbought feeling in the market.

Overall, with the markets down today, I am of the opinion that this is normal market behavior and that we're in no immediate danger (e.g., today).

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Short-Term LCR Change Timer

The timer has remained in CASH-LONG (0) status, and if today is an up day, will transition to LONG (+1).  Given where we are in the actual markets right now this is unlikely, but we could reverse this afternoon.  The NASDAQ just moved positive as I write this, so we may transition.

Given this, if the markets show major strength in the ADV/DEC line at 3:30-ish, clearly in favor of the ADV by at least 20-30% more stocks on the side of the ADV balance, I'll move into VTI, QLD, and/or UWM as I see fit.  In general the NASDAQ is performing poorly (see below), so my moving into QLD right now is tenuous at best.  UWM and VTI appear to be good candidates if we move higher.

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Intermediate-Term Elder Force Index

The Elder 13d Force Index -- FI(13) -- continues to be positive by a substantial amount.  This is bearish for intermediate and longer-term holdings.  The slopes of the 13d and 34d EMAs on price are positive, which means we're making money on those time frames, and they are pointing upwards, which means that we are actually accelerating (making more $/day than yesterday).  Hence, our Elder signal is long going into Tuesday.

This being said, this leg is looking tired.  The NASDAQ COMP MACD is rolling over with the MACD signal line, effectively squashing any view of investments in technology.  The doji it printed on Monday does not bode confidence for me as well.  The NASDAQ-100 has already rolled over and is pointing downward on many indicators (MACD is below the MACD signal line, forcing a negative MACD histogram, the slope of the 13d EMA of price is BELOW the slope of the 34d EMA of price), so if you're holding anything that is considered tech, you may want to evaluate closely.  The DOW30 also printed a doji, so the big dogs are pausing with some indicision.

The Russell 2K and the S&P600 Small Cap are still leaders, relative to the other groupings.  Note too that the R2K printed a big, fat doji also, so the pause is across the board, even with the leaders.

I check the health of my personal holdings by placing all of the equity symbols in a list and letting HGSI equal-dollar-weight their performance.  Here's the chart:



As you can tell by the above graphic, overall, I'm holding equities that are in fairly good shape.  I do note that the slope of the 13d EMA of price has been decreasing for two days after peaking last Thursday, so the portfolio is losing steam.  The slope of the 34d EMA is still pointing upward, so the portfolio is still making money at a faster rate, day over day, on this longer time frame.  No reasons to panic.

When I dive in individually, JASO, IAU, FDO, EWO, GXC, EFA, PID, and IGE are all slowing, leaving XLB, XME, VXF, FXI, KOL, GMO, CMS,  and EWH to carry the water.  This is normal action and none of the holdings appear to be in any difficulty.

As I indicated in yesterday's entry, I sold IDCC near the open because it was showing weakness across multiple days.  Of course it went up through the day, which is par for the course.

Yesterday, I picked up positions in CMS and JASO.  They are both underwater, as they did not move much higher than my purchase price and pulled back throughout the day as it advanced.

The following equities are on my list for today:

ISLN
ACPW
RDEN
SATC
GEL
CBT
BSBR
CBG
LXP
NKTR
EE
CBST
DENN
IVC
EBF
FWF
MMT
HIX
GLDD
GSG
IPSU
PEG
EOS
ACTI
NWS
MITI
MELA
TBI
ARB
SMA
IVAC
PMI
UMC
ISIS
HZO
MBLX
PPHM
EK
RDN
SGMO
RP
GSG

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Remember, you are responsible for your own trading decisions.  Please do your diligence and take ownership for your trades.

Regards,

pgd