Sunday, February 27, 2011

A Few GGT/EV Equities Look Attractive, but Will be Cautious

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Summary

  • There is no exact bias in terms of largecap vs. small cap, so invest in the best stocks and ETFs, independent of market capitalization.  Largecaps certainly have been losing attractiveness to the favor of smallcaps, but conversely, there is no decisive move away from largecaps to smallcaps.  If we see a market deterioration I would expect the flight to largecaps to become decisive.
  • The present trend is for volatility to to continue to increase at a rate which favors short-term declines compared to longer-term declines.  This means that there is a growing expectation within the market that the next 30 days will be more bumpy than the past 30 days, and it could be wise to take some money off the table.
  • The GGT Long-Cash Ratio table of slopes of various moving averages is all bearish, from the 5d to the 65d.  This means that the database is contracting, and it also means that your ability to to pick stocks has to improve because the chances of picking stocks that are sub-par is greatly increasing.  We failed to reverse this trend with Friday's action on the primary indexes, which will be a big warning sign if we do not reverse sometime next week with a significant series of up days.
  • The GGT Price Change Accumulator is telling us that buying stocks on Monday is a 50/50 proposition and that we must be selective.
  • Greek God Trading stocks and Effective Volume stocks are now able to be correlated in one file, allowing faster scanning of stocks that are at levels where they have historically outperformed and are attracting money.  At the present time this file will be posted over the weekend, and if we get a volunteer to step up (Excel 2007 and Windowz XP required), perhaps this could be moved to daily.
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LargeCap Stocks vs. SmallCaps

As many of you know from my presentations, I like to keep track of whether the market is favoring large caps or small caps.  Here's the most recent chart from Stockcharts.com, a free charting service (at least to generate this chart):



As with all my charts, right-click on the image to open in a different tab or window.

This chart plots the Russell 1000 Large Caps, represented by the ETF IWB, against the performance of the Russell Micro Caps, represented by the ETF IWC.  I've placed a 34d moving average on the ratio, so your eye can see the turning points.

When the trend line is moving upward, large caps are favored.  This is because the numerator of the fraction is growing faster than the denominator.  Conversely, when the trend line is falling, small caps are favored.  When the trend line is horizontal, there is no discernible favoritism.

You can see that since the middle of January 2011 that we initially saw a flood towards large caps (as evidenced by the gap up), but since then, we've been slowly bleeding back towards a bias to small caps.  The nearly-horizontal trend line, in combination with some of the ratios trading above and below the line show that there is no great bias either way, so you can trade away to your heart's content without fear of leaving money on the table.

This being said, if the markets start heading south, I would expect a rapid move to the safety and dividend-rich area of large caps, and this can be evidenced by the two black bars on Tuesday and Wednesday of this past week.

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Anticipated Market Volatility

This next chart is illustrative about present market conditions, because it ratios the expectation of volatility over the next several months (VXZ) against the short-term volatility over the next 30 days (VXX):



A link to this chart is here.  This is a weekly chart, and I've placed a 7-week MA on the results, which I have found to be a good indicator of when you should be in or out of the market.

As you can see, for this most recent week, we have exclusively traded below the 7w MA, which historically hasn't been a great time to be long.  Most notable was the period of late April/early May, when we simply could not move above the 7w MA and the slope of the EMA turned down.  This being said,   Also note though the lack of the solid red candle -- we did not finish the week on the lows, hence we have an open red candle (finishing lower than we started, but higher than the lows).  This is important, because it indicates that while the present climate is not overly bullish, it's not overly bearish either.

If you look closely at the figure at the week after the 7-week line has been penetrated, if the week after trades completely above the 7w line, this has been a great signal to move back into the market.  Not 100%, but overall, if you use sound money management after the week that trades completely above the 7w line, you'll make money.  We need to keep this in mind going forward.

What gives me pause is the slope of this 7w MA, which I've plotted on the top of the figure.  It is now below 0, and the closure of this value below 0 indicates that the week-over-week change now favors a significant increase in the ETF VXX, or the VIX, which is the volatility index.  

Because of the slope of this ratio falling below 0 it may be prudent to take some money off the table and keep it in areas that appreciate when the market declines.

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The Health of the GGT Database

I've not posted this summary view of the GGT Long-Cash Ratio slopes in a few weeks, so it'll be good to review:


The first thing that most likely draws your eye is the red "Bearish" lines at the bottom of the figure, which correspond to the last 4 days of trading.  This view is of the slopes of various EMAs on the Long-Cash Ratio (LCR), which is exactly what it sounds like -- a ratio between the number of LONG-rated stocks in the database to those that are recommended in CASH.  When you apply various moving averages to this ratio, and then look at the direction (slope) that each moving average is pointing, you get the figure above.

Friday the 25th was an up day as far as the indices were concerned, but nothing budged on the LCR slopes -- not one of them turned green.  This is ominous for a subtle reason:  to move a stock from CASH to LONG, we need both price and volume to appreciate over historical optimized levels where the stock did well, and Friday's action failed to produce a move where stocks reversed.  There was no large inflow of money into stocks across the board, as measured by lower volume.  This resulted in lack of moving from some form of CASH status to a New Long status.

It will be absolutely critical for a follow-through this coming week in terms of price and volume.  If we get it, play it, if we don't, then I'm extremely worried about this present climate.

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The GGT Price Change Accumulator (PCA)

Earlier this month I introduced a new tool, derived from the GGT pricing data, which shows whether we should enter or avoid purchasing stocks on a given day, provided we know the past few days of behavior.  This is an oscillator, and it has been very helpful on whether we should purchase stocks on a day-over-day basis.  Think of this as a final gate to placing the buy order on an equity that you've already screened and are interested in.

Presently, the PCA Oscillator is sitting at a value of 0, and it's been there for 2 days.  This is neither bullish nor bearish -- it's middle ground.  The optimal times to purchase stocks was Wednesday and Thursday mornings, when prices seemed to stabilize on the downside and the oscillator was reading -14 for two consecutive days.



If you choose to purchase stocks on Monday, do so if they show strength -- price and volume appreciation relative to Friday's action.  I would never plan to purchase stocks that are falling to a cheaper level in the present market climate.

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GGT and Effective Volume

Pascal Willain, who is the creator of Effective Volume, has graciously granted me permission to integrate daily EV data in with GGT data, and provided we can keep the calendars in sync (he's in Belgium, I'm in Virginia), I'll include EV data when I post stock data.

In the zip file that is posted to our GGT Yahoo! group, you will find a new file entitled "DashboardEV".  This file contains a listing of GGT stocks which correlate to Pascal's EV stocks, sorted first by GGT recommendation (New Long, Affirmed Long ...) then by Pascal's overall rating on the stock.  Here's an example for stocks:



Again, click on the image to open in a new window or tab.

A few observations:
  1. Not all of GGT's New Long rated stocks for Monday, February 28th, are listed above.  This is because Pascal does not include every stock that is included in the GGT system.  He has a universe of about 1000 stocks, GGT has a universe of about 2600 stocks.
  2. In general, there is a high correlation of GGT long-recommended stocks (New Long, Affirmed Long, Long) to stocks that have good Total EV recommendations ("Buying surges", "Buying continues").  These stocks should be a focus of your efforts if you are seeking new investment, as they are attracting money AND they have a favorable rating from the GGT system.
  3. There are a few instances where GGT data and EV data to not have a confirmed correlation.

    Examples above are SNDA, which is a GGT New Long but the Total EV Status indicates that "Selling Continues".  SNDA should be avoided.

    Another mixed signal in confirmation is NFX.  NFX has a GGT New Long recommendation but the Total EV Status is "Selling Continues" and the LER Status indicates "Do not buy". 
  • GGT is giving the stock a New Long recommendation because it has moved above it's historical levels for appreciation in terms of price and volume action on the day of recommendation.
  • Total EV Status is "Selling Continues" because the stock has been in distribution mode for some time, and it continues to reflect poor EV compared to historical EV levels.  
  • LER Status reflects "Do not buy" because the Large Effective Ratio value of  -123.1 shows that compared with historical accumulation levels, NFX is doing very poorly.
The best candidates on the joint table are those candidates where:
  • GGT Recommendation is New Long or GGT Affirmed Long (not shown in the figure) are confirming a (1) AB Buy signal near 100, (2) Total EV status of "Buying surges", which means it's a new breakout, (3) LER Status of "Acc." or "Str. Acc.", which means the stock is under new accumulation, and (4) Rating on the higher end of the scale for long positions, as this is an equal-weighting of sector strength, AB value, and Extension Tot EV.
Given this criteria, CPWR looks compelling for Monday.

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GGT Recommendations for Review for Monday, February 28th

ETFs:
  • BAB -- thinner trade at $7Msh, but huge LEV change on Friday alone.  Has not been in 3-days of LEV accumulation but someone bought a block of 247K shares early Friday @ $25, causing this to move up in terms of price and LEV all day.  It held up nicely during the down draft of Tu/Wed/Th.  Volume was 59% above average
  • BND -- nice LEV divergence pattern from SmEV, and price has been walking up steadily.  Did quite well during the downdraft.  Volume was 30% over average on Friday.
  • DBO -- solid LEV accumulation the past the days, and Friday saw continued accumulation even under price pressure.  Volume was 66% above average.
  • EMB -- large reversal of LEV to the upside on Friday with steady prices, which always is attractive to me.  Fails three days of accumulation though ...
  • GSG - rather constant LEV growth over the past 3 days on horizontal price movement.
  • IJH -- this is the Midcap 400 from iShares and it sold off in the down draft, only to return with a vengeance on Friday.  It ended the day in the last 5 minutes of trading with a huge, stair-step jumps in LEV, which is not characteristic of expectation of dropping markets.  I see this as bullish.
  • JNK -- sold off hard on Tuesday and Wednesday, in terms of price and LEV, but in the last 5 minutes of trading on Friday it jumped in LEV to almost where it was before the selloff.  Note that someone picked up 600K shares @ 11:23, which barely moved the price (stealthy purchase) @ $40, so we had a $24M+ transaction here, and then in the last minute of the trading day LEV volume jumped dramatically.  Volume was 103% of average.  Again, I consider this bullish.
  • VCIT -- another bond fund that has been under steady LEV accumulation over the past week.  Thinner to trade, but notable.

Stocks:
  • AMAG -- fails a 3-day accumulation test, but Friday saw the volume move to 206% of average, and LEV skyrocket while SmEV sold off.  I always love this type of divergence.
  • CBOE -- steady, divergence LEV/SmEV accumulation pattern, with volume up 88% on Friday.
  • CBR -- another steady, divergent LEV/SmEV accumulation pattern, with volume up 61% on Friday.
  • CIGX --a tabacco company whose LEV pattern held up fairly well under the pressure of last week, and jumped dramatically on Friday.  Volume was 125% of normal, with lots of activity throughout the day on Friday.  LEV has not decreased in any measurable way since midday Tuesday, e.g, this started being accumulated as the market was going down.
  • CPWR is the hands-down favorite according to GGT and EV scans, for the reasons noted above.  Volume was up 61% on Friday.
  • CRI has a great 3-day LEV accumulation pattern but it sold off LEV in a stealthy manner (no change in price) in the last minutes of Friday.
  • DGI -- amazing LEV accumulation in the last 30 minutes on Friday -- one of the largest LEV changes relative to the past 3 days that I've ever seen for a stock, and I look at at least 100 charts per day, every day.  Volume was 128% of average.
  • DY -- held up nicely under the decline of Tu-Wed-Th, and saw a nice, divergent LEV/SmEV pattern that started on Tuesday.  It finished the week at a price high as well as LEV high, with volume up 23% on Friday.
  • HLX - otherwise unremarkable week except that the last hour on Friday saw significant LEV accumulation in a nice, steady, stair-case/stepwise fashion.  I like it when this happens, because it tells me someone or a network of someones are buying at a steady pace.
  • KIM is involved in real-estate, and it's hard to ignore this group right now.  Someone stepped in with a 260K share purchase on Friday @ $18, and LEV didn't budge (because price didn't change).  Now THAT is a stealthy buy.  The day finished a bit weaker in LEV though, as there was some selling in the last 15 minutes, although price finished up 2.83%.
  • MAA -- another real-estate stock that was unremarkable except that there was HUGE LEV accumulation in the last 10 minutes of the day, again, that steady, stair-case/step-wise growth of LEV with barely a nudge in price.
  • MCO -- something is going on with Moody's.  Instead of furious buying in the last 5 minutes, volume generally increased in the last hour, with 200K shares at $31 being traded in this zone.  The day ended strong for price and LEV on MCO, and it bears watching.
  • MHR -- nice, steady accumulation on LEV throughout the day while SmEV remained fairly constant.
  • NWSA -- held up nicely in terms of LEV during the downdraft last week, and finished the week strong.
  • OHI -- another real-estate stock that absolutely skyrocketed in the last 5 minutes of trading in terms of volume and LEV.
  • OMI -- a picture perfect representation of growing LEV while the stock sells off on Tuesday and Wednesday, then rapid acceleration of LEV on Thursday and Friday.
  • SWI -- quiet LEV and SmEV changes on Tuesday and Wednesday during the down draft, and on Thursday, a massive amount of LEV accumulation.  Friday saw a steady LEV while SmEV sold off, and it ended the day with large LEV increases.
  • TRLG -- WOW.  Price up 19% on Friday on volume that was 345% higher.  Of significance is that LEV was increasing during Tuesday/Wednesday while stock was decreasing in price, and the sell-off on price + LEV would have made all of us run away.  Those who stuck around were rewarded on Friday.
  • VIV -- disproportionate LEV accumulation on Friday relative to price change shows just how much attention this stock attracted, and it finished the day at the LEV-high for the week.
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Trading Plan for Monday
  • My Top 25 ETF portfolio will remain fully deployed, except I will sell those equities that are newly rated as New Cash.
  • I intend to lighten up on my wife's TSP funds by at least 50%, moving at least half to cash.  I am taking this action based upon the VXZ:VXX graph and the LCR slope graphs I presented above, as well as I intend to rebalance at the end of the month due to restrictions in her account (only 2 transaction events per month are allowed).  If we were not at the end of the month I would do nothing with her monies at this time (the trend is up until we have evidence to the contrary).
  • I have a number of positions that have only been executed to 25% or 50% positions.  I intend to examine the strength of each and re-evaluate whether I will let the pending orders ride or if I will liquidate and cancel the positions.
  • I may purchase some of the stocks / ETFs above if they show convincing strength (LEV, total volume, and price appreciation) throughout the day.  I intend to enter 25% positions only.
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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 or influence positions in the following equities:  BGU, BTI, CVS, DAG, DBA, DBC, DIG, DRN, DWSN, ERX, FTI, FXF, FES, GIS, GLD, HMY, HPQ, IEO, IEZ, IGE, IXC, MTB, NXY, PZA, RDWR, RJA, SSO, SSRI, TIP, UPRO, URE, UWM, VDE, XLE, XOP, VXF, NUS, NVE, EFA


Friday, February 25, 2011

GGT Longs, confirmed with Effective Volume, Appear Interesting

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Summary:

  • The GGT price index moved up +0.28% yesterday on volume that was 19% above the 50d average level.  This is within general noise and is unremarkable.
  • The bleeding has stopped as far as the GGT price EMA slopes are concerned, meaning that there was no change Thursday compared to Wednesday.  This being stated, the 5d, 8d, and 13d slopes are all pointing downward, which is bearish.  We need these to reverse and resume an upward trend from here for the bull to resume.
  • Our new tool, the Price Change Accumulator, has moved from two days of a reading of -14 (buy buy buy) to a value of 0, which is middle ground.  If you feel compelled to buy equities, make sure they are performing strong relative to the market, as you need some form of wind in your sails.
  • The LCR Short-Term Change Timer is in CASH.  We are at least two trading days away from a long reading, and today (Friday) and Monday will need to be data-base expanding days in terms of long-rated stocks for this to move long.
  • The Elder 13d Force Index timer is in a "MIXED" mode.  This means that either the EMA or the SMA methods of calculating the 13d FI are not in agreement, and this typically happens at pullbacks.  If this moves to "CASH" we will confirm a downside bias, if it remains in cash we will be in limbo.  I would not commit a tremendous amount of cash to equities at this point.
  • The GGT Long-Cash Ratio (LCR) has been below 1.0 for two consecutive days.  This means that there are more stocks in the database with a CASH rating than with a LONG rating.  Although nothing can be gleaned from this number alone (e.g., driving at 100 mph does not tell you about the road ahead), the trend is down over the past 3 days (we are slowing), and presently, we have been slowing for 3 consecutive days.  The probability of continuing this trend (7 of 215 total runs with 4 consecutive days being lower, or 3.3%) is much lower than the probability of a reverse (41 of 215 total runs with a reversal occurring after 3 consecutive down days, or 19.1%).  With futures up as I write this, my bet is a reversal day as far as the LCR is concerned.
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GGT New Long Stocks

Here are stocks that I am watching today:
  • HES is the highest ranked New Long, and while the large Effective Volume (LEV) level hasn't the characteristic "V" divergence pattern from SmEV that I like, TEV has been steadily increasing and it held up well yesterday on volume that was 45% above average.
  • PCS is newly emerging as a LEV candidate under accumulation, and volume was 63% above average yesterday.
  • MMI has been under steady LEV accumulation, possibly because of their release of the XOOM, but the price has been steady while LEV has been diverging nicely.  This is up 1.22% in premarket.
  • HNZ saw a huge divergence on LEV / SmEV over the past two days, and although it is down -1.27% in premarket, volume yesterday was 83% above average.
  • CROX saw huge LEV accumulation late in the day and is noteworthy
  • HRB saw an upgrade yesterday, resulting in volume that was huge.  It's worthy of your time to give this a look-see.
GGT New Long ETFs

Here are the ETFs that are popping up on the radar and are worthy of my time:
  • TIP is a TIPS Bond fund from Lehman which is showing LEV accumulation.
  • VXX is the S&P 500 VIX volatility index ETF, and is showing significant accumulation.
  • IEO, which is the DJ US Oil and Gas ETF, continues to show accumulation
  • FXF, although an Affirmed Long, is getting close to my buy zone and is continuing to show LEV accumulation despite the price dropping.
  • MZZ is the UltraShort MidCap ETF and LEV is holding steady (after increasing for past 3 days) despite the price dropping.
  • PZA, which is a insured muni fund, continues to go up in terms of LEV.
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Remember, you are responsible for your trading decisions, and I am not.  Please do your diligence and take ownership for your actions.

Regards,

pgd


Wednesday, February 23, 2011

Top 25 Portfolio Update for Thursday, February 24th

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As of the close of markets on Wednesday, February 23rd, here are the suggested changes to the top 25 portfolio:

Buy:
DAG
DBA
RJA
DBC
IEZ
IGE
IVE
IXC
IYE
URE
VDE
XLE

We will be selling 1 more ETF than we are buying, dropping the total number to 23.

Sell:
DDM
FAS
MWJ
QLD
ROM
RSU
TNA
TQQQ
TYH
UDOW
USD
UYG
XSD

Hold:
BGU
DIG
DRN
ERX
IEO
MVV
OIH
SSO
UPRO
UYM
XOP


The equity curve, as monitored at Marketocracy, can be found here.  The fund's inception was November 26th, 2010.  Since that time the fund has appreciated 12.17%, compared to the S&P 500 at 10.29%.

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The sells will be entered during the morning hours on Thursday.  The buys will be entered after all of the sells have cleared and the cash is available.  Due to the Elder sell signal from Tuesday, the invested portion will reduce exposure to just over 65% total (just under 35% cash).

Regards,

pgd

Elder Intermediate Timer is Sending Mixed Signals

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Summary

  • Macro indicator:  the GGT/Elder Force Index, calculated using a simple moving average, is quite long.  Conversely, the same indicator, calculated using an exponential moving average, which weights the most recent action heavier compared to the oldest information, has moved to CASH.  Successive down days of this indicator (EMA method) has historically been bearish.
  • Macro indicator:  the long-cash ratio (LCR) of the database dropped the 4th highest amount in 560 trading days (2.5 years).  This is significant as downward spikes such as this were typically followed by change in sentiment within two-three weeks.
  • We are now oversold, as a database.  I determine this by the average of database strength, which I calculate on each stock/ETF.  Given this oversold reading, I am expecting a bounce upward from here, but who knows how long it will last.  Any stock that breaks out above yesterday's high and that meets other selection criteria should be a good candidate for entry.
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The Carnage

There were 17 New Long recommendations in the stock groups yesterday, compared to 399 New Cash recommendations.  Obviously, the bears won the battle.  Of the 17, many of which are of lower $-volume, I can only find three that have been under any form of accumulation:
  • GBCI is a thinner stock, trading near $5.6Msh average.  It has seen significant price and volume action the past few days, ending yesterday higher on volume that was 83% above average.  The LEV pattern is one of accumulation by larger groups.
  • GIS held up well yesterday, finishing up on the day.  Furthermore, the stock has seen significant buying at the close and open of each day, and I would expect this pattern to continue. LEV is diverging from the small EV lines, showing continued accumulation.  The stock traded at 56% above average volume.
  • IVR has been under continued accumulation over the past 4 days, and it held up relatively well under yesterday's pressure.  Volume was lighter yesterday, but this was offset by accumulation as prices dropped, which I consider a positive divergence.
A number of ETFs popped into New Long status yesterday, and while a few of them are contras, most of them are not -- they're in the precious metals and energy complex.  I note with particular interest that almost all of the oil and precious metals ETFs are being unloaded, according to LEV, at these price levels.
  • VXX -- the short-term ETF on the VIX, the volatility indicator, moved higher throughout the day on volume that was 89% above normal.  LEV largely ignored this one until the afternoon, then all the price movement was due to institutional or big-lot buying.
  • FXP is the contra China ETF, and someone was bold enough to pick up over 300K shares @ $32 just after opening yesterday.  Total volume on the day was very high, exceeding 167% of average.
  • BND, the Vanguard bond fund, saw a tremendous amount of buying in the latter part of the day, forcing total volume up over 100% of average.  Contrasting, BSV, which is a short-term bond ETF, actually saw LEV distribution throughout the day on higher prices, so I'd avoid BSV in favor of BND.
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Trading Plan for Wednesday

I picked up positions in GLD, SLV, and SSRI yesterday, and will continue to hold onto them if they don't get crazy and drop in terms of breaking through a floor.  My position in HPQ is severely underwater, so I need to keep an eye on this and see what it's going to do.

One day does not a market make, and today should be a good buying opportunity for stocks that have sponsorship, so this is what I'm looking to focus upon.

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

Regards,

pgd

Tuesday, February 22, 2011

Precious Metals Need Your Attention

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Summary
  • Macro Indicator:  the GGT database is expanding in the number of stocks with a LONG status.  This means that more stocks are appreciating and seeing increased volume than those that are decreasing in price.  This is bullish (a rising tide lifts all boats).
  • Macro Indicator:  the Elder 13d Force Index (FI) system, as applied to the GGT universe, is bullish and at the present daily rate of change, is about 6 days away from any form of sell signal.  The probability of a sustained down leg is smaller than the probability of a continued up leg, so we are carefully bullish.
  • Due to personal events and subsequent travel, I liquidated a large portion of my short-termed holdings last Wednesday because I was unable to attend to them Wednesday, Thursday, or Friday, and the uncertainty of world events made holding them over the weekend dangerous.  I'll be moving back into selected positions as the week unfolds, provided that the markets do not dive from their lofty levels.
  • The GGT Price Accumulator Change tool is mid-scale/neutral at a value of 0, which is neither oversold nor overbought.  Risk/reward is literally a 50/50 coin toss from here, compared to past buying opportunities.  This means that we can buy stocks here with a reasonable expectation of them going either up or down (as opposed to buying when they are oversold).  Of course, we must be selective, and we must watch where the money is flowing.
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GGT New Longs - ETFs

You can download the latest files from our Yahoo group GreekGodTrading -- Joe posts these nightly, with my continued thanks.  Simply join by sending a note about who you are and why you want to join to GreekGodTrading-subscribe@yahoogroups.com.

I want to highlight a GGT New Long, as the timing here is important:

  • GLD is the most liquid of the New Longs, and reflects continued buying into the equity over the past week or so.  Note that acquisition volume was large on Friday in GLD, which is important.  I also note that GLD is 0.8% over my buy limit, so I'd like to see it come back a bit.   The question is whether we should be considering precious metals at this point in time.



The figure above is a total EV view of GLD, the physical gold ETF, from the Effective Volume site.  Note that the average EV has a positive slope and that TEV is above this level.  The value of -8,000 tells us that while GLD is still being distributed on a day-for-day basis, the sell-off is decreasing day over day, e.g., we are lessening the bleeding, and if the trend continues, we'll wish we bought at these levels.

To answer the question on whether we should buy GLD, we can look at the precious metals sector as a whole in terms of money flow.  Again, the chart is from Effective Volume:



Here, we see a number of key items:
  1. the slope of the 20d average of money flow into the PM sector is positive, which means that day-over-day, more money is flowing into the sector as a whole that was yesterday.
  2. the 20d average of money flow (MF) just moved above the 0 line -- the bleeding has stopped and the PM MF is a net inflow.  This is good in general for precious metal stocks, and we can conclude that this sector is expanding
  3. The percentage of MF into this sector is pointing upward, parallel to the 20d average.  The conclusion is that both are increasing, which is bullish for this sector.
While silver is not on the New Long list, silver has been outperforming gold for a number of months:



 A linkable version of the chart above can be found here.  The figure above is a ratiometric analysis of silver (SLV) compared to gold (GLD).  Because GLD is in the denominator, the fraction is smaller due to the underperformance, relative to SLV.  Furthermore, I've plotted the 5d EMA on the ratio, and we see that any time the ratio drops below the 5d we've had a good opportunity to jump in.  The present value here suggests we should wait to move into SLV or GLD, but that is an individual decision.  Scaling in would most likely be prudent at this point in time.

Given that SLV is outperforming GLD, let's have a look at the TEV:


    Here, we see a large diversion of the actual total effective volume away from the moving average, which suggests that SLV could be overbought.  This being stated:

    1. the 20d TEV average line is pointing upward -- this is bullish
    2. the TEV level is above the 20d TEV average, which is bullish
    3. both lines are becoming less negative in volume of shares/day, which is bullish.
    World events not withstanding, money flow into GLD and SLV is increasing, as are their prices.

    Stocks in this gold/silver space that I like are the following:
    • UXG - saw a massive amount of buying on Friday, but has been in a general LEV down trend for the past few days.  The risk/reward ratio, as determined by the active boundary (AB) calculation, is very good.
    • AZK - lumpy LEV pattern, but clearly has been experiencing some short-term accumulation.
    • GOLD - new LEV accumulation pattern that meets my 3-day criteria.
    • HMY - new LEV accumulation pattern that meets my 3-day criteria.  
    • GFI -- has a nice lower-left/upper-right short term LEV accumulation pattern, and the AB reward/risk ratio is in my sweet zone.
    In the silver stock area, the reward/risk on SSRI, coupled with the newly emerging LEV accumulation pattern, makes this a good risk if this sector continues to move upward.

    ************

    Other GGT New Long ETFs that are being considered are:
    • EEB -- this is a BRIC ETF, and while not a stellar performer, it certainly is showing accumulation over the last week.  Note that the BRICs have been out of favor in general, so this could be the start of a new up leg.
    • MINT -- this is the PIMCO Enhanced Short Maturity Strategy Fund, and has been seeing some solid accumulation over the last few days, as well as the corresponding price performance.  As a fund we have to be careful, as the price is not tied to the movement of volume, but TEV attractiveness is important as it shows the money flow.
    =================

    I want to present another chart which shows that market sentiment is tiring as far as this bull is concerned, and we are seeing an increase in expectation of a downtrend:



    This chart is another ratiometric chart that places the mid-term futures (VXZ) against the short-term futures (VXX).  The short-term futures value is located in the denominator, so as it grows larger, we see that the ratio gets smaller, creating the toppiness.  What is important to me is the diving of the slope of the 34d EMA of this ratio -- you can see this on the bottom of the panel.

    What should be evident to you is that short-termed expectations are becoming more bearish at a rate faster than longer-termed expectations, and this indicator alone shows that we are below the levels that we experienced in late August.  This is noteworthy, and is indicative of what we are seeing in the options market (as well as the equity market).  Play this accordingly.

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

    Given the turmoil in the Mediterranean, I'll hold off on my review of attractive stocks, as this all could change in the next few days if the markets oversell.

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

    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

    Position disclaimer:  I own or influence positions in the following equities:  EFA, SPY, VXF, SSO. 

    Wednesday, February 16, 2011

    Updates to Top 24 ETF Portfolio for 2/17

    .
    Here are the changes to the Top 25 ETF portfolio going into Thursday, 2/17.  The topic title is correct, the portfolio will hold 24, not 25, after this realignment round -- I intend to scale downwards per week, watching the statistics on the trades.

    Positions will be sold on the open and new positions added after they have all settled (Marketocracy isn't instantaneous -- it needs volume in the market to sell the the position, so it takes time):

    Sell
    DAG
    DBA
    IEZ
    ITB
    IYE
    RJA
    SOXL
    VDE
    XLE

    Buy
    DDM
    DRN
    MWJ
    ROM
    RSU
    UDOW
    USD
    XSD

    *** Note that we are buying 1 less than we sold; I am going to scale into less of a "Top 25" and more of a "Top X", where X will settle in between 7 and 17 (undetermined yet).  25 is simply too many to handle but I have too much back-tested data to make an abrupt change.  Hence, I will be holding 24, not 25, stocks after this purchase round, and will decrease it weekly as we go forward until I can see the statistics start to expand faster in variance than what I'm comfortable with.

    Hold
    BGU
    DIG
    ERX
    FAS
    IEO
    MVV
    OIH
    QLD
    SSO
    TNA
    TQQQ
    TYH
    UPRO
    UYG
    UYM
    XOP

    A performance graph can be found at the following URL:  click me  The portfolio is shown in solid gold and the other major indexes are in the thinner lines.

    Individual positions, prior to realignment on Thursday, are as follows:



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

    I'm trading this in my actual account.  Here's the equity curve since inception on 1/14/11:


    The account is up 2.18% for the month (since inception), with a total drawdown of 1.57%.  One month doesn't a year make but it's a start...

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

    Under no circumstances am I advocating that you follow me on this.  This is a test portfolio that I choose to use this strategy.  Please read the disclaimer to the left of this blog; continued following of this explicitly conveys your acceptance of the disclaimer.

    Regards,

    pgd

    Bullish and Toppy ...

    .
    Summary
    • Even though yesterday didn't appear to be a great day, the Long-Cash Ratio (LCR) of the GGT universe barely nudged down.  This is bullish.
    • Confirming the strength of the LCR barely budging is our new indicator, the GGT Price Accumulator Change Oscillator.  This tool moved upward from -8 to 0, indicating that we're neutral in our signal to buy securities.  Put another way, buying securities today is more risky than it was yesterday.  So, the indices were down but the database was strong.  If you didn't buy yesterday, you best be selective today.
    • The GGT price index fell -0.51% on volume that was only +6% above the 50d MA.  Yawn.
    ===============

    GGT New Long ETFs

    There is only one worth considering, which shows just how toppy we are in the markets.  IBB, the NASDAQ Biotech, has flashed a New Long signal.  Unfortunately, there are mixed signals with this one, as someone sold 500K shares at 16:01 last Thursday @ $93, which obviously is a $40M+ transaction.  Buying/selling yesterday was somewhat neutral, but at 12:32 pm someone wanted out and they unloaded 173K shares, with no regard to hiding the transaction (no purchases in the same minute to dither the bid/ask).  I'm watching this one only.

    GGT New Long Stocks
    • KR, Kroger, has a terrible Large Effective Volume (LEV) pattern and is unremarkable.  This being said, someone picked up 1M shares at 11:58 a.m. @ $22, then turned around and did it again at 12:25 p.m.  At the end of the day LEV and TEV skyrocked while price barely budged during heavy purchasing.
    • NUE is a new LEV breakout and is in an industry that is moving upwards.
    • FDO is up 26% in the premarket, so this squawks of a buyout.  Of interest is the periodicity of the buying pattern yesterday -- almost every 75 minutes someone picked up 50K shares at $43, and I count 8 such events, so $16M in transactions and someone will make 25% on this this morning.  Nice coin.
    • BPZ is seeing a considerable amount of LEV accumulation over the last week.
    • GENZ saw huge LEV accumulation mid-day, and the price skyrocked and stayed there.  Something is going on here.
    • CMCSA is a prime example of news leakage going into earnings.
    • SCHN is another steel play like NUE that is seeing solid LEV accumulation but price was steady.  The steel industry moved upward to position #8 out of #152 in the GGT universe, so the industry group is strong  Metals industry, which is where SCHN lies, is now #29.
    • QSFT is a new LEV breakout on higher prices.
    • CMC is ANOTHER steel/metals play that signaled New Long, and is also experiencing significant LEV accumulation.
    • BMRN is a biotech (look at the only ETF that triggered today worthy of our screens), and someone bought over 700K shares last Wednesday, before the close, at $26.  LEV took off in the last 5 minutes last night...
    • LOW has a nice lower-left/upper right LEV pattern, with significant volume that was above average for yesterday.
    • X is ANOTHER steel company that just fired New Long.  Get it folks?  Steel is hot.  LEV is a beautiful lower-left/upper right pattern.
    ==================

    Trading Plan for Wednesday

    I deployed a considerable amount of capital yesterday, so today will be spent locking in gains (if there are any) and pruning the weakest stocks from my holdings.  Today should be an interesting day.

    My 1% TSLs on SI and HSY are still active, as these stocks are holding on despite their "New Cash" recommendation yesterday.

    A new purchase yesterday, URRE, moved to New Cash from New Long, so we'll most likely do the 1% TSL thing there too, although it will be painful.

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

    Remember, you are responsible for your own trading decisions, and I am not.  Please read the disclaimer found on the left side of this blog when you first started reading, and continued following of my ramblings implies your consent to the terms listed in that disclaimer.

    Regards,

    pgd

    Position disclosure: as of this writing, I own/influence positions in the following equities:  AAPL, AF, AGCO, BGU, BTI, COST, CTSH, CTXS, DAG, DBA, DIG, ERX, ESV, EWM, EWS, EWT, FAS, HLX, HPQ, HSY, IEO, IEZ, ILMN, ITB, IYE, JASO, KCG, LULU, MVV, OIL, PCLN, QLD, RFMD, RIMM, RHA, SI, SOXL, SRX, SSO, SWI, SWY, TIN, TNA, TQQQ, TYH, UCO, UPRO, URRE, UYG, UYM, VDE, WAT, WLT, XLE, XME, XOP, EFA, SPY, VXF




    Tuesday, February 15, 2011

    Starting to See More Cracks in the Bull Ice but ....

    .
    Summary

    • The GGT Price Accumulator Change Oscillator tool is back in buy zone for today, so I have a green light to purchase securities.
    • Heathcare, Financials, IT, Telecom, Utilities, ADRs (in general), Technology (in general), Europe (in general) all are good on the weekly but are cracking on the daily.  We need to keep one foot at the door with these groups...
    • Consumer Staples has cracked on the weekly and is looking poor on the daily.  This isn't good for a sector that led the FinViz charge last week.  This is a clear warning sign that there is no strength here.
    • Precious metals look terrible on the weekly but are showing strength on the daily...  

    ================
    GGT New Long ETFs -- There are none worth considering today.

    GGT New Long Stocks

    Yesterday was another incremental up day for the GGT stocks, with the database sneaking upwards in the long-cash ratio +6% to 1.841, and price moving up +0.49% on lower-than-average volume.  An expanding database is good -- stocks are appreciating -- so here is my watch list for today:

    • URRE is starting a new LEV pattern on volume that was 60% over the 50d MA.  Big block buying -- 100K blocks was normal throughout the day.
    • PH started a new LEV accumulation pattern 5 days ago and hasn't looked back.  Price decreased yesterday while LEV stayed constant.
    • LLNW is a prime example of leakage before earnings.  Give it a look.
    • SFY is a company I've liked for a while, and the LEV pattern started diverging 3 days ago and has been steadily increasing.  It ended the day strong on volume that was 20% over normal.
    • MAR announced earnings last evening, beating EPS and REV, and has guided higher, with the drop of their timeshare unit.  I expect them to bump up nicely today, so probably too late to move in, as they are 1.0% above my buy point.
    • CL had significant block buying yesterday, but ended the day on lower volume but significantly higher LEV levels.  On the fence with this one, but worth watching.
    • ** TIN has a beautiful lower-left, upper-right LEV pattern over the last 5 days.  So far in the list, this is the most consistent chart pattern for LEV.
    • AMD is a chip maker, and the last three days of buying have been solid and notable.  AMD is 2% above my buy zone.
    • STP is in my industry in which I work, and they are a good company.  Someone else thinks so too, because the LEV pattern has been increasing steadily the past 3 days.
    • ** JBL is an example of *something* going on in the last 15 minutes of the day -- they were 22% over normal volume, Elder patterns look beautiful, and LEV shot up like a rocket. 
    • YGI scares me simply because it's in China, but abnormal buying on Friday, with follow-through buying on Monday is notable.  LEV has been increasing steadily while SmEV is constant.  Volume was up 37% over normal, and the Elder patterns look great.
    • ** HLX is another lower-left, upper-right LEV pattern that looks great.  Volume buying last Wednesday at the end of the day triggered the LEV move.
    • SYNA is risky, in that the LEV divergence just started, but notable in that SmEV is selling off while LEV is increasing.  Characteristic, but early "V" pattern that I like.
    ================

    Trading Plan for Tuesday

    HSY, a GGT, LLC holding, just fired New Cash so a 1% TSL will be placed on it and it will be cast to the wind.

    SI, another GGT, LLC holding, just whipsawed for the 3rd time in as many days, but the LEV is rock solid and I can't find a reason to unload, so I'll watch, but not act unless it starts diving underwater (more).

    The stocks above have great patterns, so I'll enter as the setups allow.

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

    Remember, you are responsible for your actions, and I am not.  Please do your own work.

    Position disclaimer:  I own or influence positions in the following equities:  AAPL, AF, AGCO, BGU, BTI, COST, CTXS, DAG, DBA, DIG, ERX, ESV, EWM, EWS, EWT, FAS, HPQ, HRB, HSY, IEO, IEZ, ILMN, ITB, IYE, KCG, LULU, MVV, OIL, PCLN, QLD, RFMD, RIMM, RJA, SI, SOXL, SRX, SSO, SWI, SWY, TNA, TQQQ, TYH, UCO, UPRO, UYG, UYM, VDE, WAT, WLT, XLE, XME, XOP, EFA, SPY, VXF.

    Sunday, February 13, 2011

    2/12 Weekend Update -- Bullish, Toppy, but full of opportunities ...

    .
    Thank you to those of you who attended our Tri-State Investor's Group meeting on Saturday.  It was a great meeting -- I had fun -- and I think we're on the verge of being able to do some things with our trading / investing that we've never been able to do in the past.  A link to the WebEx recording can be found in the GGT Yahoo! forum.

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

    Summary

    • The database is in an uptrend in terms of the number of LONG-rated stocks compared to those that are CASH-rated, on all time frames from 5d through 6d.  This is completely bullish.
    • The slight pullback in the major indexes on Wed/Thurs of this past week provided good opportunity to enter stocks.  For the stocks rated as "New Long" going into Friday morning, they are up a collective 1.8% on Friday alone compared to their close on Thursday.  These stocks were screened with Effective Volume prior to notification in my blog entry on Friday.
    • The GGT Price Accumulator Change Oscillator tool has transitioned to +14, which places it squarely at the top of the range and is telling us to wait for a pullback under -5 (Tuesday was -8, as was Wednesday) before we purchase stocks on the long side.  This means we should not purchase stocks on Monday, as a pullback is eminent.
    • We are toppy.  We have hit the same relative gain levels that we hit in December in terms of database strength (peak), and while we certainly can go higher, clearing a previous peak is always an interesting event.  I do advise keeping one finger on the exit button, as we started this bull much higher "up" in the indicators than we did, say, at the start of September.  
    • Note that I'm seeing some cracking in the bull ice on the NYSE Composite Index as well as the NYSE AMEX Composite Index, meaning that these are showing signs of indecision, not mass exodus, but enough that they appeared on my radar and we need to know about them. The other major indexes look toppy but bullish.
    =====================

    GGT New Longs for Stocks (Screened for $-Vol > $10Msh)

    Not that I intend to play these (we are overbought right now), but it's worth watching the whales:
    • LYB saw someone pick up a 700K block on Wednesday, and LEV has been in a uptrend since Monday.
    • ALB has been experiencing flat price (within a range, of course), but is clearly in LEV accumulation mode.  Considerable activity on Friday above the 40K shares/minute level.  ALB is 1.1% below my buy limit.
    • TLAB is one of the "OMG" stocks.  Abnormal buying started at Wednesday's close when someone picked up 280K and 225K blocks @ $5.60 within two minutes of each other.  Friday's close saw another 278K and 214K share blocks being picked up in the last 5 minutes.  LEV ended the week at the highest level in the past 8 days.
    • GOOG saw a flurry of buying in the last 30 minutes of Thursday which carried into Friday morning.  It then continued mid-day, just after 1 pm, but LEV upticked again in the last 5 minutes.  The final LEV values are the highest in 8 days.
    • NRG fails the 3-day accumulation recommendation of LEV divergence from SmEV (it's been diverging 2 days and LEV is increasing while SmEV is decreasing), but is noteworthy because someone picked up 200K shares at $21 just after 3 pm.  NRG is 0.8% below my buy limit.
    • SI whipsawed on Thursday as far as GGT is concerned, but on Friday was back to a New Long status.  Someone picked up 800K shares at 10:06 a.m. @ $127, so do the math -- this was a $100M transaction, all in 1 minute.  Disclaimer:  GGT, LLC owns a position in SI, established on 2/8.  SI is 0.2% below my buy limit.
    • LEG is brandy-spankin' new to the LEV moving upwards group, with the divergence only being for the past 4 days.  Price was flat for the first 3, then on Friday it was off to the races.
    • Something is going on in the insurance world.  ORI ROCKETED upwards on Friday, and someone picked up 700K shares at 1:05 pm @ $10, spending $7M in one minute.
    • RDN saw the same behavior as ORI above, with HUGE accumulation well over 250K blocks early in the day.  Volume for the day was 133% above the 50d MA, and LEV has been diverging for 3 days on this one.  There was a flurry of activity in the last 15 minutes, all well above 100K shares, so again, something is going on in the insurance group.
    • OHI saw solid accumulation while price fell on Wed and Thursday, with a bunch of activity at the end of the day on Tuesday which drove LEV upwards, after OHI had sold off most of the day.  Friday saw two, 30K blocks purchased at 3 pm and shortly thereafter, which represent big trades for this 14MSh size stock.  OHI is 0.2% below my buy limit.
    • ILMN is another "OMG" stock.  Someone picked up 2M shares at 1:02 pm @ $71.70, so doing the math again, we're looking at a $143M transaction in one minute.  Yowza...  Note that the LEV pattern is not very strong here on the 8d, but on the 40d it looks really good.
    • SMTC has a beautiful, linear, lower-level to upper-right LEV pattern that is diverging from the SmEV levels.  Also note that SmEV sold off late Friday, while LEV increased, which I consider bullish. 
    • VECO has been off to the LEV races since Tuesday morning, and is looking good.  Price fell on Wednesday, but LEV moved upward.  Most of the price movement on Thursday was due to LEV accumulation.
    GGT New Long ETFs (Filtered for $-Vol > 10MSh)
    • KRE looks incredibly compelling here.  Volume was 60% higher than the 50d MA, and there were several 100K blocks purchased, with the last one just prior to close.  Accumulation was occurring as price was dropping, then Friday, everything reversed.
    • XLP has been under solid accumulation for the past two days, so while at the inside of our comfort zone, the LEV jump on Friday was remarkable, especially in the last 15 minutes of trading.  
    ====================

    Trading Plan for Monday

    For the most part I intend to sit on the sidelines.  The GGT Price Accumulator Change Oscillator is at a peak value, telling me to keep my powder dry.  This being said, ILMN and the mentioned ETFs look absolutely appealing, so if they meet entry criteria I may jump in with a 25 or 50% position, just to get a marker on the table.

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

    Remember, you are responsible for your own 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/influence positions in the following equities:  AAPL, ACH, AF, BGU, BTI, COST, DAG, DBA, DIG, ERX, FAS, HPQ, HSY, IEO, IEZ, ITB, IYE, KCG, LULU, MVV, PCLN, QLD, RFMD, RIMM, RJA, SI, SOXL, SRX, SSO, SWI, SWY, TNA, TQQQ, TYH, UCO, UPRO, UYG, UYM, VDE, WAT, WPI, XLE, XME, XOP, EFA, SPY, VXF

    Friday, February 11, 2011

    Toppy, but Good Underlying Strength Exists

    1 day until our meeting!  If you have not confirmed in one of the two Yahoo! groups by answering the poll, please do so.

    There is a combined GGT and GGT, LLC meeting this coming Saturday, February 12th, at 10:00 a.m. to 1:00 p.m. at the Burke Centre Library, 5935 Freds Oak Road, Burke, VA 22015. Please RSVP in one of the GGT Yahoo! forums so that I can print an appropriate number of handouts. I anticipate that there will be a Web-Ex that remote folks can call into and listen to the dialog as well as view the slides in real-time.

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

     Summary

    • We're looking toppy here using multiple indicators and time frames, so the Egypt situation not withstanding, a pullback will be healthy.  Keep one foot at the exit door though, as the weekly charts are losing momentum to the upside.  The important question is that if the pullback lasts more than 3 days how severe will the reset be overall?
    • The LCR, our Long-Cash Ratio of stocks in our database (~2500), has fallen two consecutive days, but only -5% and -4% respectively.  This is a "soft" sell and is bullish on a day-over-day basis.
    • Despite the mixed markets on Thursday, there is tremendous underlying strength across the board in leveraged, liquid ETFs, which tend to be more sensitive than normal ETFs because of the multiplier.  Specifically, I compare/contrast the behavior of 10 pairs of "matched" ETFs, +2x and -2x, and the resulting index direction tells me who is winning the battle on an intra-day basis.  The bulls won handedly on Thursday, despite the major indexes being down.  This is bullish overall.
    • As further evidence of this internal strength, the GGT Price Accumulator Change Oscillator, which tells us the underlying strength and direction of the shifting of prices in the database yesterday, jumped from -8 to +6, which now puts us in a "do not buy equities today" mode, hence, I'll resist to pick up equities today until this resets back below -5 or so.
    ===============

    GGT New Long ETFs
    • YCS, the UltraShort Yen, is seeing continued accumulation.
    • RJA, an Agriculture ETF which I purchased yesterday under the rules of the Top 25 ETF strategy, is seeing big-lot purchases of 50K blocks and above.
    • TNA, the Small Cap Bull 3x, again which I purchased yesterday under the Top25 ETF rules, saw large EV buying in the last 15 minutes of the day
    • SSO, the Ultra SP500, which I continue to hold under the Top25 ETF strategy, saw HUGE block buying/selling in the last 15 minutes (several blocks over 200K each)
    • URE, the Ultra Real Estate, has been under accumulation since mid-day 2/4.  
    • IYT, the DJ Transportation ETF, has been experiencing more attention the past few days on the accumulation side, and went up markedly on Thursday.
    • QTEC, the NASDAQ-100, is seing solid accumulation over the past week since 2/4
    • IWR, the Russell MidCap, is seeing what we've been seeing all week -- a flight to midcaps in general.
    • IGN, although thinner than others, can attribute it's rise in price this week purely to Large Effective Volume.  Some of the transactions have been in 25K blocks.
    • RSP, one of my favorite ETFs because it is equal-weighted, is seeing significant LEV accumulation since 2/4 and yesterday the price held more-or-less constant while LEV rocketed upwards.  This is a great setup if LEV does not selloff.
    • EUM, the Short Emerging Market, is a great play if the world continues to sell off because of uncertainty, and the big boyz see this.  LEV skyrocked yesterday while price gapped up then relaxed, showing that the SmEV folks are scared of the leverage and backed out, but the big lot folks moved in.
    • IYR, the DJ Real Estate Index, is behaving like the URE above, but jumped yesterday and saw a flurry of buying in the last 15 minutes.  This is not leveraged, and is quite liquid, so could be a good play against URE.
    GGT New Long Stocks
    • ** A new long call on BWA is significant.  Borg Warner is a great company, and this is being recognized in the solid accumulation of stock.  Note that there was a block of 300K shares traded at $72 on Wednesday ...
    • DIOD exploded yesterday, and LEV skyrocked from ho-hum to domination.  It's 9.2% above my buy point, but certainly worth watching.
    • QLIK is experiencing massive LEV accumulation over the past 2 days.
    • RDWR is back on the radar, and over the past 2 days has been a LEV favorite while the price remains constant.
    • ARUN continues to perform well, and saw a flurry of purchasing in the last 30 minutes yesterday.
    • STZ just started a new LEV accumulation pattern and I intend to watch it.  It met my Elder entry criteria yesterday but I missed it due to travel.
    • BJRI is being sold off by the retail guy and accumulated by the big boyz.  Give it a look.
    • ** JCI, a company that I know well because I work in this industry, is under solid accumulation over a sustained period of time.  It's 3.3% above my buy point.
    • ** Somebody likes VMED, as on Tuesday there was a huge block of 1.5M shares @ $25 that was purchased.  LEV hasn't looked back since.
    • CTXS is another company that is probably benefiting from Cisco's problems and the expansion of the cloud market.  LEV has been under solid accumulation, with big-blog buying, for over a week.
    • SWI -- ditto CTXS
    • AF -- someone picked up 100K shares just prior to close yesterday, and LEV has a nice lower-left/upper right pattern
    • FDX appears to be doing quite well, and the purchasing yesterday was quite active
    • ** Ahhhhhh, the rails.  NSC has just started a new accumulation pattern, with 220K shares being picked up in one block on Tuesday.  LEV hasn't looked back since.
    • ** PX is right at my buy threshold, and has a nice lower-left/upper-right LEV pattern
    • NICE -- classic case of LEV accumulation, sell off at the open yesterday, LEV didn't budge, then everything skyrocketed.
    ======================

    Trading Plan for Friday

    With the GGT LCR Change Timer now in CASH (not discussed), and with the Price Accumulator Change Oscillator sitting in "do not buy" territory, I'm going to sit on the sidelines today and watch the pullback, if one occurs.  I may pick up selected stocks and ETFs above if they meet my entry guidelines.

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

    Remember, you are responsible for your own trading decisions, and I am not.  Please take ownership for your actions.

    See you tomorrow!

    Regards,

    pgd

    Position Disclaimer:  as of this writing I own/influence positions in the following equities:  AAPL, ACH, BGU, BTI, COST, DAG, DBA, DIG, ERX, FAS, HPQ, HSY, IEO, IEZ, ITB, IYE, KCG, LULU, MVV, PCLN, QLD, RFMD, RIMM, RJA, SI, SOXL, SRX, SSO, SWY, TNA, TQQQ, TYH, UCO, UPRO, UYG, UYM, VDE, WAT, WPI, XLE, XME, XOP, EFA, SPY, VXF.




    Wednesday, February 9, 2011

    Using this pullback to identify candidates for entry

    .
    5 days until our meeting!  If you have not confirmed in one of the two Yahoo! groups by answering the poll, please do so.

    There is a combined GGT and GGT, LLC meeting this coming Saturday, February 12th, at 10:00 a.m. to 1:00 p.m. at the Burke Centre Library, 5935 Freds Oak Road, Burke, VA 22015. Please RSVP in one of the GGT Yahoo! forums so that I can print an appropriate number of handouts. I anticipate that there will be a Web-Ex that remote folks can call into and listen to the dialog as well as view the slides in real-time.


    I am in Ft. Worth through Thursday and blogging will be on an as-available basis.
     
    ==============
     
    Summary
    • As anticipated, futures are pulling back, but the pullback appears to be tame.  I plan to use this time to enter stocks that are in an uptrend but have pulled back to your my buy zone.
    • Our new indicator, the GGT Price Accumulator Change Oscillator, dropped to a value of -4, which is just above my buy zone of -5.  I would anticipate that if the markets drop today that we'll have a short-term entry signal if they pullback then move higher.
    • The Long-Cash Ratio (LCR) continues to strengthen, and is firing bullish on all time frames through the 65d/13w except the 5d.  We are seeing a slight pullback on the 5d time frame, which I consider healthy.  Put another way, in context that you are used to, the slopes of the LCR EMAs are all bullish now, which means that the database is expanding on all time frames day-over-day.
    • The strongest GGT industry group, as far as ETFs are concerned, are in the MidCaps (CVY, IJJ, IJK, IWP, IWR, IWS, PDP, VOE, VOT).  This is not a recommendation, simply an observation, as these all reaffirmed their long recommendation.
    • The strongest GGT stock industry groups are Machine-Constr/Mining (5 stocks), Comp-Networks (14 stocks), Comp-Computer Mfg (6 stocks) and Steel-Specialty (6 stocks).  Send me a note if you want the stocks in these groups, else download the weekend ZIP file in the Yahoo! group and go to the "By Industry" tab to see the stocks in that classification.
    • While LargeCaps certainly are being favored, their allure is being challenged with a general migration to Midcaps and in some instances, microcaps.  Keep this in mind as you make your choices.
    ================

    Remember, you are responsible for your own trading decisions, and I am not.  Please do your diligence and take responsibility for your actions.

    Regards,

    pgd

    Position Disclaimer.  As of this writing I own/influence positions in the following equities:  AAPL, ACH, BGU, BTI, COST, DIG, ERX, FAS, FXI, HPQ, HSFT, HSY, IEO, IYE, JJC, LULU, MVV, PALL, RIMM, SI, SOXL, SSO, UCO, UPRO, UYG, UYM, VDE, VIT, WPI, WYNN, XLE, XME

    Tuesday, February 8, 2011

    Continued Long; GGT New Long Stocks Look Interesting

    .
    There is a combined GGT and GGT, LLC meeting this coming Saturday, February 12th, at 10:00 a.m. to 1:00 p.m. at the Burke Centre Library, 5935 Freds Oak Road, Burke, VA  22015.  Please RSVP in one of the GGT Yahoo! forums so that I can print an appropriate number of handouts.  I anticipate that there will be a Web-Ex that remote folks can call into and listen to the dialog as well as view the slides in real-time.


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

    Summary

    • Overall, indicators are bullish -- you should not consider shorting or contra ETFs
    • Volume was right at the 50d MA yesterday, which doesn't overly confirm the price strength.  Consider this a short-term warning.
    • The GGT Strength indicator, which operates much like Bollinger's %B, has just transitioned into "toppy" territory and I would not be surprised at a relaxation in the markets in the next day or two, but nothing sustained to the downside
    • GGT and the VTI (Vanguard Total Index ETF) are hitting all-time highs since this started in September 2008, and there is no reason they can't keep going upwards.
    • Our new indicator, the GGT Price Accumulator Change Oscillator, is right between the buy/do-not-buy zone at +2, unchanged from Friday's value.  Entering stocks now is more risky as prices have moved upward.  
    ============================

    GGT New Long Stocks for Tuesday

    There are 121 New Longs for Stocks.  Far too many to review one-by-one, so the first thing I do is remove all that are below $10Msh in $-Volume.  This leaves about 90.  I then remove any who's 13d/34d slopes are not positive -- these are in a downtrend overall, and momentum is not on our side.  This leaves about 40 to pick from.

    After this, screen for short-term positive patterns using Effective Volume:
    • A riskier play is CEPH.  This stock reports earnings on Thursday, but has seen some serious accumulation over the last week..  For example, on Monday someone picked up 188K shares late in the session.  On Wednesday of last week someone picked up 350K shares right at noon.  On Tuesday of last week someone picked up 154K shares in one block.
    • BMY is ho-hum over the last week or so, but it saw a massive amount of buying in the last 15 minutes of the day yesterday, enough to cause LEV to move upward while the price decreased.  I always like this type of divergence.
    • DNDN has been under serious accumulation the past 3 days
    • PG saw a purchase yesterday morning of 620K shares, then another flurry of buying in the last 5 minutes of the day.  Price remained steady after the 620K purchase, while LEV continues to ratchet upward.  Lotsa purchasing on Friday too.
    •  DRYS has been under solid accumulation since last Wednesday.  Volume has been ratcheting upward, with clear buying on the dips.  Someone has bought nearly 600K shares in two purchases last Thursday just prior to the close.
    • AYI rose steadily yesterday in terms of LEV, and has been since last Thursday.
    • CTAS has nice price and LEV patterns, which have both been in an upward trend since 2/2.
    • UNFI saw some major purchases just after 11 am yesterday, and LEV continued to increase thru the day although price held steady after the purchases.  This is a good, stealthy pattern.
    • HRS has a SmEV / LEV divergence pattern, where the retail investor is dumping yet the institutional/big lot buyer is accumulating.  Serious accumulation in the afternoon yesterday, with price remaining stable.
    • NYX has been largely unremarkable, but saw a huge amount of buying in the last 15 minutes of the day.  
    • SNV has been on my radar for awhile, and the steady, regular accumulation of large blocks of stock make this one very appealing to me.
    • HOT reported a few days ago, and the leakage prior to earnings was amazing.  It sold off just after the release after gapping upward, but now that it has filled the gap it moved upward on Monday to the after-earnings levels, and LEV has been increasing steadily.
    • OEH saw LEV skyrocket in the last 15 minutes of the day but has been largely unremarkable prior to this.
    • MSCI has been on a LEV and price tear to the upside, with notable purchases on the +LEV side in the last few minutes of the day.
    • IRM rose concerning LEV and price in the last 30 minutes of the day, while SmEV didn't budge.  This is a good setup but it's 3.6% past my buy point.
    • DISCA has been under solid accumulation for the past 5 days, and it doesn't appear to be over, with a number of large block purchases on Monday.
    • STJ is another stock where the SmEV guy is jumping out yet the LEV side is accumulating.  SOmeone picked up over 500K shares at $41 last Wednesday, and the stock hasn't looked back since.
    • Many folks must think that the PIIGS situation has been resolved, at least from Ireland's perspective, as the buying yesterday in IRE was amazing.
    • MOTR has a leakage problem.  Significant LEV prior to Monday, with a major jump Monday morning, large block purchases just before 11 a.m.on Monday, then a flurry of buying just prior to the close.  MOTR reports earnings after the market today (2/8).

    GGT New Long ETFs

    • XSD isn't as liquid as I like, with only $8Msh dollar-volume.  This being said, it's under significant accumulation over the last three days
    • IWS continues the inflow of monies to MidCaps, with a HUGE spike in LEV at the end of the day
    • Again, thin dollar volume for IGN, but solid accumulation the past few days while SmEV has sold off.
    • SLX is interesting in that it has not seen institutional buying like you would expect for an expanding economy, BUT, it's LEV side rocketed upwards yesterday more than any time in the past.
    ===============

    Trading Plan for Tuesday
    • There are no changes to the Top 25 portfolios, so nothing to do there.  I'm watching JCC, SOXL, and XME for weakness, as their LEV has been dropping as the markets are going up
    • I'm waiting for a pullback to enter my personal positions into my TSP-proxy, which uses SPY, EFA, and VXF.  VXF is showing some weakness, but all three look good overall.
    • I anticipate no sell changes to the GGT, LLC world.  Note that a number of Conntor's TPS strategies fired with the close of markets last night so I'll enter those as determined by the GGT, LLC Strategy Document.  Note that FXE was a candidate for yesterday's entry, but I typically do not enter TPS strategies when the market is rising, only when it is falling.  Thus, today may not be a good day either for entry, as futures are indicated upward as I write this.
    ===============

    Today is a a travel day for me, and I'll be in Ft. Worth through late Thursday night.  Blogging will be as my time allows.

    Remember, you are responsible for your own trading decisions, and I am not.  Please do your diligence, and please read the disclaimer located at the top left of this blog.  Continued following of my ramblings explicitly indicates your acceptance of the warnings and conditions stated in the disclaimer.

    Regards,

    pgd

    Position Disclaimer:  as of the writing of this entry, I own / influence positions in the following equities:  AAPL, ACH, BGU, BTI, DIG, ERX, FAS, HPQ, FSFT, HSY, IEO, IYE, JJC, LULU, MVV, PALL, RIMM, SOXL, SSO, UPRO, UYG, UYM, VDE, VIT, WPI, XLE, XME


    Saturday, February 5, 2011

    February 4th Weekend Update

    There is a combined GGT and GGT, LLC meeting this coming Saturday, February 12th, at 10:00 a.m. to 1:00 p.m. at the Burke Centre Library, 5935 Freds Oak Road, Burke, VA  22015.  Please RSVP in one of the GGT Yahoo! forums so that I can print an appropriate number of handouts.  I anticipate that there will be a Web-Ex that remote folks can call into and listen to the dialog as well as view the slides in real-time.
    .
    Summary
    • GGT LCR System indicators are bullish 
    • GGT Price System indicators are bullish
    • A new indicator, the LCR Summation Index (described below in detail), is on a bullish run and we can't ignore the strength
    • A new indicator, the Pricing System Summation Change (PSAC) value (described below in detail), is indicating that entry into stocks on Monday is probably a riskier trade.
    • Elder FI(13), applied to the GGT system, is bullish
    • We can use GGT New Longs and Effective Volume (http://www.effectivevolume.eu) to identify candidates that are experiencing institutional buying on the day of recommendation
    ============

    The LCR System

    The LCR is an abbreviation for Long-Cash Ratio, and it is the number of stocks in the GGT database that have a LONG rating divided by the number of stocks that have a CASH rating.  We'll deal with how a stock gets a LONG or CASH rating in another entry sometime in the near future.  While the absolute value of the ratio is important (e.g, is it 0.5, 1.23, 2.6 , etc.) the trend of the movement of this number is more telling.

    Applying moving averages of various lengths to this ratio gives us insight as to what the short-term and intermediate-termed time frames are doing.  I apply 5d, 8d, 13d, 21d, 34d, 55d, and 65d averages to the LCR value, then I take the difference on a day-over-day basis to determine the slope of the moving average.  The result is the ability to produce the following table:


    The left side of the table shows the slopes of various moving averages, while the right side shows the "slopes of the slopes".  As with all my images, right-click on the table to open in a new tab or window.

    Slopes are an important indicator that goes largely ignored in the market, except the MACD (Moving Average Convergence-Divergence) indicator, which implicitly shows you the difference of two EMAs, effectively presenting the slope changes in histogram format.  I know, not exactly the same thing as what I'm doing, but close enough to get you in the same frame of mind.  Slopes are good indicators of direction of changes -- if the slope is positive in value then it simply means that the day-over-day change is positive.  If the  slope is negative in value then it simply means that the day-over-day change is negative. Moving averages smooth this effect, and this can be useful.  This is reflected above on the left side by the red and green blocks -- where they are green "bullish" we have those slopes reporting in as positive, and where they are red "bearish" we have negative slopes.

    As you can see by the staircase green "bullish" pattern in the lower left of the table, we are becoming more bullish as far as the database is concerned, at least on a 5d through 21d time frame.   The implications of this are significant -- the database of stocks that GGT follows (all above $1, all above $700Kshares in dollar*volume, all on the three primary exchanges, or about 2600 in total) is expanding in terms of price and volume participation.  Money is explicitly flowing into the markets, and this is reflected in prices moving up on higher volume as demand increases, which are necessary requirements for a stock to get a LONG rating.  If you believe (as I do) that market behavior is at least 20% of a stock movement (if not more), then our chances improve when the database is expanding, e.g., we see more green "Bullish" labels appearing on the left side of this table.  Remember, this table is not of price, but of the number of stocks that have a LONG rating to those that have a CASH rating.  The distinction is important.

    The right side of the table reflects "slope of the slope", or in essence, it answers the question "is the slope pointing upward or downward?".  This isn't the same thing as having a positive slope or negative slope (why?  make sure you understand this), because we can have a stock that has a positive slope (LCR System: left side green "Bullish") but day-over-day, is slowing in momentum (slope of slope is pointing downward, LCR System: right side red "Bearish").   Here's a detailed view of the 34d moving average as well as the 34d MA slope:



    In the figure above I've shown two periods where the 34d EMA peaked in value, and the slope correspondingly is crossing through 0 at these point (daily change is virtually 0 when it peaks, right?).  Then, as the 34d EMA trends downward, the slope is correspondingly moving more and more negative (dropping deeper in the pink zone).  Pay specific attention to how the slope bottoms out long before the 34d EMA bottoms out ... slopes are a leading indicator of the moving averages they track.

    Compare the figure above to the LCR System table.  Scan down the 34d Slope column, identifying where the table moves from red to green and back.  You will see the correlation in the figure above -- when the 34d slope transitions from the pink area (slope was negative and now newly positive), the LCR System table moves from red "Bearish" to green "Bullish".  The converse is true too -- when the LCR System table moves from green "Bullish" to red "Bearish" the 34d Slope line above is transitioning from the white area to the pink area.

    By now you've probably noted that the 34d Slope column in the LCR System table is red "Bearish".  If you look at the figure above you see that the slope line is in the pink zone -- it is also correlating that the LCR System table value is negative (below 0).  Note though that the 34d Slope line is pointing upward, and has been for the last 5 data points.  Now, go back to the right side of the LCR System table and scan down the RIGHT side where it says 34d Slope -- count how many green "Bullish" blocks you see -- the quantity should be 5.  So, the "slope of the slope" is clearly bullish as it is pointing upward, but because the LCR moving average is dropping day-over-day, everything is in the pink zone.  The positive "slope of the slope" for the past 5 days is a necessary condition for the database turning around -- we need continued "green" on the right side of the table to see the number of stocks with a LONG rating move upward.

    The real question is how to apply this information to our trading.  Here are some general thoughts:

    • When the slope value hits a maximum negative value (e.g., is deep in the pink zone or deeply negative), as it reverses it is showing the market's reluctance to drive prices further down -- day over day fewer stocks are moving to CASH status.  The values around November 18th represent this description.  This doesn't mean that prices (or the LCR) can't trend horizontally for some time -- they certainly can -- but it means that the acceleration to the downside has at least stabilized.
    • Ideally, as this value trends upward from this maximally negative slope value, we want to enter new positions IF the trend starts and continues moving upward.  Psychologically, this is incredibly hard to do, because we've been in a sell-off mode, and for the most part, with November 18th as a prime example, the markets were incredibly uncertain.
    • A confirmation signal of entering the market is when the slope line crosses from the pink zone into the white area, or for you mathematically inclined, a line tangential to the moving average curve has just transitioned from pointing down to one that is upward pointing.  Rather than show a whole bunch of charts on a daily basis, I summarize this using the LCR System table that I presented above.
    • Your eye can certainly see that there was more red "Bearish" periods on the right side of the LCR System table during the months of December and January than the latter time frames, where there is more green "Bullish" periods.  We simply desire to "jump on the train" when there are more green "Bullish" periods than red "Bearish", relative to the recent past.

    With respect to the last bullet, it's possible to quantify this visual concept by running a simple accumulator.  Here's the results of what your eye sees:



    As you can see, there are multiple "waves" to consider, so to simplify this simply look at the column to the right labeled with the sigma (summation) symbol.  This column is constructed by taking the various accumulators of the 5d through the 65d and adding them, left to right per day, based upon the premise that if we're in an uptrend on multiple time frames, the summation column should grow and confirm this.

    As the summation column increases from some local minima upward towards or in positive values we have some confidence that we should be entering the market on the long side.   Hence, incredibly negative values indicate oversold areas, and once we start moving out of those oversold areas (e.g., 1/12/11 and 1/25/11) we have some confidence that the markets are in our favor.  Looking back at past data, "all in" signals have worked well when the summation indicator drops below -12 or so, although it obviously takes nerves of steel to do this because there are generally multiple tests of these lows when the market is bearish.  Note that the lowest summation value ever recorded in 2.5 years of data is -26 and the highest is +108.
    [ Unfortunately, I was traveling all week, so I couldn't participate as much as I wanted to.  Our GGT, LLC fund is about 33% invested, and my personal Top25 ETF fund is 100% invested.  If the sigma column keeps growing I'll continue to add positions. ]

    Going forward, we're solidly green across the board, and the accumulator has been increasing steadily like a horse out of the stable, so we cannot ignore what the LCR indicators are telling us.  I note with caution that the LCR Summation Value has increased 5 days consecutively running, and while there are instances of 6 and 7 days of consecutive increases, these are rare.  Note that again, in 2.5 years of data, if we include 0's as being "positive", then we've had  three instances of 10 consecutive days of increases (6/7/10 through 6/18/10, 2/28/10 through 2/22/10 and 10/29/09 through 11/11/09) and only one instance of 9 days of consecutive losses (1/7/09 through 1/20/09).  

    To see where we are in this run compared to other runs of duration 9 days down to +10 days up, the following chart gives the number of days with the accumulator being consecutively driven into the ground (decreasing accumulator day after day) as a negative value, so -4 is 4 days of being hammered, and +5 days is 5 consecutive days of increasing momentum before a negative day intervened:



    The higher incidence of stepping back for one day (-1 = 48 occurrences) is simply that after running upward, the markets take a day to lock in gains, then we resume.  We're at +5 which has occurred exactly 10 times in 2.5 years, and you can see, the likelihood of going to 6 without a reset is less.  Certainly, it can happen (news events, etc.), but I would expect a pullback to lock in gains here any day now.  Of particular note is that when we hit two or three days of successive hits in this indicator, chances are it's moving to the upside, at least for 1 day.  Although I've not tested it, I think that Larry Connor's strategies could work well with this indicator.

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

    The Pricing System

    The pricing system is organized much like the LCR System, in that we:

    1. take the average price of the database (equal-weighted), 
    2. apply a series of moving averages to the price series (5d - 65d), then
    3. take the difference of each day's moving average to determine slope.  
    4. We then take the day-to-day difference of the slope values to get the direction of the slope, or as I call it, the "slope of the slope".
    The result is the same tabular presentation format as the LCR System, but now we have pricing information:




    Lotsa green on the slope side (left).  Prices clearly have been in an uptrend for a long time.  In fact, look at the 65d slope column -- solid green "Bullish" since 11/16/10.  QE2, whatever, we're in an uptrend and there is no argument to this.  "Don't fight the tape", as the expression goes.

    The left side of the Pricing System table shows whether the respective moving average is pointing upward (gaining price at a faster rate day-over-day) or pointing downward (losing price at a faster rate day-over-day).  We've been in a choppy market as of late, with prices seeming bouncing back and forth.  Here's a way to tackle the noise:

    Just like in the LCR System, we can look at the slope of the slope area as "when is it a good time to buy", or better, "when is it NOT a good time?"   Take a look at the following graph:



    The figure above plots the GGT price index (right axis, red line) along with the daily changes in the Price System accumulator.  Starting at the lower left of the figure, work your way up the GGT price index line, noting when the GGT price index line is jumping upward, as well as when it is falling.  Now correlate this with the changes in the blue Price System Accumulator Change line ...

    What you should observe is the following:

    • When the pricing system accumulator change (PSAC) falls into the green zone, prices have pulled back and this presents a good area to purchase stocks.
    • When the PSAC fails to fall into the green zone but does fall, GGT price has been more-or-less stable/horizontal. 
    • When the PSAC peaks at a value over +5 or so, the value of the GGT price index has fallen within a short period of time, which would put pressure on any purchases made at this time.
    It seems that there are good buying days and bad buying days, with the bad buying days being at the top of the PSAC cycle and the best buying days at the bottom of the cycle.

    We have just come up off a Wed/Thur sequence of being at -14 and -10 respectively, and we finished Friday at a value of +2.  Monday is probably not the day to purchase stocks.

    I'll start including this value in my summary when I blog, as I think it can give a significant edge to our efforts.  It seems to me that if we restrict our purchases to those days where we are in the green zone, we stand a better chance of the trades moving upward.

    For those of you interested in backtesting, simply send me an email and I'll send you the dates in Excel format where purchases were "authorized", e.g., when the PSAC was below -5.


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

    Contra ETF Watch

    Contras continue to look ugly overall.  Both Bull and Bear Power (Elder creations) are negative, which tells us that the Bears for contras (or Bulls for long equities) are fully in control.  Swimming against the current is never advised, hence I'm not going to say much more until we have some strength appear in the contras that I watch (82 in all).

    This being said, give a close look to the Bond Bears (SMB, TBF, TMV, TBT, PST, TYO, etc.).  They continue to outperform all other contra ETFs, and if interest rates move up due to inflation or otherwise, they will do well.  I'm thinking of pulling the bonds out of my internal index calculations because these simply march to the beat of a different drummer.

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

    GGT New Long ETFs for Monday, February 7th

    A question recently came in about how to select New Longs and the order placed in the sort on the GGT "By Recommendation" page, posted every evening by my colleague Joe A.  On this particular sheet ETFs are sorted first by recommendation (New Long, Affirmed Long, Long, Cash, Affirmed Cash, New Cash), then are sorted GPB, or "Gain Per Buy" descending.  This simply applies GGT to those equities, and then sorts them descending from the highest gain per signal to lowest.

    Yes, discarding anything below 0% is a good first step.  Additionally, removing any GG vs. BH (Greek God vs. Buy-Hold) that is below 0% is a good idea too.  Note that these are only valid if you strictly adhere to GGT buy/sell rules, which many/most of you do not.

    So, let's step back and see how the "By Recommendation" sheet could be useful to you, simply with the primary sort of "By Recommendation" (hence the name).

    First of all, let's recap how a stock gets a "New Long" recommendation in the first place:

    1. Behind the scenes, a computer is cranking away 24/7, literally, looking at what combination of moving averages to price and volume, in combination with rates of change of price, maximize an equity curve,  But rather than pick the peak, the program "dithers" each of the values once it finds a solution, and backs off the "peak curve fit" in the direction of those values that produce the minimum change.

      Think of it this way:  the program basically finds the peak of the mountain, but then slices off the top of the mountain to create a flat plateau.  You can move the magic numbers a bit in any direction and the value of the equity curve will not move (much).

      The lookback period is typically 2 years, and it is applied as a sliding window.  This means that if I calculate the same equity two consecutive days the data will almost be equivalent, but will have a slight difference, due to a day being added and the oldest day falling off the record.
    2. Once the magic values are found, they are loaded into the spread sheets every Friday.  These typically appear in the "Control Panel" in columns R-W, header names EMA1, EMA2, Volume, ROC1, ROC2, ROC3.
    3. IF today's price and volume action are above this magic combination of numbers, the stock will most certainly be some form of LONG status.  If yesterday found it below these magic values and today above, THEN, and only then, is it assigned as a "New Long".

      Hence, "New Long" equities have price and volume appreciation, relative to past periods that gave good equity curves.  
    Now, think about this.  What is Effective Volume? It's price changes and volume, and we like it when price changes and volume start increasing.  What this means is that it's quite possible that New Longs can feed a screen based on EV, and this concept is exactly what I've been evaluating for the past few months.

    Here are GGT New Long ETFs, filtered through an EV commentary:

    • IWP, the iShares Russell Midcap Growth ETF, has seen some fairly significant buying, especially near the end of Friday.  A whole series of 25K blocks (about $1.4M per traunch) around 3:45 drove Large Effective Volume (LEV) upward by the end of the day, along with the price.
    • It's hard to ignore the price movement in SCO, which saw LEV increase throughout the day and saw some solid buying action just after 11:00 (200K shares or so).
    • VOT is another mid-cap growth ETF, and it clocked in a positive-trending LEV while the retail Small Effective Volume (SmEV) sold off in the morning and never returned.
    • FVD is a dividend ETF and it's been under solid accumulation, as evidenced by the LEV curve, all week.  Friday was no different, and the LEV kept increasing while SmEV held steady.  Note that FVD is thin in terms of $-Volume @ $1.5Msh; I like to consider ETFs above $10Msh.  Note that someone picked up 100K shares on 1/30 in this, so there is some institutional movement.
    GGT New Long Stocks for Monday, February 7th

    There are 70+ New Long stocks for Monday, so plowing through each of them isn't as highly desired as you may think.

    The first thing I do is throw out any stock that has a $-Volume level of less than $10Msh.  This reduced the list to about 50 or so.

    Next, I use a combination of filters to get rid of any stock that isn't meeting general Elder criteria:  FI(13) > 0, 13d EMA > 34d EMA.  This reduced the list to about 30.  Time to plow ...
    • UAL, United Airlines, saw some impressive buying on Friday. 385K shares were traded at a bit after 2 pm, then another 371K shares about 30 minutes later.  Both significantly contributed to LEV.  About 3:40 someone sold 225K shares, but from that point to the end of the day the buying continued, forcing LEV to move positive.
    • WTFC, Wintrust Financial, saw a number of transactions occur throughout the day that added to LEV until the last 10 minutes of the day. 
    • ALB, Albemarle Corp, is in LEV accumulation
    • BDX, Becton Dickinson, reports earnings in 2 days and is experiencing significant LEV accum
    • PHH had two blocks of 183K shares trade within 20 minutes of each other and the price didn't budge until the second block.  Solid SmEV and LEV accumulation.
    • BC, Brunswick Corp, saw huge accumulation THURSDAY at the close of business, and LEV didn't look back all day Friday
    • DBD, Dibold, saw a flurry of buying/selling with a net LEV increase in the last 10 minutes on Friday.  Interesting.  They report earnings in 9 days.
    • CNK, Cinemark Holdings, saw solid, steady LEV accum all day Friday, with two big lot grabs throughout the day.
    • BBY, Best Buy, has been under solid accumulation for a long time.  Friday was no different.  Some price pressure mid-day saw the retail boys running but the LEV kept bouncing upward on the dips.
    • AVP, Avon, which I've been ignoring overall, saw about 200K shares in 2 minutes just before closing, causing the price to jump up and LEV to skyrocket.  AVP reports on 2/8.
    • ARRS, Arris Group, beautiful LEV pattern on Friday.
    • NKE, Nike, solid accumulation for several days.  They report on March 17th
    • CLX, Clorox, reported before the market opened on Friday.  Amazing LEV all day Friday.
    • SAPE, Sapient Corp, saw large lot buying throughout the day, all contributing to a positive-moving LEV.  In fact, LEV never decreased except for a brief sell just before closing, then it skyrocketed to the day's high.
    • TRP, Transcanada Corp, has been under solid accumulation for days and Friday continued the pattern
    • CRI, Carter's Inc, the little kid's outfit store, has been seeing big lot purchases for several days.  It reports on 2/24.
    • JNPR, Juniper Networks, massively jumped in the last 5 minutes of trading in terms of LEV.  
    • MRX, Medis Pharma, has something going on with it.  A HUGE move in volume at the end of the day on Thursday pushed LEV and price up, and the same thing happened in the last 15 minutes on Friday. 
    • CIEN, CIena Corp, saw amazing buying on Friday, driving LEV up in major steps.  This one saw serious buying, with over 400K shares traded at 11:18 @ $25, or over $10M in one pop.  Volume clocked in at 127% over the 50d average ...

    All of these are good candidates with significant institutional buying.  The ones at the top of the list are in my buy zone, the ones at the bottom of my by list are outside of my buy zone (CIEN is 10.3% above!!!).  I intend to wait for these to pull back, and where I see good value, I'll enter.

    Obviously though, probably not Monday ....


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

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

    Make it a great weekend.

    Regards,

    pgd

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