Tuesday, November 16, 2010

All Timers in Cash -- No Ambiguity

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Jumpin' Joe is diligently updating the GGT stock file for me as I type.  My bride had emergency spine surgery last night so I've not been able to do a full analysis on the LCR using the GGT system.  All is well; I'm camped next to her while she rests here at Reston Hospital.

Thanks to Joe for the extra effort.

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GGT Universe a' la HGSI



Pictured above is HGSI's view of the GGT universe, as of November 15th's symbol list.  Let's go down the graph one step at a time so we can see what we're looking at.  As with all my images, right-click on the image to open in a new tab or window.
  • The top line is Elder's Bull Power indicator.  This is simply the 13d moving average (MA) of the price series subtracted from the high of the day.  When this is positive, the bulls are in control... well, almost.  The value here is $3.70.
  • The next line under Bull Power is Elder's Bear Power.  This is simply the low of the day subtracted from the 13d MA of price.  This value is negative at -$3.27; if the magnitude of this exceeds bull power (e.g., 3.27 is smaller than 3.7 right now, or if  | bear power | >  | bull power | we know that the bulls are in trouble.  As you can see, we're close to this right now, but the bulls still have the edge.
  • The top ribbon bar indicator is Elder's 13d Force Index, calculated using exponential moving averages (EMAs) as opposed to the one below it, which is calculated using a simple moving average (SMA).  EMAs respond faster, and we've now had two days showing that we have a negative Force Index.  In fact, the raw value of the FI(13) EMA was -4,900,000 on Friday, and -7,500,000 with the close on Monday, which is the wrong direction to go if we want the bulls to win.  Overall, a downtrending FI(13) that is of this magnitude is something to pay attention to on the sell side.
  • The middle ribbon bar is the Elder FI(13) but calculated with a simple moving average.  Of significance is that this is massively positive:  +25,600,000, so it is going to take time for this to move negative (or a massively down day on volume AND price).  Dangerous currents indeed.  As it stands, this indicator is strongly bullish, but remember, it weighs the market action 13 days ago the same as yesterday's action, so it does not move nearly as fast.
  • The bottom ribbon bar is the Elder FI(2), which is a very short, "do we enter here?" indicator WHEN BOTH THE FI(13) METHODS ARE POSITIVE.  Since this is not the case, ignore this one.
  • Underneath this is the MACD graph.  I draw your eye to the histogram, which is negative.  A negative histogram is bearish, and while the market can go up while this condition exists, you're swimming up stream.  Don't do it.  As I frequently remind folks "Salmon swimming upstream eventually get eaten by bears"
  • Another key aspect of the MACD histogram is that the trend of the histogram has been heading down for 5 days, another bad indicator for the bears.
  • Of significance is the window below the MACD, which plots the slope of the 13d price EMA as well as the slope of the 34d price EMA.  As you can see, not only is the 13d slope below the 34d slope, you see that they are both pointing downward and more importantly, the 13d slope is now below 0 (losing $/day).  This means that on a 13d time scale that you are losing money.  Read this again.  On a 13d time scale you are losing money.
  • Finally, in the pricing pane, note that the aggregate GGT price ($276.92) has closed below the 13d EMA ($278.12).  This isn't a good sign.

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In the for what it's worth bucket, I'm moving 100% to cash.

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Remember, you are responsible for your own trading decisions, not me.  Please take ownership for your actions.

Regards,

pgd