Friday, February 11, 2011

Toppy, but Good Underlying Strength Exists

1 day until our meeting!  If you have not confirmed in one of the two Yahoo! groups by answering the poll, please do so.

There is a combined GGT and GGT, LLC meeting this coming Saturday, February 12th, at 10:00 a.m. to 1:00 p.m. at the Burke Centre Library, 5935 Freds Oak Road, Burke, VA 22015. Please RSVP in one of the GGT Yahoo! forums so that I can print an appropriate number of handouts. I anticipate that there will be a Web-Ex that remote folks can call into and listen to the dialog as well as view the slides in real-time.

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 Summary

  • We're looking toppy here using multiple indicators and time frames, so the Egypt situation not withstanding, a pullback will be healthy.  Keep one foot at the exit door though, as the weekly charts are losing momentum to the upside.  The important question is that if the pullback lasts more than 3 days how severe will the reset be overall?
  • The LCR, our Long-Cash Ratio of stocks in our database (~2500), has fallen two consecutive days, but only -5% and -4% respectively.  This is a "soft" sell and is bullish on a day-over-day basis.
  • Despite the mixed markets on Thursday, there is tremendous underlying strength across the board in leveraged, liquid ETFs, which tend to be more sensitive than normal ETFs because of the multiplier.  Specifically, I compare/contrast the behavior of 10 pairs of "matched" ETFs, +2x and -2x, and the resulting index direction tells me who is winning the battle on an intra-day basis.  The bulls won handedly on Thursday, despite the major indexes being down.  This is bullish overall.
  • As further evidence of this internal strength, the GGT Price Accumulator Change Oscillator, which tells us the underlying strength and direction of the shifting of prices in the database yesterday, jumped from -8 to +6, which now puts us in a "do not buy equities today" mode, hence, I'll resist to pick up equities today until this resets back below -5 or so.
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GGT New Long ETFs
  • YCS, the UltraShort Yen, is seeing continued accumulation.
  • RJA, an Agriculture ETF which I purchased yesterday under the rules of the Top 25 ETF strategy, is seeing big-lot purchases of 50K blocks and above.
  • TNA, the Small Cap Bull 3x, again which I purchased yesterday under the Top25 ETF rules, saw large EV buying in the last 15 minutes of the day
  • SSO, the Ultra SP500, which I continue to hold under the Top25 ETF strategy, saw HUGE block buying/selling in the last 15 minutes (several blocks over 200K each)
  • URE, the Ultra Real Estate, has been under accumulation since mid-day 2/4.  
  • IYT, the DJ Transportation ETF, has been experiencing more attention the past few days on the accumulation side, and went up markedly on Thursday.
  • QTEC, the NASDAQ-100, is seing solid accumulation over the past week since 2/4
  • IWR, the Russell MidCap, is seeing what we've been seeing all week -- a flight to midcaps in general.
  • IGN, although thinner than others, can attribute it's rise in price this week purely to Large Effective Volume.  Some of the transactions have been in 25K blocks.
  • RSP, one of my favorite ETFs because it is equal-weighted, is seeing significant LEV accumulation since 2/4 and yesterday the price held more-or-less constant while LEV rocketed upwards.  This is a great setup if LEV does not selloff.
  • EUM, the Short Emerging Market, is a great play if the world continues to sell off because of uncertainty, and the big boyz see this.  LEV skyrocked yesterday while price gapped up then relaxed, showing that the SmEV folks are scared of the leverage and backed out, but the big lot folks moved in.
  • IYR, the DJ Real Estate Index, is behaving like the URE above, but jumped yesterday and saw a flurry of buying in the last 15 minutes.  This is not leveraged, and is quite liquid, so could be a good play against URE.
GGT New Long Stocks
  • ** A new long call on BWA is significant.  Borg Warner is a great company, and this is being recognized in the solid accumulation of stock.  Note that there was a block of 300K shares traded at $72 on Wednesday ...
  • DIOD exploded yesterday, and LEV skyrocked from ho-hum to domination.  It's 9.2% above my buy point, but certainly worth watching.
  • QLIK is experiencing massive LEV accumulation over the past 2 days.
  • RDWR is back on the radar, and over the past 2 days has been a LEV favorite while the price remains constant.
  • ARUN continues to perform well, and saw a flurry of purchasing in the last 30 minutes yesterday.
  • STZ just started a new LEV accumulation pattern and I intend to watch it.  It met my Elder entry criteria yesterday but I missed it due to travel.
  • BJRI is being sold off by the retail guy and accumulated by the big boyz.  Give it a look.
  • ** JCI, a company that I know well because I work in this industry, is under solid accumulation over a sustained period of time.  It's 3.3% above my buy point.
  • ** Somebody likes VMED, as on Tuesday there was a huge block of 1.5M shares @ $25 that was purchased.  LEV hasn't looked back since.
  • CTXS is another company that is probably benefiting from Cisco's problems and the expansion of the cloud market.  LEV has been under solid accumulation, with big-blog buying, for over a week.
  • SWI -- ditto CTXS
  • AF -- someone picked up 100K shares just prior to close yesterday, and LEV has a nice lower-left/upper right pattern
  • FDX appears to be doing quite well, and the purchasing yesterday was quite active
  • ** Ahhhhhh, the rails.  NSC has just started a new accumulation pattern, with 220K shares being picked up in one block on Tuesday.  LEV hasn't looked back since.
  • ** PX is right at my buy threshold, and has a nice lower-left/upper-right LEV pattern
  • NICE -- classic case of LEV accumulation, sell off at the open yesterday, LEV didn't budge, then everything skyrocketed.
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Trading Plan for Friday

With the GGT LCR Change Timer now in CASH (not discussed), and with the Price Accumulator Change Oscillator sitting in "do not buy" territory, I'm going to sit on the sidelines today and watch the pullback, if one occurs.  I may pick up selected stocks and ETFs above if they meet my entry guidelines.

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

See you tomorrow!

Regards,

pgd

Position Disclaimer:  as of this writing I own/influence positions in the following equities:  AAPL, ACH, BGU, BTI, COST, DAG, DBA, DIG, ERX, FAS, HPQ, HSY, IEO, IEZ, ITB, IYE, KCG, LULU, MVV, PCLN, QLD, RFMD, RIMM, RJA, SI, SOXL, SRX, SSO, SWY, TNA, TQQQ, TYH, UCO, UPRO, UYG, UYM, VDE, WAT, WPI, XLE, XME, XOP, EFA, SPY, VXF.