Thursday, October 11, 2012

Models are in Cash: 10/10/12

Although there was buying in the last minute of the day on 10/10 (Wednesday), it was not enough to keep my models on the LONG side.  Correspondingly, I'm exiting all positions in my personal accounts and although IWM is still holding on by a thread, we've given up almost all the gains in this position and I'm not overly optimistic that it will end positive.

Overall, my timers look like the following:

The short-term timer continues in a CASH mode and is the result of a contracting Long-Cash Ratio.  You'll see that below.  The Elder Intermediate timer has signaled two consecutive days of CASH, and when this occurs, this is a clear sign to move to the sidelines.  The long term timer is still showing LONG status, as the 13d is well above the 65d, so on a long-term perspective, we are still in an up trend, although the slopes of the 13d and 65d are trending downward and are converging (meaning that this signal is in danger if the markets to not change).

The LCR slope mechanics show me that we are in a period of database contraction (N = 3131 stocks) and that more stocks in the database are in some form of CASH status than are LONG (LCR = 0.896).  As you can see below, we've been in this area of contraction on all time scales since 9/26, so aside from the minor issue that I was out of the country from 9/19 through 10/4 and nobody was watching this table, there has been ample indication of a slowing market.

(Right-click on the image to open in a new tab or window).

In the end, I am not a buyer of stocks today.  I am specifically waiting for the intermediate-termed timer to transition to a LONG state from either CASH or MIXED mode, and it will take a significant market event for that to occur today.

As always, do your own diligence.  You are responsible for your own decisions, and I am not.