Thursday, March 29, 2012

Update for Thursday, March 29th - Short Term Timer Moves to Cash, Intermediate and Long-Term Still LONG

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With the close of markets on Wednesday, March 28th, my short-term timer, which is based upon the 4d simple moving average (SMA or MA) of the Long-Cash Ratio (LCR), has transitioned to cash. Long equities (which are not contra ETFs) which were purchased since 3/26 will be closed, as the probability of their success from here is considerably lower. The GGT index performance since the last signal (3/26) is poor at -1.22% and is indicative of a weak market, but I do note that it is less than the average losing trade (count = 30 since 1/2/09) which is -1.79%. A minor flesh wound.

In my opinion (worth what you pay for it) any long equities bought since 3/13 are also candidates for closure if they are showing any form of weakness.

Here is the timer summary:






As you can see, the Elder intermediate-termed timer and the simple 5d / 65d timer are still long. The Elder timer is within a hair of triggering to Mixed conditions (a major warning) or Cash (an event marker) depending on today's action, but of course, stay in the profitable trades if you are holding longer than a few days. The 3/9 or 3/12 long signal from the Elder timer was the last transition (depending upon which signal you follow), so play accordingly.

The 1/5/12 long move in the 5d / 65d timer is still the most profitable. If you placed orders around this signal and they are profitable, this signal is telling you to continue to hold your longs. 

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The LCR model is completely bearish across the board from the 2d EMA to the 65d EMA. The LCR dropped -11% on Wednesday, which is slightly below the average of -15%. This is not a panic-selling market. We are accelerating downward in the LCR on a day-over-day stance, which is simply telling me that this is not a time to move long in equities.

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As you might imagine, the price-slope model is becoming more bearish, but is still holding on to some bullishness on the 13d and longer time frames. This is why it could be prudent to hold stocks on the long side in accordance with the 5d / 65d and/or the Elder timers.

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I intend to sit on the sidelines today. Of my holdings, I am net short, but realize that I have almost 60% of my holdings in cash at the present time, so if we continue upward from here the damage is certainly recoverable. We've not made much progress in the last week and when this occurs, the sidelines are a good mental spot for me.

Regards,

pgd