Friday, December 3, 2010

Elder Timer Confirms Long, Short-Term Timer Moves Long

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Summary
  • The GGT Long-Cash Ratio continues to thaw -- we now have the slopes of the 5d - 34d EMAs on the LCR all pointing upward.  This is the first time that this has occurred since November 4th and can be considered bullish.  I'll call a full bull when the 55d and/or 65d slopes also turn green, which may happen within the next week. 
  • The 5d EMA of the LCR has now crossed above the 8d EMA of the LCR.  Again, this tells us where we have been, not where we are going, but the action is bullish and is a necessary step in proper alignment of the EMAs ( we want 5d > 8d > 13d > 21d ...  which we don't have right now ....).  The "so what" here is that the sustainability of this next leg will be confirmed once all these EMAs are properly aligned; until they do so, we should be more short-term focused.
  • The Long-Cash Ratio has jumped from 0.762 to 1.554 in three days.  This is an incredibly fast move in the LCR to the upside and shows broad participation in the pricing moves that are supported by volume.
  • The GGT Price Index moved upward again another 1.18% on volume that is 11% above the 50d MA of volume.  This now is a three-day sequence of higher prices on higher volume, which is certainly bullish for the intermediate term, and potentially suggests an overbought condition on the short-term.
  • The Elder Intermediate-Termed Timer has signaled long using both methods.  We should now start selecting purchasing equities using this method.
  • The Short-Term LCR Change Timer has confirmed a move back to the LONG side.  Because this timer never reset, I will not chase and will not enter today.
  • %B is overbought at 1.08, and suggests that we should wait for entry now for a pullback.

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General Comments

Three solid days of gains, the jobs report, and the day of the week (Friday) make me nervous about jumping into the market with both feet today.  I think that selective entry of stocks with lower %B (a rising tide raises all boats) with controlled positions sizes will be okay, but I am erring on the side that we should use a pullback to massively enter new positions.

If we look for the following combination:
  • GGT New Longs
  • Elder Force Index 13d > 0
  • Elder Force Index 2d < 0
The list returns ZERO results.  We are overbought.  TODAY is not the day to enter intermediate-termed GGT positions.

I simply think it prudent to wait for a bit of a pullback before entering.  At least we now have a green light to enter.  Patience is generally rewarded -- chasing is generally punished.  I must keep reminding myself of this.

THIS BEING SAID, I like to watch good candidates, just to prove that I can still pick stocks that are appreciating.  Here's my list for today:

HD

MI
RF
GLW
WY
LXK
WYN
SD
DE
RYAAY
PAY
ORCL
ARUN
PFE
CBS
PSA
EBR
ADM


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Trading Plan for Friday

I intend to sit passively on the sidelines for most of the day, but may enter the positions above with a 20% position if they pullback then resume an upward movement.

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Remember, you are responsible for your own trading decisions, and I am not.  Please do your diligence, take ownership for your decisions, and have confidence in your actions.

Regards,

pgd