Friday, May 6, 2011

GGT Indicators Showing Possible Bounce Developing ...

.
We have a meeting at the Great Falls Library on May 14 at 10:15 (doors open at 10).  I'll attempt to broadcast the event via WebEx; please stay tuned.

I'm traveling today from the west coast back to Virginia, so there are no GGT + Effective Volume recommendations for Friday, as Pascal doesn't update this content until the following morning (his time), and I will not be able address before I begin my travels.

===============

Summary

  • Obviously, another challenging day for the bulls. The GGT price index fell another -0.63% on volume that was 7% above average.  3 of the last 5 days have seen greater than -1% decrease in the GGT index on average volume, and with all of the past 5 days being down, we are quickly moving to an oversold condition.
  • The 55d slope of the price index moving average has fallen below 0, which is the first time this has occurred since 11/16/10.  The only soldier that is standing in positive territory is the 65d slope of the moving average, and if this falls, we will have a confirmed intermediate-term call to move everything to CASH.  9/7/10 was the last date that the 65d slope was negative, so this has been quite a bull leg.
  • Needless to say, all the timers are in cash, both short-term and long term.  Moving into long positions right now for anything longer than day trading is really not advised.
  • Surprisingly, the 5d "slope of the slope" with respect to the price moving average, AND the long-cash ratio (LCR), have both moved positive.  This is an interesting situation -- it means that on this 5d time frame we actually have slowed our drop, e.g., a reversal (bounce) could be in the making for Friday.  It simply means that enough stocks moved upward to somewhat offset those that were falling, hence, we are slowing in the drop.  I feel that money flow at this point will be critical to determining how aggressively we move back into the markets.
  • The LCR, which is a measure of the number of stocks in the database with a LONG recommendation vs. CASH recommendation, has just moved below 1.0, which means there are more stocks on the CASH side than on the LONG side.  The trend is down, and this is bearish for the short term.  The LCR fell another -20% on Thursday, so the week's sequence is -11%, -28%, -25%, and -20%.  If we fall less on Friday, or even reverse it to the positive side, then I think it possible that we could have a short-term bounce.
Conclusions:  I have no intention of placing any positions on the long side.  I am anticipating a bounce here, as the slope of the slope indicators on both the prices and LCR system are indicating a slowing in the falling of the knife.  Given that it's a Friday, I can't see any compelling reason to hold anything over the weekend.

===================

Today I unloaded EPIQ, as planned.  The position was slightly underwater.

GGT has indicated that ORCL, one of my holdings that I have a very slight loss (-0.5% in two accounts), should be sold as it has transitioned to a "New Cash" recommendation.  Short-term LEV has been decreasing but is sill above the SmEV levels, and we had a slight uptrend in LEV at the close of the day, so I'll see if the accumulation trend continues.  If not, I will unload ORCL.

CMI, which is indicated "Long" by GGT, saw a considerable amount of LEV accumulation on Thursday although the price was moving all over the place, both upward and downward.  I see no reason to unload CMI even at the slight loss level of -1% in two accounts.  In fact, if LEV continues to increase, adding to the position as price falls will most likely be a course of action for me.

DOV is underwater -3.5% and on the short-term view, is having LEV problems.  Long-term LEV is still looking better, but the end of day LEV pattern showed a significant uptick in price as LEV plunged.  This is opposite of what I consider a good EV pattern, so I'm concerned about DOV in general.  GGT has it at a "Long" recommendation but with a strength of -2, so it could move to a sell with any further decrease in price.

My VXX position is up slightly and given the present downdraft, I think the trend is up for this.  If we get a reversal I will unload.

========================

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