Thursday, December 9, 2010

Possible Good Entry Today if Market Moves Upward

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Summary
  • The Long-Cash Ratio (LCR) system is bullish overall, with all the major slopes on the EMAs in an uptrend.  This means that the database is expanding in terms of stocks appreciating in price and volume on a +5d and onward time scale.
  • The LCR fell on Tuesday by -7%, which is a 1-day contraction in the number of database stocks that are meeting price and volume criteria for expansion.  Nothing to get ruffled about.
  • The GGT pricing system fell -0.14% on volume that was 9% higher than the 50d MA.  Falling prices on higher volume is worrisome, and needs to be watched.
  • The GGT pricing system is bullish across the board going into Wednesday's action, with all of the pricing EMAs pointing upward.
  • %B for the database continues to weaken, and is now at 0.7998.  This correlates with the GGT strength index, which fell to 0.702.  Given the status of the LCR value, as well as the LCR system, we still have gas in the tank to move upward.
  • The Short-Term LCR Change Timer system has moved to LONG-CASH because the LCR fell yesterday.  If today is weak it will move to CASH, signalling that short-term trades should be liquidated.  Conversely, if the LCR moves up, this indicator will remain in LONG-CASH.
  • The Elder Force Index Intermediate-Timer system is LONG.  It is okay to purchase stocks for longer holding periods.
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Today's Strategy

In general, we're looking good overall from this morning's vantage point.  The LCR system indicates that we have more stocks exceeding pricing and volume thresholds that we've had in the local past, which is bullish.  All the LCR EMAs are pointing upward, which is good.  All the pricing EMAs are pointing upwards, which is good.  The Elder 2d Force Index on the GGT universe has moved negative, which means that if today is an up day overall that this could represent a good entry period.

Dark clouds on the horizon are simply that prices dropped on a 1-day scale on higher volume.  This is the definition of churning, and is problematic if it continues.  1 day does not make a trend so we do not have to worry, per se.   I dont' see any other significant storm clouds, except the ongoing news about POMO stopping today.

I'm focusing on selecting stocks where the Elder 2d Force Index is negative, going into this morning, then the stock moves higher on higher volume.  Here's a list of quality stocks that I'm looking at:

NG
PAL
CPX
CYD
SOA
SSRI
SPRD
ATW
ATPG
CENX
CEO
OMX
HT
JCI
TC
CE
AEM
PENN
HRC
KND
MGA
FST
TPX
VECO
TEX
APA
GFI
VALE
XEC
CSX
HP
HMC
TLM
SFL
DNR
AAN
CLF
CAJ
APH
UNS
MYL
BEC
CBG
HMY
CPT
AIV
CAH
DVN
TMO
BCR
NSC
RRC
DIS
SU
GXP
MLM
MCK
HK
RMD

I'm screening these with Effective Volume (http://www.effectivevolume.eu/), looking for shorter-term appreciation / positive deviation between price and the 20d MA on EV.  This shows that big money is moving into the stock, forcing it up faster than historical.

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Trading Plan for Wednesday

I am presently in CASH via the Short-Term LCR Change Timer.

I intend to enter Elder stocks on the long side if they show appreciation and volume throughout the day.

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Remember, you are responsible for your own actions, and I am not.  Please review the disclaimer on the left side of this blog.

Regards,

pgd