- The GGT Short-Term LCR Change Timer is LONG, which signaled LONG as of the close Wednesday night. Since Thursday the index is up 1.33%. I missed this signal due to my travels and I will not be chasing it.
- The VTI Short-Term Timer, which is directly related to the GGT ST LCR Change Timer, signaled LONG as of the close of Thursday night. The open price was $66.25 on Friday, and it closed up 0.65%.
- The Intermediate-Termed Elder Force Index timer continues to indicate LONG, and has been long since 12/1
- The slopes of all the primary GGT EMAs (5d ... 65d) are pointing upward, and have been since the close of Thursday's markets. This is bullish.
- The GGT strength index is up significantly from last Friday's level of 0.575, ending the week at 0.782. Values above 0.8 are approaching overbought, but this is a less-than-scientific level.
- http://blog.alphascanner.com/, specifically reading the entries by Billy
- Billy is LONG, solidly long. The reasoning is sound and the indicators in the market are what they are -- bullish.
- Frank, at Trading the Odds, gives historical evidence to this MLK week as being decisively negative, especially as the week moves onward.
- Rob, at Quantifiable Edges, hasn't blogged in a week and his last blog entry was more on his methods and not on indicators. Hence, he gets a hall pass.
- Dave, at ETF Roundup, has been on hiatus and will return (today). He too gets a hall pass.
Often, EMAs (exponential moving averages) applied to the LCR can help me discern a trend. Here's a chart with the 13d, 21d, 34d, and 55d EMAs plotted:
Of significance here is that the primary EMAs shown above are "interwoven". This exemplifies the noisy, raw LCR graph previously shown, and indicates again that there is really no primary trend on these time scales (which I consider the primary, intermediate-length scales). I would argue that caution is advised with respect to longer-termed holdings (those longer than trading days, or 2.5 weeks), simply because we could move either way as far as the markets are concerned.
Remember, the LCR EMA graph is not a price graph -- it is a state of the database. It is telling us that the number of available stocks to choose from is relatively static within the database, and when this occurs, it's time to look at other indicators. It's not saying that the stocks aren't changing -- it simply is telling us that overall, neither the bears nor the bulls are winning in terms of longs/cash. In fact, we are seeing rotation in terms of sectors, but more on that later.
If the two graphs above were not enough to convince you that there is no trend in terms of the database expanding or contracting, then this next one should show you in a graphical way just what is occurring. If we plot the "change in the LCR EMAs", day-over-day, we get this next graph:
This last graph is the familiar dashboard of the LCR system:
Here, we see that in the middle of the graph, that we have three days of the slopes of the LCRs all being "bullish", with the last two day's confirming the 65d EMA slope. For now, we are bullish, but all of the "red" in the middle portion of this graph, and the choppiness of the red/green, tells me that we need to be cautious and ensure that if we commit monies, it is not with the expectation of holding for the intermediate length time frames...
The Pricing System
Wuda, cuda, shuda ....
Here's a summary dashboard view of the GGT Pricing System:
The left column is the daily GGT price change, in %, and next to it is the volume of the day, compared to the 50d MA volume of the GGT database. We've been solidly above the 50d since returning from the holidays, so we know that the institutional folks are back at their desks.
Again, the middle of the figure is where the primary action lies, as this is the slope of different length EMAs on the GGT price series. What is most important here is the sea of green -- especially the 55d EMA -- and with one exception on 11/16, we've been pointing upward. Perhaps there is a lesson here, as we place dollars in the bank, and this "greenness" is tied directly to dollars.
Just as the LCR ROC chart can tell us about how far we are from the slopes moving positive or negative, we can do the same thing with the pricing slopes:
Of significance here is the amount that we are up over the pink area. Now, don't get complacent -- all one needs to do is look back to the middle of November and we had a huge downdraft from these levels over the course of a couple of days, but the point here is that invested portfolios have been making money because as a whole, the database has been appreciating on multiple time scales, all with upward-trending slopes. The 13d, 21d, and 34d lines plotted above are the same 13d, 21d, and 34d columns of the previous figure -- please make sure you understand what you're looking at between these two figures, because the data is the same, just presented differently.
From the combination of the LCR charts, as well as the pricing charts, I conclude the following:
- The database is churning, neither growing or contracting in any regard. Since we have New Longs as well as New Cash recommendations occurring each day, the inflows to New Longs and the outflows to New Cashes is more or less balanced.
- Prices continue upward with respect to the database, which we established prior as not expanding. This means that the stocks recommended in some form of "Long" status have to be carrying an increasingly disproportionate weight compared to the recent past. As long as the stocks that rotate out (New Cashes) do not depreciate faster than the stocks that are rotating in (New Longs) the price index will continue higher, so we need to place our attention on finding these equities.
- This rotation of the database but increase in prices is unprecedented in the 2.5 year history of GGT. Because of these uncharted waters, throwing caution to the wind and jumping on the USS InvestEverything is not something I'd consider prudent.
- Volume levels are still above the 50d MA, indicating the presence of big buyers/sellers. Hence, we should be able to find stocks that are appreciating due to volume accumulation but are in a healthy uptrend too, e.g., stocks that meet sound Effective Volume as well as Elder Force Index criteria.
- While I didn't discuss the details, both the price charts and LCR charts have a "slope of the slope" section (far right on each), and as you can see, both are very green. Monday is probably NOT the day to pick an entry to stocks and fire all of our powder, but careful selection could prove valuable.
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