Friday, October 8, 2010

Intermediate Timer Long by a Whisker ...; Meeting Tomorrow 10/9

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The dashboard:


The GGT Price Index fell only -0.16% on Thursday, ending the day at $25.32.  Volume was down -7% from the 50d MA, which is well within the noise distribution.  Overall this was a "normal" day in terms of price and volume action.

The GGT Long-Cash Ratio fell again from 3.239 to 2.995, and now indicates that 2234 stocks have some form of long recommendation and 746 stocks have some form of cash recommendation.  Put another way, we added a net 43 more stocks to the cash side of the recommendation list.  74.9% of the database is long, and as a snapshot, this is a very bullish stance.  Falling for two consecutive days can be considered normal, as the run-up on Tuesday certainly has given people reasons to protect profits.

The GGT strength index continues to weaken as price, volume, and rate of change all come off the highs established this past Tuesday.  We are now at 0.741, down from 0.839 yesterday, so we continue to relax the overbought position of the market.

Overall, the market is protecting gains established on Tuesday.  We've not seen a sharp sell-off, nor have we seen a seriously down-day this week.  From price and volume action alone we appear to be in a normal pattern of profit-protection and relaxation of extremes, so nothing is demanding our immediate attention.

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Short-Term LCR Change Timer

Because the LCR dropped on Thursday, this timer moved from CASH-LONG (0) to CASH (-1), reaffirming our signal flashed on 10/4.

The GGT Equity Curve is locked in at $1.597 and is in cash, and the VTI Equity Curve, which has been in cash since 9/23, is locked in at $1.556. 

It does not matter concerning today's action; we are at least two full days from any type of long call.  With futures down significantly as I write this, I do not see how we can expect anything before Monday.

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Intermediate-Term Elder Force Index Timer

The Elder 13d Force Index timer is LONG, but only by a whisker.  A down day today of anything greater than -1.2% in price on average volume or higher will most likely cause this timer to move to cash. 

Watch http://www.finviz.com/, specifically the Relative Volume numbers to the right of each of the Dow, NASDAQ, and SP500 graphs.  If you see this significantly above 1.0 after 3:30 pm EDT, and if these three indexes are down more than 1%, protecting profits could be prudent, especially if you have any close to break-even.

I provided a LONG list of potential Elder candidates yesterday; not ONE met volume and price action requirements for entry.  This is a warning sign that we are at a local top and further relaxation of the overbought perception is required.

98 ETFs meet the initial Elder screen this morning -- that's a huge number.  Here is a list of those ETFs that have up-trending 13d EMA and 34d EMA slope lines:

FXE
TMF
MWJ
TNA
FCG
OIH
DJP
IAU
IHI
EWK
EWC
EWM
EPP
EWL
IWF
IWO
IWN
IWR
IVW
IXC
IJJ
IGE
IJR
SLV
KOL
GDXJ
SLX
DGP
PIZ
PSP
UGL
MVV
PALL
SGOL
XLP
RWR
GLD
XLB
XME
MDY
XES
VUG
VO
VOE
VB
VBK
VBR
DEM

Of this long list, note that there are several gold ETFs.  Gold has been topping, and the pull-back that we saw yesterday may be profit taking.  If the trend resumes you'll know it because the price of these ETFs will break yesterday's highs.  This could be a good entry point if you missed gold's run up, but certainly be very patient.

The list of potential stock candidates is long too -- 70 initial candidates using the HGSI Elder screen.  Here are the ones where the 13d EMA and 34d EMA slopes are in an uptrend:

AEM
AGP
ANO
AXTI
ABX
BW
EXK
GMO
HAS
HL
IPG
LAD
NKTR
ROC
SMG
SVM

Again, wait for the prices AND volume to be up before entry.

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Trading plan for Friday

My short-term timer is in cash and those funds will remain in cash.

I intend to protect my Elder trades, e.g., if they move against me and look like they will dive underwater I will sell them.  Correspondingly, I have placed the appropriate TSL on each position -- e.g., if they are up 1.9% I have placed a 1% TSL, if they are up 5.3% I have placed a 5% TSL, etc.  It is important as the markets shake out that we not lose any monies on these weaker candidates.

All TSLs are day-only; let's see what the markets do and make a determination over the weekend.

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We have a meeting on Saturday (tomorrow) at the Herndon Fortnightly Library, Meeting Rooms 1/2, starting at 10 am and going to 1 pm.  The address is 768 Center St, Herndon, VA 20170-4640.

I hope to see you there!

Regards,

pgd