Friday, April 30, 2010

Gotta Love (Hate) Whipsaws ...

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The LCR (Fast) Change Timer has moved back to LONG with the close of Thursday's action, signalling that we should be considering only long positions.  If you've been following along this timer went to CASH this past Tuesday, so back and forth we go.  For those of you following my daily trades in the VectorVest blog, this timer is in sync with what I'm seeing in the Contra 13x21 portfolio, so frustrating as it may seem, it's not too far from reality.

The LCR (Slow) Change Timer is still indicating CASH (actually, it is CASH-LONG), so if today is a strong day it will transition to long.

Remember, the fast change timer has a time constant of about 6 hours of trading action, whereas the slow change timer has a time constant of about 4 days.  Only use these timers if you can be nimble in your trading.

GGT price moved up 1.7% on solid volume of 3M shares.  Volume has been quite heavy lately -- significant participants in the market.  If anybody has an explanation I'm listening.  Pricing EMAs have resumed their upward march, and the GGT price is now above all the pricing EMAs, which is bullish.

Elder's Force Index is just barely positive, which is a major warning for stocks.  A significant down day will certainly take this indicator below 0, which will turn us from bullish to bearish.  Be advised.

The Long-Cash Ratio moved upward again, and is now at 1.833, up from 1.700 but down from where we started the week.  1906 stocks are indicated LONG, and 1040 are indicated in CASH.  This is a net change of 51 stocks to the long side and oddly, -51 stocks to the cash side.  Don't read anything into the balance.

The LCR EMAs are still very negative, but are moving upward, e.g., becoming less negative.  This means that the tide has reversed and when this is happening, we can expect prices to move more positive.  Note that they're not moving upward very fast, and since they are still negative, over the long haul we are certainly seeing a decrease in bulls and increase in bears.  Keep this in mind.

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

Emotion is telling me to hold onto my contras, but the indicators are telling me to sell them.  As I'm trying to drive emotion out of my trading, I'm placing 1% TSLs on all my contras, and will continue to play the long side as indicated in my VV blog.

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

Remember, you are responsible for your trading actions, not me.

Regards,

pgd

Thursday, April 29, 2010

Price and Long-Cash Ratio Divergence ==> Dangerous Waters

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The GGT Price Index climbed 0.23% on Wednesday, finishing at $26.30.  Volume was strong at 3M shares.

The GGT Long-Cash Ratio (LCR) fell a large amount Wednesday, from 1.923 to 1.700, picking up 83 more stocks on the cash-recommended side.

These two indicators cannot remain out of sync for very long -- the LCR is a derivative of the price index.

A CASH recommendation is provided any time a stock falls below the historical optimized pricing EMA levels.  There were 108 "New Cash" stocks on Wednesday, meaning that with respect to price, each of these fell below the limbo bar where they were prior above the bar.  Conversely, a LONG recommendation is provided any time a stock excells at BOTH price and volume over some historical optimized level -- and there were 25 of these stocks that were below the limbo bar that made it above the bar.

The GGT Price index is an average of all the stock prices in the database -- when the price index drops, the entire database, on average, has dropped, and when the price moves up -- like yesterday -- the entire database price has moved upward.

The divergence is that while the underlying database is showing price strength (appreciation of the database price index), it is doing so on lower volume (the number of New Longs dropped relative to the number of New Cash).  Correspondingly, the LCR falls while the Price Index climbs.

There are only two ways to resolve this:
  1. The LCR will reverse and the bull will continue, with stocks gaining in price AND volume. I favor this occuring simply because we've been in an uptrend, earnings are relatively strong, and market confidence is strong.
  2. The price index will reverse, with the markets collapsing.  I do not favor this approach, but nevertheless, it certainly could happen, given our overbought areas.
With the futures up significantly on all three exchanges, I am leaning towards method #1 above, but remember, we cannot predict the market -- only read where it has been.  You sometimes drive off the road when you drive forward while looking in the rear-view mirror ....

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Remember, you are responsible for your own investment decisions.  Please do your own homework.

Regards,

pgd

Wednesday, April 28, 2010

GGT LCR Fast Timer Confirms Move to CASH

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GGT Price dropped -2.49% to $26.24 on Tuesday on the 2nd highest volume ever recorded since we started in August 2008, 3.4M shares.  Distribution day indeed.

The question is "now what?"

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

For the first time since 1/22/10 the GGT Price has penetrated the upper Price 13d EMA.  While it is too early to say we'll continue, futures are a tad lower this morning, so heading for the 21d EMA is not out of the question.  Here's the chart:




A close below $26.06 of the GGT Price will take out the 21d EMA.

=========

Tuesday was the largest, single day drop for the Elder Force Index since we started keeping track in August 2008.  While we are still above the 0-line, e.g., we're positive in FI(13) value, which is still bullish, but with a modest down day it could move this average negative.  In other words, we're on the cusp, and we could tip either way.  I hate indicision, so perhaps this will clear itsself today or tomorrow.

=========

The Long-Cash Ratio (LCR) fell to 1.923, indicating that 1938 stocks have some form of long status and 1008 stocks are in some form of cash status.  This is down significantly from Monday's value of 3.307, which is what we expect for a heavy distribution day.  There are a large number of long-recommended stocks available so continuation of this drop is not out of the question.

=========

The EMAs on the LCR are still aligned in a bullish stance, with the 13d > 21d > 34d > 55d.  A crossing from above of the 13d x the 21d would be another bow shot, and this is the next bogey that I'm watching for out of this indicator.  Failure to achieve this crossing would be a bullish sign and we'd have a buying opportunity on the long side ...

=========

ALL LCR Rates of Change (ROCs) have moved negative, which is a clear warning shot.  They have done so decisively, which makes me think that they will actually relax, e.g., they could remain negative but less so than the present values, e.g., moderate the decline in LCR.  Here's the chart:































Perhaps my colleague Ray is correct: "... something feels different this time ..."

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I wrote about the emergence of Contra ETFs in my VectorVest blog; if you are inclined to play that side of the market you may want to review.

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As always, do your diligence.  You are responsible for your trades, not me.  Comments and questions are always welcomed.

Regards,

pgd

Tuesday, April 27, 2010

GGT LCR Fast Change Timer has Transitioned to Long-Cash (0)

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With the close of Monday's markets, the GGT LCR Fast Timer has transitioned to Long-Cash.  If today is a down day with respect to the ADV/DEC ratio (more declines than advances), it is highly likely that this timer will move to a full-cash signal.

Given the strength of the small caps, TWM, the ultra short to the Russell 2000 should do well when the market reverses.  Same with the TZA, which is the TRIPLE short Russell 2000 from Direxion.  You have to be absolutely nimble to play these ETFs.

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

The GGT price index fell -0.3% on Monday on volume that was 19% above average.  This is within the daily statistical noise so I wouldn't read too much into this. 

The distribution of stock classifications -- New Long, Aff. Long, Long, Cash, Aff. Cash, and New Cash -- are all within their norms so again, yesterday was a yawner in terms of change in database structure.  Stocks with a Long recommendation (lower volume but prices still higher than historical optimum levels) grew from 1444 to 1564, which is notable -- more stocks are nearing the edge of the "cash" cliff and a down day in the markets will force them to jump to the red side.    We'll see.

The actual Long-Cash Ratio (LCR) fell just ever-so-slightly on Monday, again, within the noise of daily movements.  It is now at 3.307, indicating that 2262 stocks are long and 684 stocks are in cash.  Put another way, ~77% of the database is in some form of long status, and we've been here for some time.

I'm not seeing anything in the pricing or LCR EMAs which suggests that "Tuesday is the reversal day".  Everything is marching upward, and aside from the warning sign of the LCR Fast Change Timer telling us that we could move south, all other indicators are still north of the border.  Don't bet the farm on TWM or other short ETFs just yet.

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

Remember, you are responsible for your own trading decisions, not me.  Please do your homework.

Regards,

pgd

Sunday, April 25, 2010

Weekend GGT Summary

I've created a video blog which is far easier for me concerning time than creating a lengthly blog.  This week's video blog can be found here:

ftp://airak.com/ggt

Point your browser there; once the directory tree is displayed, please select the file:

GGT-Weekly-Summary-10APR25.mp4


Either rightmouse-click on the file for options concerning where to open or download, or just click on the file and it will start playing in your browser.  Firefox and IE work best.

Comments and suggestions for improvement are always welcomed.

Regards,

Wednesday, April 21, 2010

GGT LCR Timer has signaled a move to CASH

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With the close of the markets onTuesday, 4/20, GGT has signaled a move to CASH (-1).  I am traveling and was unable to run data for Monday until yesterday (Tuesday), and the setups for this move occured on Monday, with a confirmation on Tuesday (even though the markets were up). 

We get a move to cash when the underlying database moves downward in recommendations, e.g., when the individual strengths and prices of the underlying database (nearly 3000 stocks) move downward more than the stocks that appreciate.  This is what we are seeing, and it was sparked by Friday's sell-off on the Goldman news.  We are seeing this despite a 1-day bump in the GGT Price, which increased from $26.10 to $26.44.  This suggests that for the stocks that did appreciate significantly on Tuesday, they did so in a big way.

If the trend upward continues the GGT LCR Timer will reverse.  It has happened in the past, and will continue to happen going forward.  This being said, the equity curve from listenting to just the fast timer is up 116% since August 2008 (30 signals) and if we wait for the confirmation timer (slower), we're up 56% in the same time frame (24 signals).

I plan to sell those stocks in my portfolio which are not moving up when the market moves upward.  I'm looking at setting a sell point of 2ATR or the 10-day low, whichever is higher.

I do plan to enter ICOG above $1.37 today as a replacement turtle trade.  PWAV also looks interesting as another 55d turtle trade.

-----------------------

Remember, you are responsible for your own trading decisions, not me.

Friday, April 16, 2010

All-time LCR Peak on 4/15, All-time Long Peak on 4/15, Volume Peaking

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GGT classifies stocks into 6 categories:

New Long
Affirmed Long
Long
Cash
Affirmed Cash
New Cash

You can only achieve a "New Long" status if you were in one of the three cash status, and conversely, you can only achieve a "New Cash" status if you were in one of the long status.

Affirmed "X" means that the criteria is the same for the respective side of the table -- if you have an Affirmed Long, this is the same criteria for a "New Long", but since you were already long, this simply reaffirms the status.  The converse is true too.

As stocks weaken, they move from New Long/Aff. Long to Long, and as they strengthen, they move from New Cash/Aff. Cash to Cash.

As of 4/15, we have hit an all-time peak with the greatest number of "Long" rated stocks since we started tracking in September of 2008.  Historically, we've seen sideways movement or a decline from this point in the past, so we need to watch.

As of 4/15, we have hit an all-time peak in the Long-Cash Ratio (LCR), which is the ratio of (New Long + Aff. Long + Long) / (Cash + Aff. Cash + New Cash).  This ratio is now 4.219:1, meaning that 2413 stocks have some form of long recommendation, and 572 have some form of cash recommendation.  As new territory, we can't infer past behavior, but suffice to say, we've ALWAYS corrected when these levels have been this lofty.

Finally, we have experienced 2 consecutive days of volume of 36% and 35% above average levels.  GGT Price has moved up only $0.02 with the action on Thursday, so this is a prime example of churning.  Churning is associated with topping formations, or pauses before another move upward.  Given the low number of available cash-recommended stocks, I don't see how we can move upward in a big way, but who knows?

Caution is advised.

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

Remember, you are responsible for your own trading decisions.  Please do your diligence.

Regards,

pgd

Sunday, April 11, 2010

Video GGT Summary for April 10th Weekend Available

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I am pressed for time this weekend so I have uploaded a video summary of GGT at the following address:

ftp://airak.com/ggt/

There is only one file in the directory, but you want the one entitled "GGT-10APR11.mp4"


Right-mouse click and you can "Open link in new tab" if you do not want to download it to your disk.
 
Comments on this format are solicited and welcomed.
 
Regards,
 
pgd

Friday, April 9, 2010

LCR Change Timer (fast) has transitioned from LONG to LONG-CASH

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The GGT Price Index dropped $0.01 Thursday to $25.72 on above-average volume of 2.3M shares.  As I indicated yesterday --> churning, and when you do it after a nice bull run, it's a call to wake up.

Wake up.

The GGT LCR fell to 2.921 yesterday, the first down day since 3/31.  2264 stocks are indicating some form of "LONG" status and 775 have some form of "CASH" status.  The slope of the 65d EMA on the LCR is just barely above 0 at 0.003/day, further indicating that there may be trouble ahead.

The LCR Change Timer (fast) has signaled a transition to Long-Cash (0) from Long (+1).  If today is weak from the bull's perspective I would expect that this timer would move to the Cash side.  Note that the LCR Change Timer (fast) is up nearly 116% since September 2008, so it pays dividends to watch this indicator, although it does whipsaw and this will frustrate many of you.  The LCR Change Timer (slow), which is a confirmation timer on the fast one, is still indicating LONG.  It is up nearly 56% within the same time frame.

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

A number of my positions are within pennies of hitting their trailing stop losses, so if today appears weak by around 10:30-11:00, I will cut the weakest stocks from my portfolio for virtually no gain and will leave the ones with solid gains (CQP, BYI, YCS, SOA) to run.  I do not intend to add any long positions today and have not performed any searches on the long side of the equation.  I am carefully watching for contras to emerge.

Remember, you are responsible for your own trading decisions, not me.  Please do your diligence.

Regards,

pgd

Thursday, April 8, 2010

Price-LCR Divergence

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The GGT Price Index fell from the all-time peak of $25.87 to $25.73, a change of about -0.5%, on extremely high volume of 2.592M shares, where 2.09M is the average 50d MA on volume.  Although the price decline was not huge, a drop of this amount on volume that is nearly 24% higher than average volume is certainly a "heads up" alert.  I call this action "churning".

The Long-Cash Ratio, which is a measure of the number of stocks in the database with some form of long status (New Long, Affirmed Long, Long) ratioed against the number of stocks in the database with some form of cash status (New Cash, Affirmed Cash, Cash), moved higher on Wednesday to 3.092, which is bullish for the day and is the fourth consecutive day of increasing.  What is significant about this is that it is a divergence from the GGT Price Index action.  Let me explain the mechanics.

The GGT Price Index is a raw value -- no manupulation.  It is the simple average of all the stocks in the database.  GGT Price and GGT Volume are the purest indicators we have.

To get a LONG recommendation, if previously in CASH, you need both price and volume to move higher, relative to some optimized value that changes on a ~monthly basis.  Conversely, but different too, is that to get a CASH recommendation, if previously LONG, all you need is a fall in price.  Doing it this way creates a "check valve" so when we have stocks that are recommended LONG, we know both price and volume caused the stock to move up, e.g. accumulation.

For the LCR to move upward, more stocks are in LONG status than CASH, relative to yesterday.  This means that these stocks had both price appreciation AND higher volume.  Contrasting, the decline of the GGT Price Index shows that although the database, as a whole, moved upward in price and volume as determined by the LCR, THE PRICE DECLINE OF THE STOCKS THAT DID NOT EXPERIENCE SOME FORM OF LONG STATUS actually was quite severe.

It's rare to see the LCR move upward but price action drop.  In the nearly 400 trading days that GGT has been alive it has happened only 28 times.  What followed, especially in recent history, will surprise you:  The markets generally continued higher.  Here are the dates it occured in the past so you can judge for yourself:

10/21/2008


11/18/2008

11/24/2008

12/8/2008

12/15/2008

12/18/2008

2/27/2009

3/16/2009

3/19/2009

3/20/2009

3/24/2009

4/30/2009

5/5/2009

5/20/2009

7/17/2009

7/21/2009

9/17/2009

10/13/2009

11/4/2009

11/6/2009

11/10/2009

11/18/2009

11/25/2009

12/28/2009

2/3/2010

2/10/2010

2/26/2010

4/7/2010

==============
 
I'm staying the course today.  I sold a few losing positions yesterday, and I've set an intra-day stop loss on my positions which are above water, preventing them from losing my profits.  Futures are down, so my profits will be under pressure today.
 
Remember, you are responsible for your own trading decisions, not me.  Please do you homework.
 
See you Saturday, 10 a.m.
 
Regards,
 
pgd

Wednesday, April 7, 2010

A warning sign ...

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As of late, I've been in the camp of "let the bulls run".  I've watched other folks discuss the drying up of volume across the board, yet I've not seen it, at least through last weekend.

That has changed.


The graphic above shows average volume for the past 15 months, plotted with the GGT index.  Reading this chart and inferring patterns is like reading tea leaves -- just because we see a drop in average volume does not mean the market will fall.  Nevertheless, we've been on a good run with respect to average volume, and just recently I'm seeing the peak.  In fact, 4 of the 6 past trading days have seen daily volume less than average volume, which blows the previous 57-day streak of daily volume being higher than average.

Given that the GGT price index is extended above the shown artificial trend line, and given that volume is peaking, I think you may want to consider protecting some gains.  I know that I am.

Regards,

pgd

Tuesday, April 6, 2010

LCR Timers Confirmed Long (+1)

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The strong action yesterday (Monday), combined with the reversal and push upward later today was enough to cause the LCR Change timer (slow) to confirm a move to LONG (+1).  I've not run today's numbers on the stock database but http://www.finviz.com/ indicates 3611 advancers and 2545 decliners, which means an up day for the LCR.

My contra ETFs hit their stops two days ago and were closed out with 1% TSLs yesterday.

This rally is quite mature, so I would be cautious at entry on any large number of equities.  Nevertheless, you can't make money if you don't play, and I'm entering 25% positions as they clear the previous day's high.

Regards,

pgd

Sunday, April 4, 2010

GGT Timers and Other Observations, Updated Easter Weekend

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Summary

*** Remember -- these are snapshots in time looking backward, not a prediction of the future ***.  Some call this "driving by the rear-view mirror".
  • The GGT LCR Change Timer (fast) is LONG (+1).
  • The GGT LCR Change Timer (slow/confirming) is in transition at CASH-LONG (0)
  • The market is continuing to favor smaller caps relative to larger caps
  • The EMAs on the 65d slope of the VIX have all turned up, which is bearish
  • The number of "Longs" has fallen off the March peaks, indicating upside potential (fuel) but also showing that (if the past is any indicator of the future) that we could easily experience a significant pullback.
  • The slope of the EMA of the 65d price signal has just turned positive (65d EMA slope is now horiztonal) but has been moving upward the past few days from a negative value, which is bullish.
  • The EMAs on the LCR Change have all reversed and are now pointing upward (bullish), although they are still negative in value.  Watch for these to move into positive territory for a definite bull signal.
  • The GGT Price Index rates of change have broken a downward-pointing trendline are are now pointing upward, if not accelerating.  This is bullish.
  • Contrary to the talking heads, GGT Volume has been very stable and consistent with rising database prices.  This is bullish.
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GGT Long-Cash Ratio Change Timer Update

The GGT system uses two timers based on the Long-Cash Ratio.  These timers have three states:
  1. CASH (-1): You should be purchasing contra ETFs and have no long positions
  2. CASH-LONG or LONG-CASH (0):  You should be prepared for a state change.  CASH-LONG (0) means that you are previously in CASH and have a possible transition to LONG.  LONG-CASH (0) means that you are previously LONG and have a possible transition to CASH.
  3. LONG (+1):  You should be long in equities.
In my previous post I alerted you to a state change to CASH-LONG (0) of the fast timer which occured on Tuesday, March 30th.  I also alerted you to watch http://www.finviz.com/ to see if the ADV/DEC was supportive of such a move on Wed or Thurs, since I was going to be traveling both days.  Finally, I stated that the slow timer was still favoring CASH as of the market open Wednesday morning.

As of the close of Thursday's action we have the following:
  • GGT LCR fast timer has transitioned to LONG (+1).
  • GGT LCR slow timer has transitioned to CASH-LONG (0).
Until these two confirm we're in quasi-quasi-land on what to do.  Given this, sitting on cash with a slight bias to the upside is prudent, at least from the perspective of this timer pair.

Here's the equity curve of the fast timer, plotted with the GGT Price Index:



As with all of my graphs, you can right-click on the chart to open in another tab or in another window.

The left scale of the graph above refers to the GGT price index, which is shown in BLUE.  The purple trace is the GGT Equity Curve, using the fast timer, and it's scale is shown on the right.  Basically, if you would have put a $1 on the table and religously followed the GGT price index with buy and sell signals you would have doubled your money since January 2nd, 2009.  Note that this equity curve ignores the slower confirmation timer.

Two equations are shown in the graph, each colored corresponding to the curve they represent.  What is important to understand is that the coefficient of regression, known as R2 by some, is very, very good for the fast GGT dataset, giving a R2 value of 0.96 (on a scale of 1) for the data shown.  The way to interpret this is that the GGT equity curve is very linear with respect to time, which is what we want.

I've circled an area on the graph where the fast timer is struggling in the present market.  GGT was designed to correct itself over time, so my expectations are that it will continue upwards as soon as a definite market trend resumes.

The common complaint about the fast timer is that you can get whipsawed.  Very true, and thus the nature of a fast timer.  Hence I created the slower timer using the same model, which prevents a high rate of whipsaws at the expense of lower gains and higher drawdowns.  Here's the curve:




The first thing that should jump off the figure at you is that the gains of the equity curve are about half of the fast timer.  The second thing to realize is that this slower timer is also having difficulty in the present climate, hence the equity curve is falling a bit while the GGT price index is climbing.  Remember, the slower timer has just transitioned to CASH-LONG (0) from CASH, so it's not time to sell the contra positions (yet). 

Going forward from here ...

The rules of the GGT timer system say do the following:
  1. IF in a CASH (-1) situation, you should be playing the contra side of ETFs or shorting stocks.  Your longs are going to be beaten over the longer haul, so give consideration to closing them.
  2. IF in a CASH-LONG (0) situation, you have been in cash and are now in the process of transitioning to LONG (+1).  Wait until you have strong confirmation that the next trading day is going to be a very positive day according to ADV/DEC lines.  As I've instructed, the home page at http://www.finviz.com/ can provide you a very easy method of determining this (upper left corner of the home page).  IF the ADV/DEC ratio is at least 2:1 by mid day it *may* be safe to enter, e.g., GGT LCR Change will confirm a move to LONG that evening.  The problem in recent days is simply the number of reversals that we've been seeing -- this can all fall apart too.  A safer method is to wait until a firm LONG (+1) signal is issued with the close of the day.
  3. IF in a LONG (+1) situation, you should be playing the long side of equities.  Your contra positions are going to get beaten over the longer haul, so give consideration to closing them.
  4. IF in a LONG-CASH (0) situation, you have been LONG and are now in the process of transitioning to CASH (-1).  Wait until you have strong confirmation that the next trading day is going to be negative with respect to ADV/DEC lines, e.g., the ratio is better than 1:2 to the downside.
Monday's futures are up just slightly as I write this Sunday evening.  The FAST LCR Timer is LONG (+1) and the SLOW LCR Timer is CASH-LONG (0), which could move to the long side (+1) if Monday is an up day on equities.  Conversely, since Thursday was up according the the LCR, IF Monday is down according to the LCR the slower LCR timer will remain at CASH-LONG and the faster LCR timer could actually whipsaw back to LONG-CASH (0).  Stay tuned, and ask questions if you don't understand what've I've written.

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Micro Caps vs. Large Caps

As many of you know, I like to watch the ratio of micro cap stocks to large caps stocks.  I do this with ETFs, plotting the IWC (Russell MicroCap Index) against the IWB (Russell LargeCap Index).  HGSI makes this easy:


The chart above, specifically the top pane , shows the ratio of the two ETFs.  Plotted against the solid blue trace is a red, dotted trace which is the 13d EMA of the blue line.  What the data shows is that microcaps are out-performing large caps in the present market, and have been doing so since late November.  The result is that we should be focusing our efforts on smaller-cap stocks, not larger (although largecap stocks will continue to perform, just will do so behind microcaps).

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The VIX

The VIX is showing signs of life, which means volatility is increasing.  Increasing volatility generally means increasing pessimism.  Here's the chart:



Of particular interest to me is that in the 65d Slope EMA pane (white background), all the EMAs on the slope of the 65d EMA price are now in an up-trend.  This is a HUGE warning sign.  Here are the dates when this last occurred:
  • 1/22/10
  • 10/29/09
  • 10/1/09
  • 8/6/09
  • 6/15/09
  • 2/19/09
Certainly, these are not perfect indicators of a downward slide, but they have flashed their signals in the past near local tops.  Just be advised.

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

GGT Relative Ratios

The following graph should be familiar:


This graph shows the relative ratios of the different rankings of stocks within the GGT database.  I've circled periods where stocks that were ranked "Long" have come off their peak.  You can see that we had a sustained period in March-April 2009 where we remained at lofty levels before the pullback in May-June 2009.  You can also see on the right hand side of the graph that we have pulled back a considerable amount from the peaks early in March, indicating that we could continue to remain at these levels if not higher. 

Don't miss one thing though:  EVERY time we hit a high, we had a significant pull-back within a month or two.  Make sure you understand the graph, specifically the yellow ("Long"), the blue ("Cash"), and purple ("Affirmed Cash") levels.

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

GGT Price 65d EMA Change

The change in slope of the 65d EMA of the GGT Price gives us a good view of the intermediate trend for the database.  Here's the graph:



Plotted above is the GGT Price Index, along with the day-to-day change in the slope of the 65d EMA of the GGT Price Index.  Note that the change in slope is not smoothed -- this is "real time".

The first thing that should catch your eye is that starting about mid-March we started to decelerate in the day-for-day changes of the slope, which means that we had all indicators that a reversal was pending.  As soon as this indicator moved negative the slope of the 65d line on price moved from slightly upward to slightly downward pointing, another bearish sign.  Now, with the indicator reversing (which is bullish) and now transitioning to just above $0.00 (which too is bullish), the intermediate-term trend appears to be stabilizing (horizontal, no significant price appreciation/depreciation), which puts us in the quasi-quasi land I mentioned above.

Until we get some signficant movement above or below the $0.00 level caution is advised, although your bias should be to the long side.

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GGT Price and GGT Long-Cash Ratio Rates of Change

This next graph plots the GGT Price Index along with the LCR rates of change of various EMAs.  ROCs are interesting because as they transition, they can tell us about changes in market sentiment.



This graph reveals that the LCR ROCs were all negative, indicating that the bears were winning even though the database was moving to new highs.  This is a divergence -- either the price must reverse to sync with the increasing number of stocks moving to CASH, -- OR -- the LCR must reverse to sync with stock prices moving higher.

We have a perfect example of the latter occuring -- stock prices in the database continued higher, and the rate of change of stocks moving to a CASH recommendation slowed then reversed over the past week.  The fact that they are all still below $0.00 is bearish, but this is strongly negated by the fact that they are now pointing upward.  A cross-over of these ROCs into positive territory would be a strong bullish sign.  Hence this indicator is mildly bullish and gaining strength as we move onward in time.

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GGT Price and Price Rates of Change



The graphic above shows that over the last week that the prices in the GGT database resumed an upward move in appreciation, albeit a slight acceleration to the up side.  Breaking the downward-pointing trendline is bullish, and this graphic says that not only are we appreciating in prices (upward-pointing price movement), we are now doing so at a faster rate than over recent previous weeks.  Color this bullish.

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GGT Price and Volume

Contrary to the talking heads, I'm not seeing the "dry up" of volume others are seeing.  Remember that the GGT database is comprised of:
  1. Stocks over $1
  2. Stock only on the AmEx, NASDAQ, and NYSE
  3. Stocks with 50d MA > 50k shares
Perhaps the talking heads are looking at the universe of stocks, including OTC:BB and .PK stocks to draw their conclusions .... I simply don't know and more importantly, I don't care.






























The Graphic above shows that volume has been very steady since just before the January 2010 decline, which I consider healthy.  I'd be throwing red flags everywhere if we saw rising GGT prices on declining volume, but I'm not seeing it here.

Color the Price/Volume combination bullish.
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Remember, you are responsible for your own trading decisions, not me.  Please do your own homework.

Also remember that there is a general meeting of the NoVA VV group this Saturday.  Check the Yahoo! site for further information.

Regards,

pgd