Thursday, May 5, 2011

No New Long Entries; Not Anticipating a Bounce Today

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We are having a face-face meeting on May 14 at the Great Falls Library in Northern Virginia at 10:15 a.m. (doors open at 10:00).  I'm attempting to determine whether we have a solid internet connection so that we can broadcast the meeting via WebEx.  Stay tuned.

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Summary

  • The GGT price index fell -1.01% on volume that was +6% above the 50d MA.  This is solid volume on a a down day, the 4th one in a row, and is significant overall.
  • The pricing "slopes of the slopes" are all pointing down on the 5d through 65d timeframes, so we are accelerating downward and have not yet stabilized.  This is bad for the bulls and we need to protect profits.
  • The long-cash ratio (LCR) indicators have all turned negative and remain downward pointing through the 65d time frame.  This is significant, and indicates that the database is contracting in terms of the number of stocks that are outperforming their historical behavior.  Unless you are really good at picking stocks, it is ill-advised to enter stocks on the long side, as the currents are flowing against you.
  • GGT has the ability to determine the "strength" of the database; we're in quasi-"could-go-any-direction"-land but because momentum is pointing down, I think we'll continue that direction for the next day or two.
Conclusions:  we have confirmation of yesterday's comments that this bull leg is under pressure and is in significant trouble.  We have not yet entered an area where historically, we have bounced, so I'm anticipating further downside movement.

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Holdings

Most of my positions just dropped below the waterline with the action of yesterday's market.  I intend to hold onto them for the most part, unless the wheels simply come off the wagon today.  Here's my decision process; I use the TradeStation plugin for analysis:
  • CMI:  Short-term LEV is poor, longer-termed LEV can be interpreted either way.  GGT has the stock at a LONG status.  Total EV status is "buying continues".  Briefing.com has the earnings guidance as guiding higher, but revenues only.  Healthy but under pressure.
  • EPIQ: EV has been dropping since my purchase, and now the LEV levels are below the SmEV levels on multiple time scales.  GGT transitioned to CASH on Monday, and I should have sold on Tuesday.  EPIQ is guiding up earnings for the quarter.  EPIQ is not tracked in Pascal's EV universe.
  • ORCL:  Short-term LEV is above SmEV but the two are converging, showing distribution.  Longer-termed LEV just fell below the SmEV level showing a general distribution over the last 40 days.  GGT has the stock ranked as a LONG, and the guidance is positive for the quarter concerning earnings.  Pascal has a rating of 62 for the stock, which is favorable but not above my desired threshhold of 80.
  • SPY: LEV is poor on both long-term and short-term timeframes.  If we hold around $134.00 I'll most likely add around that point, provided that I see some movement in terms of short-term LEV.
  • VXX:  I just went positive on my VXX position, and with this morning's action, it looks like it is moving upward aggressively.  This was a hedge and has been in contrast to LEV, which has been very poor.   I'll most likely lock in the gains if I see any form of topping.
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GGT + EV

While I'm not entering any new long positions, I do feel that I need to generate the list of candidates that I would closely review if I were to move back into the markets.  As we know, they can change quickly.  Here's my most recent list:



As with all my images, right-click on the figure to open in a new window or tab.

Note the high level of Health-Sector stocks; give them a close review, as they are being accumulated.

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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