Wednesday, January 12, 2011

GGT Long Candidates still Bullish, Markets are Toppy

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Greetings from Spokane.  Snow on the ground here too, so I'm not missing the fun on the east coast.  :o)  Unfortunately, the stock updates are still running, so I cannot give a view of the present action using my GGT dashboards.  I can, however, use HGSI for part of the analysis, which is what you will see below.

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Summary
  • My view of the GGT universe of stocks, using HGSI, suggests that aggressive movement into stocks at this point would not be prudent.
  • The aggregate view of GGT LONGS shows continued strength, so Elder applied to this universe will give us a edge.
  • My HGSI scan of available Elder candidates only returns 11 stocks, and when screened with Effective Volume, only a few look interesting.
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GGT Universe

Here's my GGT Universe view using HGSI:



Click on the image above to open in a separate tab or window.

As you can see, this is a bullish chart from a historical sense.  Trend lines are from the lower left to the upper right, etc.  Here's what is giving me pause at entering 100% positions at the present time:
  • The MACD histogram is negative.  This suggests waning momentum.  As a whole, the database is losing steam, and it is likely that whatever stocks are chosen, they too will experience this ebbing of the tide.
  • The slope of the 13d EMA is below the slope of the 34d.  As a general rule I make no broad investments when this is the case, as it certainly confirms that we are losing ground faster in the shorter term as well as the longer term.
  • We have a Doji on Tuesday's action, which shows broad market indicision.  Yes, the markets were up, but only if you chose correctly in the indices.  Underlying stocks within the database are balancing in terms of those going up and those that are dropping.
Correspondingly, we need to be selective.

Here's a view of the GGT Long-Only stocks, as of the close of Tuesday, Jan 11:




This graph shows just the stocks that were LONG, as of the close of markets on Friday, updated with Tuesday's data.  Clearly, much stronger performance, so we should be focused on these as a whole (and avoiding any stock with any form of a CASH recommendation).

These stocks meet Elder's critiera, as of the close of Tuesday, Jan 11, using my HGSI scan:

SONC
SNDK
MDP
PPO
CTB
AXE
PCP
MRK
EAT
GD
USU

A basic strategy is to purchase these if they hold above yesterday's high.

If you are interested in Effective Volume, http://www.effectivevolume.eu/, this slice of these Elder candidates could be of interest:
  • SONC has good short-term large effective volume (LEV), so could be a good candidate for entry
  • SNDK has mixed LEV -- increasing today (1/12), but in general, is unremarkable.
  • MDP shows short-term LEV distribution
  • PPO is showing increasing short-term LEV distribution
  • CTB is an avoid due to LEV distribution
  • AXE is an avoid
  • PCP is showing slight, weak short-term LEV accumulation
  • MRK has been in long-term LEV accumulation, but is presently in short-term LEV distribution
  • EAT is in a strong, LEV accumulation
  • GD is in a weak, short-term LEV accumulation phase
  • USU is in a strong, LEV distribution
So, candidates, when filtered with EV, could be SONC, PCP, EAT,  and GD.  These are not recommendations, so do your own diligence.

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Overall, I'm cautious on the markets.  NONE of my Elder candidates are pulling back, hitting my entry level constraint, so I'm largely in cash.  This fact is telling me that the Elder candidates are overbought in general and that the trend lines are not very strong (8d EMA is more horizontal than pointing upward), causing any significant move upward to move the stock out of my buy zone.

Chase stocks as you see fit.

Remember, you are responsible for your own investment decisions, and I am not.  Please do your diligence and take ownership for your actions.

Regards,

pgd