Wednesday, March 30, 2011

Continuing to Hold the Long Side ...

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Summary

  • The GGT Price index hit a all-time new high of $34.05 on Tuesday on volume that was 19% below the 50d average.  We had rising prices in December 2010 on poor volume, and we cannot discount the impact of POMO buying.  New price highs are bullish overall, period.
  • All the pricing moving averages are positive and pointing upward.  This is bullish for our bank accounts.
  • The GGT Price Accumulator Oscillator is at +14, it's maximum reading, and is indicating that we should not buy new stocks on the long side as the short-term chance of decline from today's levels is above average.
  • GGT Strength is at 74%, and indicates that there is considerable fuel in the tank to power higher.
  • The short-term timers are both LONG, but I would not chase them from here.
  • The Long-Cash Ratio (LCR) closed above 1.0 on Tuesday at 1.058, the first time since 3/7.  While the absolute value is not important, the trend is up, at least through the 34d moving average.  The 55d and 65d moving averages are still negative, which means that we do not have 100% confirmation as far as the broad base of GGT stocks are concerned.
  • Investor's Business Daily finally joined the party Tuesday evening and has announced that we are in an uptrend.  There is comfort having them on our side.
Conclusions:  Stay the course on the long side.  While we are approaching overbought levels on a short-term basis, suggesting a slight pull-back, I think we'll be okay through the rest of this week.

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Holdings

I'm presently holding AZO, CAT, FXP, OPEN, PCLN, and SJM.  I unloaded positions in DOG and SH yesterday, and lightened my position in FXP, all for a significant loss I may add, but Effective Volume action at the end of the day suggested that any further holding of the positions would be at the peril of my account balances.  I am mirroring this portfolio in the GGT, LLC account and it too realized the loss.

While you may be inclined to say that EV is a poor signal to base selling decisions, I think you'd be mistaken.  I simply remind you of the FTNT situation in January when LargeEV was increasing but price was decreasing  -- we had the same situation for SH and DOG until about 3 pm yesterday.  This is one of numerous examples.  All I can say is that many people took a hit yesterday, including our micropercentage compared to the masses.  Until I see compelling evidence to the contrary I'll let EV continue to guide selling if there is any consternation.  Of course there are other indicators to tell me to exit, but the majority of them have been mixed, as folks have not believed this latest up leg.  Finally, I'm reminded of a discussion I had with a full-time trader recently -- she indicated that when a hedge comes off, there's a loss, or there would be no reason to have the hedge in the first place.  Point taken.

Here's what I'm seeing on the positions being held:
  1. GGT has all of the stock positions as "Long", so there is no compelling reason to unload anything.
  2. AZO saw a significant uptick in the last 30 minutes of trading in terms of LEV and a simultaneous decrease in SmEV.  Price moved upward, so the big boys were stepping in.  I feel better about this stock, although I'm not overly pleased about how it's been acting over the last week or so.  I do note that it just cleared a weekly Darvas box, so combined with the breakout of the daily Darvas box on 3/24, we have a good setup.  I'm 17% below my target holding position of 16% total.  My price target is still around $300.
  3. CAT saw a turnaround in LEV yesterday, with steady, linear accumulation while SmEV dropped throughout the day.  CAT also just cleared a weekly Darvas box, and again, like AZO, when combined with the daily breakout of the box, we have a good setup for higher prices.  I'm 59% below my target allocation of 40% in CAT, so will most likely add early but not all, especially since the GGT Price Accumulator Oscillator is maxed out, saying we're due for a pullback.  I'm looking for a price target of about $114.
  4. FXP is frustrating me.  With the close yesterday I have mixed signals on the weekly time frame, and also with the close yesterday FXP has fallen outside the lower right corner of the daily Darvas box, an ominous sign.  Given this, LEV upticked at the end of the day as buyers stepped in.  Also, in looking at the price series over the last 40 days, it's visually easy to see that we're near a lower active boundary, so when combined with the mixed weekly signal, FXP actually appears to be a good play.  Nevertheless, GGT has FXP as a CASH recommendation, and I need to follow my own rules unless LEV skyrockets today (along with price).
  5. OPEN continues to perform well, and coincidently, has just cleared a weekly Darvas box in concert with a daily Darvas box on 3/24.  With recent strength my target allocation has fallen to nearly zero (volatility has been spiking, a bad sign), so I will place a target stop loss/profit point OCO order and exit the position with some form of gain.
  6. PCLN is marching upward nicely.  I'm 23% below my target allocation of 13%, so most likely will add those shares early this morning.  My price target is still around $540.
  7. SJM underperformed yesterday, which is worrisome when a stock does not participate in the broad market.  I'm slightly underwater on the position in both accounts, with a worse-case of -0.44%.  LEV held steady on Tuesday though while prices dropped, which is a good sign.  Any weakness in LEV will be cause for removal, especially since yesterday's price closed below the Darvas Box ceiling of $72.09.  We'll see how it behaves early in the session and if it lags, it's gone.
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Remember, you are responsible for your own investment decisions, and I am not.  Please do your diligence, and please take ownership for your actions.

Regards,

pgd