Wednesday, November 24, 2010

Short Term Timer May Move to CASH; Elder Timer in CASH

.
Summary

  • The LCR EMAs, slopes of the LCR EMAs, and the "slopes of the slopes" are all telling us to run away from the market right now.
  • The Pricing EMAs, with the exception of the 8/13d pairs, are all still indicating bullish patterns
  • The 5d/8d/13d/21d slopes of the Pricing EMAs turned down with Tuesday's action.  This is bearish, but because the 34d and 55d slopes are still pointing upward, I'm not in panic mode (I'm never in panic mode by the way)
  • The "slope of the slopes" of the Pricing EMAs have all turned down, which is short-term bearish.  
  • The Short Term LCR Change Timer is LONG, and I have positions in IWM, QLD, UWM, UYG, and VTI.
  • The Elder Intermediate-Term Force Index, depending upon the method selected (SMA or EMA), is on the fence.  Yesterday's action pushed is back down into a CASH signal, but we're on the threshold.
=================

The LCR 

Here's the chart:

































As with all my images, right-click on the picture to open it in a new tab or window.

The presentation has changed a bit.  Over the weekend I talked about "slope of the slope", and have added the appropriate indicators to the right of the picture above.

As you can see above, the LCR fell on Tuesday, landing the day -17% below Monday's level of 0.846.  More stocks in the database are in CASH than are in LONG, and a falling LCR tells us that the number of stocks with a LONG status is getting thinner.

ALL of the LCR EMAs are inverted, meaning that the 5d < 8d, 8d < 13d, etc.  This means that the database is in a contraction mode, and that I need to be careful in stock selection.

I've been discussing the role of the slope of the LCR EMAs, and as you can see from above, the trend has been down since November 11th.  This means that the database is contracting, keeping the aforementioned LCR EMAs inverted.  Until we see some green here the database is getting smaller and smaller.

The inclusion of the "slope of the slope" (SoS) table simply tells me whether the slopes of the LCR are headed downward faster or slower.  With the across-the-board red values as shown, it's clear that we are accelerating to the downside with Tuesday's action.

The LCR dashboard is bearish.  Pay heed or pay with your equity.  'nuff said.  

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

The Prices

The Pricing Dashboard follows:





































The GGT Price Index fell -1.35% on Tuesday on volume that was -7% lower than average.  We can consider this a distribution day, because prices fell on average volume.  

Only one of the pricing EMAs has me on the bearish side.  As you can see above, the 8d EMA is below the 13d, but all the others are properly aligned.  This means that the bull is still alive but because of the LCR's, it's food supply is getting thinner (as is the bull).  

The slope of the pricing EMAs started to head down with Tuesday's action, but note that the 34d and the 55d are pointing upward.  This is good for the bulls, and creates a mixed-signal concerning what we should be doing right now.  I personally am sitting on big pile of cash, simply because I don't like losing my cash.

The right-most view is the SoS of the pricing EMAs.  Since these are all red, we are accelerating downward on all time frames, and if the redness continues, the slopes of the pricing EMAs will all turn red.  If THAT continues, the pricing EMAs will all be inverted, and at that time, contra ETFs make really good sense (but not before).

The last column on the right is the GGT strength oscillator.  As you can see, it fell on Tuesday, which is no surprise, and as you can see with the red/green background on the oscillator, it's behavior closely follows the SoS of the pricing EMAs.  Note that the strength oscillator is much like the %B that my trading partner Hsin uses in his trading decisions.

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

Short-Term LCR Change Timer

The ST LCR Change Timer is LONG, but it transitioned to a LONG-CASH signal with the decrease in the LCR on Tuesday.  If the ADV/DEC line at www.finviz.com or other ADV/DEC line that you watch is negative by a substantial amount at the end of the day we have a high probability that this will transition to a CASH signal.

I'm modifying my playing of this timer -- I'm setting a price target based upon the entry and will exit 100% of the position when I hit the target.  Right now I'm using a 1% profit target for the 2x ETFs, and will adjust as more data becomes available.

Disclaimer:  At the time of this writing I am presently holding positions in IWM, QLD, UWM, UYG, and VTI.

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

Elder Intermediate-Term Force Index Timer

The GGT System has the Elder Timer in CASH, and this is where I am positioned.  The 13d Force Index, via the SMA calculation method, is negative, which block entry into intermediate-term long positions.  Furthermore, the 13d pricing slope is NEGATIVE, which further violates my Elder Timer rule.  

I intend to pay heed, so I am not even screening for Elder candidates.

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

Top25 Stocks

The always-invested Top25 portfolio, which is new and is being forward-tested in real time, fell -1.2% on Tuesday.  Since inception on 10/28/10 the portfolio is down -1.1%.  This portfolio strives to maintain long positions and utilize between 65% and 100% of the available capital.  Presently, the portfolio is 69% invested in equities/31% invested in cash, due primarily to the Elder Intermediate-Term Timer Status.  A new top 25 list of stocks will be generated tonight with the close of markets today.

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

Trading Plan for Wednesday, November 24th

Simple.  I intend to watch my ETFs hit their profit targets in the Short Term LCR Change Timer, watch them exit, and be happy with 1% gains.

I do not intend to purchase any substantial positions in equities at this time.

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

Please read the disclaimer to the right of this entry.  You are responsible for your actions -- I am not.

Make it a great turkey day!

Regards,

pgd