Friday, March 18, 2011

We Need Significant Volume

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Summary

  • The GGT price index rose +0.79% on volume that was -2% below the 50d moving average.  In isolation, unremarkable.
  • The slopes of the 5d through the 21d pricing EMAs are negative, which means that day-over-day on time frames less than 21d, you're losing money in your equity account.  The 34d resumed pointing up yesterday.  This is a step in the right direction.
  • The reward/risk tool is pegged at +14, telling us that entry to long positions today is risky.  Conversely, given the down-mood that we've been in over the last week or two, entry to contra ETF positions is ideal.
  • Database strength *barely* edged up yesterday.  This is a tepid response to a +1.4% increase in the major indices, and shows lack of broad support.
  • The Elder intermediate-length Force Index timer is still in CASH.
  • The GGT Long-Cash Ratio (LCR), which tells us the number of stocks that are performing well compared to those that are not, FELL yesterday.  This means that more stocks slipped over the edge of the cliff than climbed back up the price and volume mountain, and shows underlying weakness.
  • The slopes of the LCR EMAs are all negative, although yesterday's action did cause them to point upward from negative territory.  This means that the database is stabilizing, which is necessary for a bull leg to resume.
All things being equal, we're either taking a breather before heading down, or we're getting our feet under us.  Volume participation was lackluster, causing the LCR to drop.  This being said, a +14 reading on the reward/risk tool says that today probably isn't a great day to enter long positions (quadruple witching, Friday, Libya, Japanese nuclear reactors), so adding positions to contras may be a safe(r) play.

For me to have confidence to move back long I'd like to see 
  1. all of the pricing slopes in positive territory
  2. the Elder Force Index timer showing a LONG status
  3. the LCR slopes moving into positive territory day over day (first the 5d, then the 8d, then the 13d, etc.)
  4. I'd like to see the VIX close below the lowest level of the ribbon, as shown below, with the 14-day volatility average decreasing:


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GGT + Effective Volume Stocks

Since I didn't post stocks yesterday, allow me to update the list.  Note that I'm not at all advocating entering these stocks, as you're swimming upstream against the current.  It is good to keep your lists active though so that you're ready to enter when the time comes.
  1. CLH is a new addition to the 3/18 list and has good 40d Large Effective Volume (LEV) and newly emerging 8d LEV.  I'd like to see price close above $95.47 in order to move in on this.
  2. CMG went against the trend yesterday and lost a good amount of price value, as well as seeing a Total Effective Volume (TEV) wipeout.  What I like about this is the 40d LEV pattern is solid, the price held the 17d MA, and it's in a Keltner/Bollinger squeeze.
  3. THS is newly emergent in the 8d LEV pattern while the Small Effective Volume (SmEV) sold off during the day, which I generally like.  Price drifted down throughout the day while LEV moved upward, showing support.  I'd like to see it close above $52.49 to enter.
  4. YUM was new to my list yesterday and saw notable LEV accumulation late in the day.  It is holding it's 17d well and the close proximity of the 50d provides a good stop loss level.
  5. DLTR has mixed signals.  The 50d is in a downtrend, but the 17d and 200d are in up trends.  Volume has been increasing steadily since mid February.  40d LEV is solid, and 8d LEV is holding steady although prices have been under pressure.  I'd like to see this close above $53.42, which is the low of the gap down on 1/4/11, before entry, but I may be dreaming here....
  6. GWW is rangebound in a box defined by $129-$138, and it saw a breakdown in LEV support yesterday.  Despite this, the 200d is pointing upward, and the 50d and 17d are intersecting, with the price action open/closing above this intersection, which is bullish for the stock.  Keep it on your list and wait for it to move upward beyond $138.
  7. MDR is another rangebound stock but is finding support on good 8d/40d LEV patterns.
  8. MPEL appears to be losing a good chunk of value but LEV is holding well.  Unfortunately, it's trading below it's 17d AND 50d, which is challenging for me.
  9. PCP is another rangebound stock that is following it's downtrending 17d in terms of price.  LEV, on the other hand, is steady.  I'm watching support at $136 and would like to see it break out of $146.68.
  10. SUN continues it's rangebounding behavior between $40.84 and $44.  I'd like to see it move above $44 to enter.  LEV has been wonderful on the 8d and 40d time scales, and it bounced well off it's 50d.
  11. *TEX is one that I may enter today.  It closed above a resistance threshold yesterday and 8d/40d LEV look great.
  12. WAT is bouncing between an upper resistance level and a lower support.  LEV has been growing, but its price is under its 17d (but above the 50d) and performance yesterday was less than spectacular.  What makes this worth watching is that LEV held up well as the price dropped this past Tue/Wed, which shows good support.
  13. *WFMI has cleared resistance of $59.57 so I'm looking to get into this one.  A good stop loss will be just below the resistance level.
  14. HK just cleared resistance yesterday of $22.07, and 40d LEV has been steady.  Note that the ATR(20) on this one is 7%, which is very high.  This means that you can see some wide swings with this one, so ensure you set your stop loss wider or simply do not move into a stock with this volatility.
  15. *CNX just cleared a resistance level which corresponds with a 52w high, and EV has been steadily increasing.
  16. *CSU just cleared a resistance level which corresponds to a 52w high, and volume has been very steady.
  17. DTG keeps breaking it's 52w high, almost on a daily basis, and LEV has been steadily increasing.  It's a bit overpriced here, but it has obeyed the 17d very well, so keep an eye on it.
  18. GLNG ships natural gas, and given the infrastructure issues in Japan, this company stands to benefit.  Note though that it has several long-term contracts in place which prevent it from directly benefiting from an immediate increase in NatGas, so think of this as a derivative play.  I'd wait for a pullback to enter.
  19. *JVA just cleared a 52w high and LEV has been moving up aggressively.
  20. *PANL continues to march upward, having cleared resistance and now setting a new 52w high.  LEV is very supportive.
  21. TESO is getting ready to clear resistance which corresponds to it's 52w high.  LEV has been decreasing slightly, but if this closes above, I'd look for this one to move higher.
  22. TRC has been on my list for a week or so, and has bucked all downward trends.  Note that it has made 3 consecutive 52w highs in the past 3 days, and LEV  has been steadily increasing.
  23. UAM just cleared resistance and has positive-trending TEV.
  24. ADES is traded at a thinner level than I like ($-vol = 486Ksh), but LEV has been steadily increasing.  Note that it dropped yesterday, which is bucking the upward trend, so make sure it holds above $16.
  25. APL continues to impress me, with it now clearing resistance for 2 days and LEV moving upward at a steady clip.
  26. *MMSI just cleared a 52w high on improving volume.  The 50d is crossing the 200d from below.  LEV has been steadily increasing.
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Trading Plan for Friday
  • I may enter selected stocks as listed with trial positions if they continue to move upward, but the reward/risk levels are poor.  
  • Today, at the end of day, could be a good day for Contra positions, if the market continues moving upward.
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Remember, you are responsible for your trading decisions, and I am not.  Please do your diligence, and please take ownership for your actions.

Regards,

pgd

Position disclaimer:  as of this writing, I own positions in the following equities:  BIDU, EWH, SJM, SWI.