Effective today (May 22nd) I'm posting weekend updates here, and daily updates at my forum at Effective Volume. I'm finding it nearly impossible to simultaneously operate multiple forums due to various time constraints, so please join me at the EV site, where you will find my content as well as other very valuable content concerning market timing.
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- For the week, the GGT price index fell about -1.2% on volume that was -17% below the 50d MA. This is within a standard deviation over the average so I wouldn't read too much into the lack of volume. The bears are in control.
- The pricing slope model clearly shows the bears being in control, as ALL pricing slopes, from the 5d through to the 65d, are pointing downward. This means that on all time frames we are losing $/day, and this further supports that the bears are in control.
- Of the 5 days this past week, three of them showed a renewed attempt by the bulls to pull the market prices upward. Friday showed that they failed, and the bears resumed control.
- The Elder Force Index timer is in CASH. We should not purchase stocks on the long side with the intent of holding for the intermediate term.
- The slopes of the Long-Cash Ratio (LCR), which tell us how fast stocks are moving into a long recommendation on a per day basis, is solidly bearish with all moving averages through the 65 showing some negative value. This means that the number of stocks per day that have a favorable setup compared to historical performance is decreasing on a per-day basis. Put another way, your stock picking abilities have to improve when these slopes are falling, because the pool of outperforming stocks is falling day-over-day.
- Despite the LCR slopes being negative, they are all pointing UP, which means that we have the internal markings of the bulls trying to make a comeback. Even with Friday's down day the number of stocks falling into CASH status was less than those moving into LONG compared to Thursday, which is important if we are to see any form of bounce from here.
- Contra ETFs, as measured by the 5/65 method (presented below), are showing that we are too early to commit both feet to contra ETFs. This could easily change if we continue moving downward. Conversely, long-rated ETFs are looking poor too, so we're in middle.
- Effective Volume techniques (http://forums.effectivevolume.com) are showing a net outflow of money in the market on Friday, and the value is becoming more negative in terms of change/day than Thursday. This timer remains short on the market as a whole.
- Along the top I have the slope of the 65d moving average of price.
- In the middle I have the 5d EMA of price, as well as the 65d EMA of price.
- Along the bottom I have the price of the index, as well as the 65d EMA.
- Buy the components of the index en masse when the 5d EMA crosses above the 65d EMA, AND when the 65d slope line is positive.
- Sell the components of the index en masse when any of the following occur:
a) the 65d slope moves negative, or
b) the 5d EMA crosses the 65d EMA from above, or
c) the price closes below the 65d EMA
- The 65d slope is NEGATIVE by a hair. This prevents en masse movement into the components of the index (but does not prevent surgical strikes)
- The 5d EMA is (barely) less than the 65d EMA, preventing en masse movement into the components of the index (but does not prevent surgical strikes)
- Prices are still closing below the 65d EMA, which is bearish for the index.
- The 65d slope is POSITIVE by a hair. This shows that we do not have complete breakdown, and although I stated above that the bears were in control, they are not 100% in control according to this methodology.
- The 5d EMA is LESS THAN the 65d EMA, again by a hair. We should not be holding any of the Direxion components for the intermediate term at this point (assuming that we got in early)
- Prices are closing below the 65d EMA, which means we should have exited with the signal on 5/13/11