Tuesday, April 26, 2011

LCR Signals "All In" on the Long Side, Price System isn't Confirming (Neither is Force Index)

  • Monday's action resulted in prices falling -0.75% on volume that was -30% below the 50d average.  When I see such poor volume it simply indicates that we are on autopilot -- most likely due to the Fed's anticipated remarks on Wednesday.  Until Wednesday p.m., I do not anticipate any significant moves in the market.
  • My pricing change tool relaxed off of "overbought" at a reading of +14 going into Monday's market to "neutral" (+0) going into today's market.  This is telling me that (Fed minutes notwithstanding) entering long positions today should be okay provided "quality" and "high demand" stocks are the target candidates.  Put another way, I'm considering strength above yesterday's high, not pullbacks.
  • The Elder intermediate-termed Force Index timer is still mixed, and Monday's action did nothing to assist clearing this to a long signal. Until I get a signal either way, I'm largely in cash.
  • The slopes of the LCR system have all moved positive, which is a divergence from the pricing action of yesterday.  This tells me that the database is participating on the long side in terms of price and volume, and this is certainly an "all-in" signal.
Conclusion:  The Elder Force Index indicision has me cautious, as does the extremely low volume, but the LCR now signalling positive slopes for all time periods out to 65 days is a powerful long signal.


Pricing Analysis

As can be seen above, the pricing system has been fully long for the past three days on all time frames from 5d through 65d.  The slopes of the pricing slopes did turn down, and this was indicated by the overall GGT index dropping -0.75%.   "All green" in terms of pricing is bullish -- historically, I have wanted to be long in the markets when the pattern above has existed.

Next, here is the LCR slope system:

What is remarkable about the presentation above is that the LCR slopes have all turned positive, despite the database price dropping on Monday.  Even on low volume, we were close enough to threshhold levels in prices and volume such that we "went over the edge", and the presentation above tells me to get my feet in the (long) market.


Effective Volume

Today's combined GGT + EV scans returned a larger-than-normal list of candidates to review, which means more stocks are favorable for entry than not.  Here's my watchlist:

Many of these stocks are appearing multiple days here, due mainly to continued buying, so given that the pricing change tool is indicating a more favorable entry risk/reward ratio, I will probably enter selected candidates on strength today.

I do note that we DO NOT have a confirmed EV money flow indicator to either the LONG side or SHORT side.  The indicision of the money flow indicator gives me tremendous pause at entering major positions, so I most likely will only float "trial balloons" of 25% size or so.


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