Tuesday, November 9, 2010

Everything is LONG; One Minor Crack in the Ice

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Summary
  • We continue to see a relaxation of the markets, as measured by the GGT Strength Oscillator.  While still very bullish at 0.806, it has relaxed enough from overbought areas to allow us to continue higher.  
  • The Long-Cash Ratio indicators are indicating that the database is expanding in the numbers of stocks available to choose from.  This improves our chances of success in picking stocks that will appreciate.  The LCR Indicators are telling us to be long in stocks.
  • GGT price and volume were relatively unchanged with Monday's action, which indicates either a breather/consolidation or churning within the markets.  Today's (Tuesday's) action will be important.
  • Short-Term timer is LONG, and positions are appreciating as designed.
  • Intermediate-Term timer is LONG, and there are numerous opportunities for entry today.
  • I am traveling Tuesday-Thursday so blog posting will be on an as-capable basis.
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LCR Indicators

The LCR indicators look the same as they did yesterday except there is one more row of green/red as applicable.  We still have the hold-out with the 13d LCR EMA less than the 21d LCR EMA, which is a crack in the ice but appears to be refreezing over.  All of the slope lines on the LCR EMAs are pointing upward, so if this continues, the 13d LCR EMA MUST recross the 21d LCR EMA from below, giving us complete green lights across the board.

In the three days that all the LCR EMA slopes have been completely green the GGT price index has increased +0.595%, so while early in this reaffirmation of a bull leg, we are certainly within it.

Aside from the 13d/21d LCR holdout, this system is telling us to be long in stocks.

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GGT Dashboard

Despite the primary markets being down yesterday, the GGT universe of stocks squeaked out a small gain.  Remember that I screen on stocks that are $1, have at least 100K 50d MA Volume, and that trade on the three primary exchanges.  The GGT price index moved up +0.07% to end the day at $27.58, a gain of +$0.02, and an all-time high since GGT's public unveiling in September 2008.  Volume was down slightly, ending the day -2% below the 50d MA of volume.  This is within the noise level so consider this a normal day in the neighborhood.  Unchanging prices on unchanging volume is either a sign of churning or indecision, so today's action will be important for the overall short-term trend.

Here's the dashboard:


The pricing system, comprised of their EMAs and slopes, are all green, which is very bullish for the markets.  There is no debate that we should be holding stocks long at the present time.  I used yesterday's apparent pull-back in some equities to enter numerous positions long, so I'm swimming with the trend.

Pick your stocks, pick your entries, and watch for an abrupt change in the LCR or Pricing systems.  Right now we're pointing upward.

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Short-Term LCR Change Timer

The short-term LCR change timer has completed it's 4th day of being long.  Since this time my personal position in VTI, my proxy for the GGT universe, is up +2.23%.  I entered QLD and UYG because of this signal and QLD is presently up +0.64% and UYG is up +1.71%.  If you are not in the markets with this signal I would not enter now, as this is a very short-term timer system (hence the name).

The official sell signal for these holdings is the short-term LCR change timer transitioning to a (-1) CASH position.  We are officially at least two trading days from that signal, and with the futures up as I write this, I do not think that today will be a reversal day (but your crystal ball is as good as mine).

I intend to stay the course with these holdings, but because of my travel the next three days, I will place a TSL equivalent to their ATR(20).

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Intermediate-Term Elder Force Index Timer

Elder's Force Index Timer system is LONG, indicating we can enter stocks on the long side.  The slope of the FI(13) fell yesterday, providing an opportunity to enter stocks on the long side.

My list of Elder Candidates is long so I will stop the list at the top 25 or so, as yesterday saw a pull-back, resulting in the FI(2) going negative.  Enter these stocks only if volume and price are moving upward (FI(2) transitioning positive by the end of the day):

MWW
NXTM
SKS
CNH
MBI
CENX
SBH
WCC
LUFK
AME
SLB
PMTC
ITUB
MCO
BDC
CODI
BUCY
PUK
SBS
CLP
PM
SLTM
AVT
TOT
LWSN

Disclaimer:  I hold a position in SKS.

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GGT Top25 Stocks

This is a new strategy that I am presently testing.  My "cream of the cream" are the following:

CEO
MA
GOOG
CMG
AAPL
BVN

Aside from these, my pool for entry is also:

ABV
BIDU
SOHU
LNN
SNP
DRQ
AMG
RVBD
SWM

These stocks will possibly change with the close of Wednesday night's markets, so entry on the Tuesday prior could be dicey.  Nevertheless, these are all quality stocks, and if you are holding any of these, you're probably pretty happy.

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General Disclaimer:

I have personal positions in SKS, WBSN, GBG, FOSL, GSIT, VTI, SSO, VXF, FUQI, EGY, SMTC, EFA, NOG, and JAZZ.

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Remember, you are responsible for your actions, not I.  Please take ownership for your decisions.

Regards,

pgd