Sunday, May 30, 2010

Video Blog Update

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I've posted a GGT Video Blog Update at the following address:

ftp://airak.com/ggt

Once there, select the file:

GGT Memorial Day Weekend Update.mp4

Or you can click on the underlined text above for the file link and you should be prompted on what to do with the file (view, save to disk, etc.).

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

Regards,

pgd

Friday, May 28, 2010

Change in Timer State -- Recommended LONG

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With the close of the markets on Thursday, May 27th, the GGT LCR Change Timer (fast) has signaled a move to the LONG side of the market.  I will close my index contra ETFs this morning with a 1% TSL and open positions in long index ETFs at the open.  This is a FAST TIMER, e.g., holding period is on the order of a couple of days.  It has no relevance on longer holding periods or other signals, and certainly does not negate other contra positions that I am holding.

(I abhor purchasing longs when the market spikes so dramatically to the long side but I follow the timer and it is right more often than it is wrong.)

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Unlike the GGT ETFs, which contain ETFs that represent markets/currencies from around the globe, the GGT Stock System only contains stocks that are:

  1. above $1
  2. have greater than 70K shares 50d MA volume
  3. are on the three primary exchanges
The number of stocks meeting this criteria ebbs and flows around 3,000, and is presently at 3,045.

Although ADRs are part of the stock universe, so there is some foreign company influence, the number is less than 350 so the influence is less than 11% on the overall GGT stock system.

With the close of Thursday's markets, the GGT system is showing an increase of 3.9% in the price index, finally closing at $24.04, up from Thursday's value of $23.14.  This certainly is bullish on a day-over-day timeframe.  Volume was weaker though, with GGT volume at 2.5M shares, -8% below the 50d MA volume of 2.7M shares.  While in the statistical noise of a normal distribution (+/- 530K shares), it is weaker, most likely due to the pending Memorial Day weekend.  A huge spike in price on weaker volume does not instill a large degree of confidence in the positive move.  

The slopes of the GGT Price EMAs are negative but are trending higher.  In Ken Phillips' parlance, the car is moving backwards but is slowing, almost ready to drive forward.  Specifically, here are the states of these EMAs:
  • 13d EMA: $24.10, negative slope, change in slope is positive (bullish) since Tuesday
  • 21d EMA: $24.50, negative slope, change in slope is positive (bullish) since Tuesday
  • 34d EMA: $24.78, negative slope, change in slope is positive (bullish) since Tuesday
  • 55d EMA: $24.70, negative slope, change in slope is positive (bullish) since Tuesday
Based on these indicators alone, a negative slope tells us that we are still losing ground in the EMAs, which is bearish.  The change in slope being positive across the board is a bullish situation and is necessary for the bleeding to stop and for the markets to begin/sustain an upward movement.  Note that the price sequence is still far below the EMAs, which is bearish, so we are very early in any bull move upward.

Elder's 13d MA Force Index on the GGT price series, while moving somewhat more positive earlier this week (IT IS STILL NEGATIVE), actually turned more negative over the last few days.  This downward movement (more negative) in the Elder Force Index is the wrong direction and points us to a more cautionary stance.  This is NOT the time to pile into long positions.

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The GGT Long-Cash Ratio (LCR), which separates stocks into two major buckets and ratios the number within each bucket, bottomed this past Tuesday @ 0.089 and has been increasing daily.  It closed Thursday at 0.154, and is now indicating that 407 stocks are long and 2638 stocks are in cash.  Of significance here is the status of the EMAs -- they too are trending more positive.  Here are the states:
  • 13d EMA: 0.333, negative slope, change in slope is positive (bullish) since Friday, 5/21
  • 21d EMA: 0.636, negative slope, change in slope is positive (bullish) since Friday, 5/21
  • 34d EMA: 1.026, negative slope, change in slope is positive (bullish) since Friday, 5/21
Based on these indicators alone, the negative slope tells us that we are weak in the number of stocks that have a long recommendation, which is bearish.  The change in slope being positive for these three EMAs is a bullish situation and shows us that the markets are rallying, and although we bottomed in the LCR on Tuesday, we have been "bottoming" as far as the number of stocks are concerned all week and are trending upward.  The fact that we are not losing ground in the number of stocks with a Long/Cash recommendation is bullish and could be a strong indication of the local bottom being in place.

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My GGT trades going into the day are as follows:
  1. Closing my index contra ETFs, based on the GGT LCR Change Timer Signal, with a 1% TSL
  2. Purchasing long index ETFs, based on the GGT LCR Change Timer Signal, with limit orders
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Remember, you are responsible for your own trading decisions, not me.  Please do your own work and arrive at your conclusions based upon your own research.

Regards,

pgd





Thursday, May 27, 2010

Head Fake? Thursday Evening Summary via GGT ETFs

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The markets clearly screamed higher today -- firing on all cylinders.  Or did they?

Surprisingly, the GGT ETFs this evening are painting a different picture -- one that is very divergent and cautionary.  Specifically, the ratio of LONG-recommended ETFs to those that are CASH fell from yesterday's value of 18.3% down to 15.8%, a level we haven't seen since February.  This was completely unexpected by me -- I was predicting that the value would have gone up, as we saw a large number of New Longs appear.

The rationale behind this -- and I won't be able to confirm it until Friday morning -- is that while the markets moved up, they didn't do it across the board, and because the ETFs represent the kitchen sink of securities -- literally -- while we did well in the US, we didn't do so well globally.

I note with some interest that 28 short (contra) ETFs signaled New Cash with today's action ... I'm tracking 94 so this is nearly 30% of the Contra ETFs flipped south.  Many of them are leveraged -2x and -3x, so they react dramatically (which is why I like them), so this could be an early warning that the bulls are awakening or it could simply be that they are too darned sensitive for our purposes.  Stay tuned.

I also note with interest that EVERY MSCI ETF that I track has some form of "cash" status associated with it.  I've never seen such bearishness around the world.  Here's the chart; the data in the columns should be self-explanatory:






























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I'll post in the morning once the stock file has updated and I've had a chance to evaluate.  Check back before the market opens.

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

Regards,

pgd

Wednesday, May 26, 2010

Wednesday Morning GGT Update

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My LCR Change Timer remains with a CASH recommendation, so no matter what happens today, I'll not be moving into any new long positions.  In fact, truth be known, it reaffirmed the CASH position, simply because the LCR continues to fall.

The new LCR going into Wednesday morning is 0.089.  This is an incredibly low level and suggests that we are extremely oversold (thanks Lisa).  I remind you that just because something is oversold, this does not imply that the markets will move aggressively higher -- we could stay down here for a bit.

I note with interest that the Elder Force Index 13d EMA on the GGT Price series has started to move upward, but is still in negative territory.  When this signal crosses the 0 line into positive territory we generally can move back into long positions.  Note that this is not a sure-fire signal, but certainly is confirming.  Here's the graph:




























As I write this the futures are down across the board, but just slightly.  I note with considerable interest that many of the major market indexes finished with a "hammer" pattern, which if confirmed, could be very bullish.  A confirmation on the hammer pattern is simple:  we must open higher than yesterday's close, and we must finish higher than we opened.  We'll see.

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

Regards,

pgd

Tuesday, May 25, 2010

ETF Update from Tuesday Evening Close

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In my earlier post this evening I stated that I would not have stock data before tomorrow.  This much is true -- I don't have STOCK data, but I have ETF data as of 10:18 pm.

Today's (Tuesday's) ETF data shows that the ETF Long-Cash Ratio, while different from the stock LCR, dropped in 0.2%, e.g., even with the internal run-up this afternoon, most of the ETFs I track (over 900) ended in somewhat worse condition today than they were yesterday.

I'm expecting to see this in the stock data, but I won't know until the morning.

The implication of the ETF data is that we are too early on determining whether today signals a reversal, hence, I will NOT be jumping in at 9:30 with longs tomorrow.

Of course, if the stock data shows otherwise, I'll retract my statement.  Right now I'm not convinced that we need to be thinking about going long.

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

Regards,

pgd

Weakest "LONG" Strength Since Inception

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A bit tardy on this update, but with the close of the market on MONDAY, May 24th, the GGT system is showing that we are experiencing the weakest strength in the stock market, having hit a strength raw value of -10612 on 5/24, in those stocks that are rated LONG.  This is our new "low" since inception in August 2008, and indicates that we are tremendously oversold.  This surpasses the low that we experienced with the close of Thursday, 5/20th market, and over the longer term, should represent a buying opportunity.

As we saw today (Tuesday), the markets started out in the toilet and finished strong, showing again how volatile this market can be.  Is this a buying opportunity?  Perhaps, but I'm not off to the races at 9:30 Wednesday morning.

Although I will not have Tuesday's GGT data processed until Wednesday morning, I can say that because the GGT LCR Change Timer (fast) is still showing a CASH status with Monday's data, and because it takes two days to get a confirmed LONG call, we can't possibly see a move to the long side before the close of Wednesday's market.  Certainly, we can anticipate, and I often do, so check back in the morning (Wednesday 5/26) and see what this timer did today.   A casual check of http://www.finviz.com/ will show you that there were 2165 advancing issues and 4045 declining issues in the market today (Tuesday), resulting in significant downside pressure and this will hold the Long-Cash Ratio to a very low level.  We are clearly a day or two early before we can see ANY type of bull bounce that is worthy of my money.

Ah, the LCR.  The Long Cash ratio is low, VERY low.  In fact, it is at 0.092, indicating that 256 stocks are indicated LONG and 2789 are indcated CASH.  By itself you would think a great opportunity to buy -- perhaps.  Also, perhaps not.  The LCR trend is DOWN, across the board.  The 13d EMA of the LCR has been sloping DOWN for the last 20 consecutive days.  Until this value starts moving less negative on a day-over-day basis, or more importainly, crosses above 1.0 ( it presently is at -0.061/day), then there is no way that we can see any sustained light at the end of the tunnel (and be sure that it isn't a train).  I think it is too early to go long, according to the LCR.

Monday's GGT price index fell from Friday's value by -1.027% to $23.12, and did so on lower volume than we've been seeing.  The ONLY reason this is remarkable is because I'm starting to see volume lessen, which is amazing, especially since volume has been increasing steadily since mid January.  We'll see if this was a one-day-fluke or if we're starting to see less participation in the markets.

I'm presently holding two stocks long right now:  AMRN and AAP.  I closed my Contra ETFs today with the exception of the primary index Contras.   This includes EUO and DUG.

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

Regards,

pgd

Friday, May 21, 2010

Friday 5/21 Mid-Day Update

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Although I'm seeing some strength, I'm not seeing us clear yesterday's highs mostly across the board, e.g., so far as I can determine this is a sucker's rally.  Volume IS up across the board except where noted.  Here are the ETFs that I am watching:

UWM, volume up
SAA, weak volume
QLD, volume up
DDM, volume up
SSO, volume up
MVV, volume up
UYM, volume up
UYG -- cleared previous day high just prior to noon, volume up
DIG, volume up
URE, volume up
USD -- cleared previous day high in significant rally, volume up
GLL, volume up
GLD, volume weak
ULE, weak volume
EUO, normal volume

As of right now my ETF power is dry.

Note that I did move funds from my wife's TSP into the market which most likely will be effective tonight -- see http://ggt-tsp.blogspot.com for details.

Regards,

pgd

All Time Low in GGT Long Strength

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I'm presently tracking 2900 stocks that are

  • above $1
  • trade more than 65K shares 50d MA Volume
  • and are on the 3 primary exchanges
I feel that these stocks represent a good section of the market, as they are all liquid.

One aspect of the GGT system is that I can calculate the individual "strength" of a stock, which ranges from -5 to +5, -5 = weakest, +5 = strongest.  This strength is based upon internals, e.g., is the price above historical good-performing EMA values, is the volume increasing/decreasing, etc.  When I sum the individual strengths of each of the stocks, I get the composite strength of the database.

When the database has a strength of 0, we are the weakest we have ever been.  When the database has a strength of 1, we are the strongest we have ever been.

With Thursday's action, the database returned a raw value in excess of -10,480, which is the lowest strength ever recorded since we started this process in August 2008.  This value corresponds to a strength of 0.

We have NEVER had two consecutive days of 0-0, meaning that the database has always moved upward from the lows on the next day.  

Based upon this, I intend to move into long positions if they show any strength today.  Strength is moving above yesterday's high on higher-than-normal volume at that time of day; here's a rough schedule I use:


12% 21d MA Volume by 10:00
25% by 10:30
33% by 11:15
50% by 12:15
60% by 1:15
70% by 2:15
90% by 3:15


DO NOT ENTER if volume is weak -- it'll be the retail boyz and girlz sucking you (us) in if volume is weak.

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You are responsible for your own trading decisions. 

Regards,

pgd

Tuesday, May 18, 2010

GGT LCR Change Timer Signals MOVE TO CASH for 5/18

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With Monday's close, the GGT LCR Change Timer (fast) has signaled a confirmed moved to CASH.  This suggests that I should close all long positions and keep everything in cash, else trade contra ETFs.  Here is the chart:



The graphic above shows that the timer has moved to 0, and that the Long-Cash Ratio has failed to breakout to the upside, resulting in this change in state.  It is in your best interest to pay attention to this timer.  Had you traded in the VTI (Vanguard Total Index ETF) since the inception of this timer (August 2008) and bought/sold at the open the next trading day the position would be up 63.2% in this time.  Had you traded the IWM (Russell 2000 ETF) over the same time the position would be up 101%.  Had you traded the QQQQ's (Nasdaq 100), the position would have been up 74.4%.

Within a week or so I will be introducing the test history of a number of ETF pairs which seem to perform well with this timer.

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

Regards,

pgd

Saturday, May 15, 2010

GGT Video Blog for May 15th Weekend


To keep my life simple this weekend, I've posted a video blog review the the GGT indicators for the weekend of May 15th at the following location:


ftp://airak.com/ggt

Once there, save the following file to your PC:

10MAY15-GGT-WeekendUpdate.mp4

Comments/questions are welcomed and invited, as always.

Regards,

pgd

Thursday, May 13, 2010

Video Update for May 13, 2009 Posted

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Due to time constraints and simply being behind, I've prepared a video update.  Access the update by pointing your browser here:

ftp://airak.com/ggt

Once there, save the following file to your PC:

GGTOverView-10may13am.mp4

Comments/questions are welcomed.

Regards,

pgd

Thursday, May 6, 2010

GGT LCR Change Timer Continues to Indicate CASH

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The fast LCR Change Timer is still indicating a CASH position.  In fact, it reaffirmed it today with two consecutive down days on significant loss of long-recommended stocks.  Caution is certainly advised.

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For the past two days the GGT Price Index has fallen -2.896% and -1.356%, landing Wednesday evening at $25.47.  This is the lowest level of the GGT Price Index since 4/1/10, when it closed at $25.45. 

We have now fallen -5.6% since the peak on 4/23/10.

Volume is very high, with traded volume at 3.3M shares on 50d average volume of 2.4M shares.  We've had a number of distribution days and you should be paying heed:

4/27/10: -2.49% on volume 49% above average
4/30/10: -1.982% on volume 29% above average
5/4/10: -2.896% on volume 34% above average
5/5/10: -1.356 on volume 35% above average

Note that on 5/3/10 we had +1.45% GAIN ON 3% above average volume --> failed rally attempt (retail investor?). 


Conclusion:  from price and volume action alone we've been saying be cautious -- 4 distribution out of 7 trading days is a clear indicator.


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With the close Wednesday, the GGT price is is below the 21d EMA, as well as the 34d EMA.  Here is the chart:


Take a look back to January as well as October 2009.  We are clearly in the same condition as these two dates, and may continue further south.

In terms of loss of momentum, the 13d, 21d, and 34d EMAs are now in a downward slope, e.g., they are losing money over those time frames.  The 34d is particularly key to me -- it's in my sweet spot of time frame, and this one indicator is certainly telling me that no matter how strong the different long strategies that I use, that they are very risky from a holistic-market point of view.  Here's the rate-of-change graph, note that the 13/21/34 are all below $0.00/day:



With respect to the above graph, pay particular attention to the level (rate of change) of the different slope values -- these are seriously pointing downward.  I would not be at all surprised if we:
  1. Reversed and moved to the upside, or 
  2. Relaxed the rate of decline, but still continued to stay in the pink area.
Finally, take a look at the next graph:



This chart shows us that the slope of a 65d EMA is dropping almost -$0.004/day.  Note that this rate of change is hugely negative, which typically cannot be sustained.  Again, I would not be surprised at a reversal from this level, or at least, continued pink area, but not as fast as -$0.004/day.

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The Long-Cash Ratio (LCR) has now dropped to 0.693, the lowest level since 2/16/10.  1209 stocks are indicated as some form of "long", and 1744 stocks are indcated as some form of "cash".  Remember, these are stocks that:
  1. Are on all three major exchanges
  2. Are all greater than $1
  3. Trade at above 50K 50d moving average volume
Of greater importance is the less-than-unity value of longs to cash.  Historically, when we've dropped below 1.0, we've entered a good bear leg:




You can test these dates for yourself.  A "1" means go long at the next trading day.  Yes, there are whipsaws that would have frustrated you, but you would have been on the right side of the market every time and would have caught every bull or bear leg.

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Elder's Force Index (13d) on the GGT Price/Volume series is still well below 0.  This is telling us to avoid long positions.

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The graphic above shows that we are nearing points where we have rallied in the past.  The strength index is calculated based upon the number of stocks that are showing price, volume, and ROC appreciation; as you can see we've been falling like a rock for the past few trading sessions.  Although the 0.2 level is less than scientific, we need to be aware of a possible rally within the next week.  Look closely at the GGT strength index (purple) ... it doesn't generally hang around here too long.

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Caution is advised.  Although we could rally from here, we're dropping.  I've been playing contra ETFs, and you should be considering these too.

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

We have a NoVA VectorVest meeting this weekend -- I hope to see many of you there.

Regards,

pgd

Tuesday, May 4, 2010

Elder's 13d Force Index has Moved Negative

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This is more than a warning shot -- it is terminal as far as this bull leg is concerned. 

The Elder Force Index is one of the most basic yet powerful indicators in your toolbox.  It is created by taking the daily change in price and multiplying it by the daily volume.  When you apply a moving average to this, you smooth the daily noise and get a very powerful indicator.

When the FI(13) is positive, the market is generally in an uptrend.  I say "generally" because this indicator is typically a leading indicator compared to other metrics.  As volume explodes off bottoms, the FI(13) moves positive, and as volume dries up off tops, the FI(13) moves negative.

As we saw yesterday, we had a 140-pt gain in the Dow, a 37-pt gain in the NASDAQ, and a 15-point gain in the SP500, all above 1% for each.  Our very own GGT Price Index moved up 1.45%, slightly on par with each of the individual index gains.  Conversely, the GGT volume yesterday was terrible -- only 3% over the 50d moving average, and all last week we were consistently higher:  19%, 49%, 31%, 31%, 29% was the run for M-Fr of last week.  So even though the GGT Price index moved up, it has been range-bound, and combined with weak volume from today, it has moved negative with respect to the Elder FI(13).  Here's the chart:


The actual transition was Friday of last week, but I wanted a 2-day confirmation (take a look back around 8/25/09) to ensure the trend is intact.

As I write this, futures are down:  -0.55% for the Dow, -0.65% for the SP500, and -0.65% for the NASDAQ.  I have no qualms about lightening up on my positions -- keep the gains, sell the weakness, so a 1% TSL off last night's close is my typically method to accomplish this.

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Contra ETFs still appear to be too early....

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

Regards,

pgd