Wednesday, March 2, 2011

This bull is not dead - yet (but it's not overly healthy either)...

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There is NO face-to-face meeting in March; I'm obligated with family-centric things on our normal weekend.  I will be conducting a WebEx sometime during the month, so stay tuned.


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Summary

  • The GGT price index sold off -1.66% on volume that was 20% higher than the 50d MA.  This is the 3rd such sell-off in 6 trading days and it meets the criteria for O'Neil's "distribution days".  Oil is making it difficult to get any form of traction (pun intended...)
  • The GGT Price Accumulator Change tool is back to a -14 -- which means that it's OK to enter stocks today if you can find good ones.  Note that you're almost swimming against a changing tide if you go long; see the next comment.
  • The Elder 13d Force Index timer is sitting right on threshold between LONG and CASH.  It's less than a day away from moving back to ALL-CASH, so keep this in the back of your mind.  This is an intermediate-termed timer and we're either at a great buying point for the next leg upward or at the point where cash and contra ETFs make the most sense.  More on contras below.
  • Industry groups that were up according to GGT strength (price and volume) yesterday were:

    Mining-Gold-Silver-Gems                        
    Tobacco                                        
    Bev-Soft Drinks                                
    Fin-Frgn Funds                                  
    Trvl&Leisr-Movies                              
    Auto-Mfg U.S. & Frgn                                      

    There are 41 stocks in the Mining-Gold-Silver-Gems group so many to choose from.  Download the combined stock/ETF zip files from the GGT Yahoo! group for a listing, or search your Quotes Plus/HGSI database for those industry groups.

    I am liking GG, SLW, and CDE here, but all have seen significant appreciation in the past few weeks.  PM and MO are worthy of further consideration too.  FMX and KO look good in the Bev-Soft Drinks group.  DISCA is continuing to be bought, and TM just flashed a new long signal.  Note that I've not screened any of these for my Effective Volume setup, so do your own legwork.
  • A number of GGT stocks and ETFs have moved to CASH status with yesterday's action.  Yes, these will be sold today, and given the present market climate, I think it prudent not to hold onto weaker stocks.  ETFs are posted; if you want the most recent stock file listing posted send me a note or post a comment below and if I get ONE request I'll do it (takes time to prepare and upload).  I sold HPQ at a major loss yesterday in two accounts (held across earnings - ouch!), and while taking the loss hurts, all the major leaders are headed down so it simply doesn't make sense to continue to acquire losses.
  • Contra ETFs are too early early as a group.  Don't start shorting anything yet.
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Contra ETFs

Contra ETFs are those Exchange Traded Funds that move opposite to the market.  If the market goes down 1%, some of these ETFs will move up +1%, +2%, or even +3%.  This is a way to play both sides of the market, and playing the -1x contra ETFs is no more risky than playing a +1x ETF, provided the ETF has sufficient liquidity (volume).  Obviously, playing a -2x or -3x contra ETF has increased risks, as these use leverage-behind-the-scenes to get the gains (or losses) they experience.

Here is a chart of my Contra ETF universe index.  As with all my charts, right-click on it top open in a new tab or window:



WE ARE EARLY FOR CONTRA ETFs, in general.  I state this based upon the following observations:
  1. Bull Power, which is an Elder creation, is sitting at a negative value.  We want this to be positive, as it reflects the difference between the high of the day (for the index, which is why I LOVE HGSI -- you can create any index that you can think of) and the 13d moving average.  This says that the 13d MA is ABOVE the high of the day, which is BEARISH for contras, NOT bullish.
  2. The Elder 13d Force Index (EMA and SMA methods), are both still very negative.  We want these values to confirm and both be positive -- they are not.  This is BEARISH for contras.
  3. The slopes of the 13d and 34d EMAs are negative, and they are both pointing down.  This is BEARISH for contras.
  4. All the EMAs are inverted, e.g., the 8d < 13d < 34d < 40d < 160d.  Until we start seeing some crossing from below (obviously, the 8d will cross the 13 from below first), we cannot sell our long positions and move into contras.
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GGT Long ETFs, screened with EV
  • DAG, the 2x leveraged agriculture ETF, has seen significant accumulation over the past three days, although it gave some up yesterday.
  • DBC, the commodity index tracking ETF, is under steady accumulation although price was moving higher yesterday while Total Effective Volume remained more or less constant.  Could be topping in accumulation.
  • GSG, another commodity-tracking ETF, is down in premarket but has been steadily accumulating for 3 days, with a HUGE purchase just prior to the close on Monday.
  • UGL, the 2x leveraged gold ETF, is obviously on a tear.  The accumulation pattern isn't as strong here, but what is significant is the action just prior to close yesterday, where someone bought a large block, driving Large Effective Volume (LEV) upwards.
  • SIVR is the silver trust ETF, and it's had a rocky road in accumulation over the past 3 days.  
  • AGQ is the 2x leveraged silver ETF, and of all the ETFs I've presented here, this is the most liquid.  It's had a nice accumulation pattern over the last 3 days and ended the day strong, but Total Effective volume (TEV) ran up more due to the retail buying than LEV.  
GGT Long Stocks, in GGT-Appreciating Industries, Screened with EV
  • BVN is a Gold & Silver play that has seen good accumulation over the past several days.  I do note that LEV started to taper downward at the closing hours, while SmEV moved up, which is opposite of the divergence I like to see.
  • RGLD has a nice, LEV-divergent pattern over the last three days, showing that it's attracting money.  
  • ABX is another stock that has been moving upward in accumulation, but again, like BVN, saw some LEV distribution at the end of the day which makes me pause.
  • AUY is showing a new accumulation pattern while SmEV remains constant.
  • NGD is seeing lots of activity in accumulation, especially at the end of the day on Tuesday, where LEV jumped in a major burst of buying.
  • PAAS is showing a nice accumulation over the last three days, and is seeing the price movement corresponding to this.
  • GG looks very good, and volume was 99% above average.
  • SLW is trading on average volume and is moving upward over the last 3 days in terms of accumulation.
  • UXG has a nice, lower-left/upper-right accumulation pattern over the last several days, but is overpriced
  • CDE has rocketed the past 2 days on price, driving it to be 12% over my ideal buy point.  Volume is 98% above the average, and the accumulation Monday/Tuesday dwarfed all previous days.  Too expensive to get into this one for me, but it may appeal to some of you.
  • BTI continues to see favorable accumulation after selling off last week.
  • EOD, which is a Wells-Fargo Global Dividend stock, is holding up well right now on fairly good accumulation
  • EDD, an emerging market debt fund which is yielding 7.52%, is worthy of review.
  • IMAX is experiencing significant accumulation while the price remains fairly steady and SmEV sells off.  I consider this an ideal setup.
On a side note, EXPE, which is a GGT Affirmed Cash (avoid) stock, is one that is seeing HUGE, STEADY LEV accumulation while the price continues to drop.  It'll be a good stock to watch.

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Trading Plan for Wednesday
  • The Top 25 Stock portfolio held up very, very nicely yesterday in terms of not issuing a number of New Cash recommendations, but fell -2.07% on the day.  I'll unload Dean Foods (DF) today, as it is a New Cash.
  • The Top 25 ETF portfolio saw UYM move to New Cash, so it will be unloaded today.  The portfolio took a beating in price, falling -2.6%.
  • The Market Cap Favoritism stock portfolio got nailed yesterday, dropping -2.23%.  GLW and CS fail the Elder Force Index (13) test, using both the EMA and SMA methods, and will be sold today.
  • CPWR, a GGT, LLC holding, has moved to New Cash and will be sold.
  • I intend to move into equities listed above provided that they show strength, volume, and accumulation.
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Remember, you are responsible for your own trading decisions, and I am not.  Please do your diligence, and please take ownership for your actions.

Regards,

pgd