Wednesday, December 15, 2010

Top 25 Portfolio Updates, GGT New Longs are Interesting, LCR has a Crack in the Bull Ice ...

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Meeting Reminder:


There is a monthly meeting this coming Saturday, December 18th, from 1 p.m. to 3 p.m. at the Great Falls Library, 9830 Georgetown Pike, Great Falls, VA 22066. The GGT, LLC investment club will meet immediately following the advertised meeting. WebEx information will be provided in the Yahoo! groups.

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Summary
  • The LCR System turned "somewhat unhealthy" today, at least through the slope of the 55d EMA.  Specifically, the slope of every EMA from the 5d to the 55d has turned downward, and this is problematic for bulls.  Protecting profits would be a good thing at this time, so I think I will.
  • The LCR EMA "slope of the slopes" has now had 5 of 6 days with a negative pointing slope.  This is what caused the slopes of the LCR EMAs to point downward and if this continues, the bears will be sitting around the Christmas tree instead of the bulls.  If Thursday is a down day too for the "slope of the LCR slopes" it will be the 4th consecutive day of this occurring.  This occurs more often with the LCR system than the pricing system, with the last few periods being 11/9 - 11/12, 10/14 - 10/10, 8/19 - 8/24, and 10/15/09 - 10/21/09. 
  • Unlike the LCR System, the Pricing System is healthy, with all of the slopes of the pricing EMAs (5d through 65d) pointing upward.  This tells me to keep my strongest holdings and sell the weakest.
  • Despite the Pricing System slopes all pointing upward, the "slope of the slopes" of the pricing EMAs have all been red the last three consecutive trading days.  4 consecutive days is VERY rare (December 28 -December 31st 2009 was the last time), so if we get 4 consecutive down days, I think we'll have to move to the sidelines.
  • %B and the GGT Strength index fell, but are still indicating more gas in the tank.  I need the values to fall further before I get myself into a "sell everything" mentality.
  • The Short-Term LCR Change Timer is in a confirmed CASH condition, and has been here since 12/9.  It will take two up days on solid prices/volume to change this (e.g., close of b'ness Friday at the earliest).
  • The Elder Intermediate-Termed Force Index Timer is LONG, indicating that we should be purchasing stocks LONG on this pullback.  Keep your shopping lists ready.
Yes, the markets are pulling back.  As you will see below, there has been a complete rotation of the Top 25 stock portfolio -- e.g., all the high-flying stocks that were on the list last week have been knocked OFF the list (because they no longer have a long status), or they have fallen in ranking below the top 25.  Either way, the markets are rotating.  Elder's method tells us that we should buy stocks on this pullback, so do not run for the hills just yet, as you should be figuring out what stocks you want to enter on the long side.

The next day or two will be important to the bulls.  If we see one more day of LCR "slope of the slope" negativity this will drive the markets into a short-term oversold condition.  If we meander sideways it's anybody's guess what could happen.  If we bounce from here on the news I'll use the opportunity to lock in profits, especially since I am traveling on vacation starting December 22nd.

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Top 25 Stock Portfolio

The close of the markets Wednesday night has revealed a nearly 100% turnover in the top 25 stock portfolio. 

The following positions should be closed, with (+gain/-loss) in parens:

AAPL (-0.29%)
AMZN (-2.60%)
AZO (+8.69%)
CEO (+1.41%)
CKH (-2.91%)
CME (+5.14%)\
CMG (-2.21%)
DECK (+13.98%)
DRQ (+2.87%)
ETN (+1.38%)
FCX (+14.47%)
FFIV (+9.18%)
FOSL (+5.63%)
LNN (+4.02%)
MEE (+0.81%)
MTD (+4.84%)
NFLX (+5.28%)
NOV (+2.18%)
RL (+4.96%)
SLB (-0.11%)

The only position left "standing" is BSFT, which is DOWN -4.85%.  Go figure.

BSFT will be adjusted to a 4% position on Thursday.  Positions heading downward at 10:00 a.m. will be sold and the portfolio will not be added to until the positions below turn upward, or near the end of the day, whichever occurs first.

New to the list are the following stocks:

ACPW
AREX
ENMD
FCS
FTK
FXEN
IGOI
IMAX
JAZZ
LNG
MWW
NCT
NG
SGY
SIMG
ST
TGA
UEC
URZ
VRUS
VSH
VVTV
WTI
XIDE

Of these stocks, these stocks were previously on the "top 100" list and are obviously in the top 25:

BSFT
IMAX
ST
VRUS

This simply goes to show that when the high-fliers rotate, they do so hard.  Also note that we had a number of stocks hit "New Cash" status today:

AAPL
NOV
SLB
MEE

PCLN had already been sold and confirmed it's sell status with a "Affirmed Cash" recommendation.  Ditto MIDD.

Since inception on 10/28/10, the portfolio is up +1.5%.  It reached it's peak value on 12/6/10, when it was up +2.34%.  The maximum draw down since inception is 5.3%, which occurred from the peak of 11/8/10 to the valley of 11/16/10.

In the last 30 days the fund has increased 4.86%.  According to Google Finance, the S&P500 has increased 3.39% in the same time frame.

The fund has been alive for 48 trading days.

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Top 25 ETF Portfolio

11 ETFs will be rotated out of the ETF portfolio:

IJK (+3.44%)
IJT (+4.06%)
IWO (+4.91%)
MDY (+2.66%)
QLD (-0.45%)
RFG (+2.10%)
SOXL (+5.91%)
VPRO (+1.53%)
VBK (+4.57%)
VDE (-0.21%)
XLE (+4.45%)

11 ETFs will be added to the portfolio, at a 4% level:

DBS
MWJ
NLR
PXJ
SIVR
SLV
SMH
SOXX
UWM
XES
XSD

Positionally, the only ETF in the entire lot of 25 that remained in the same relative ranking position is AGQ.

The following ETFs are weaker, but still made the top 25 list:

PALL
OIH
MVV
TQQQ
BGU

The following ETFs are stronger, and have moved up in relative ranking.  Note that many of these are new purchases, but were previously in the "top 100" and are now in the "top 25" due to their strength:

ERX
USD
TNA
DIG
IEZ
SIVR
UYM
TYH
XES
KOL
SMH

New to the list are the following ETFs:

DBS
SLV
MWJ
UWM
PXJ
XSD
SOXX
NLR

The Top 25 ETF portfolio was started on 11/25/10, and since that time is up +4.75%.  It reached it's peak value on 12/13/10, when it was up +4.99%. The maximum draw down since inception is 0.46%, which occurred from the day the fund was started to the valley of 11/30/10.  This is not a normal circumstance and indicates that we need far more trades to judge the performance of this ETF portfolio before we commit our monies.


The fund has been alive for 20 trading days.

Positions heading downward at 10:00 a.m. will be sold and the portfolio will not be added to until the positions below turn upward, or near the end of the day, whichever occurs first.  All trades will occur sometime on Thursday.

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New Longs

I note with considerable interest that the GGT New Longs, going into Thursday, are heavily weighted in Drugs, Bio, and Healthcare.  Here's the list of NL stocks:

AMRN
VPHM
RP
EXAS
ALKS
INWK
COT
ABV
CPSL
OSIS
PRXL
NWL
MOH
VM
PDCO
ARAY
KGC
MSG
ABM
MR
DVOX

To our resident Dr. Scott -- any thoughts here?

ETFs look interesting too:

XPH

SSG
OIL
UUP
FXP
DBO
PPH
SOXS

XPY is the Health/Pharma ETF, but is too thinly traded for my liking.

Note that SSG is the Ultra SHORT Semiconductors

Note that UUP is the DOLLAR -- a new long here does not occur frequently, and according to GGT, when it has occurred in the past, we've had more whipsaw action than not.  Be careful with this one.

FXP is the -2x Leveraged Contra China Xinhua25 -- this is confirming with many indicators.
PPH is the HLDRs Pharma, and completely dwarfs XPY.  THIS is one worth watching, and the stocks above confirm this (or the other way around).  Dr. Jeff?
 
SOXS is the -3x Semiconductors, so it confirms SSG.
 
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Remember, you are responsible for your own trading decisions, and I am not.  Investing in the Top 25 portfolios is very risky, as these are being forward tested at the present time.  If you do so, you acknowledge that you may get the heck beat out of you by the markets and that you have no one to blame but yourself.  We are in a period of consolidation, yet every one of the 50 stocks/etfs mentioned is on the long side of the market -- if we move down, they will get hammered. 
 
TAKE OWNERSHIP for your actions, and make sure you do your diligence.
 
Regards,
 
pgd