Sunday, December 9, 2012

Update for Monday, December 10th

The GGT system is presently on a LONG signal that was confirmed with the close of markets on 11/30 and realistically could be acted upon during the 12/3 trading day. I'll not sugar coat this -- it's been difficult picking good, leading stocks in this market, and overall, I'm neutral on all accounts.

The fiscal curb/cliff (depending upon perspective) is keeping us rangebound between the 50d MA and 200d MA of most of the indexes. This past Friday, December 7th *could* be a watershed day in that some of the indexes closed above their 50d, but not all did, so we clearly are not firing on all cylinders. I'd like to see continued strength and for all major indexes ($DJI, $COMPQ, $RUT, $SPX) to follow through.

From a GGT perspective, we transitioned to a short-term long signal around 11/21 or 11/23, depending on how you want to view the markets (with/without volume). The GGT price model, using the 65d EMA, has been long since then and gives us some confidence to stay long and add positions on pullbacks. Note though that we're only staying with positive 65d slopes by a thread, and hence we're not as robust as we have been in the past. Thank you Congress and White House for this:

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Of significance is the weakness here -- the Database Strength indicator has been falling slowing but relatively continuously since peaking on 11/30, which is when we confirmed this new LONG signal using the LCR (see below). Additionally, we've not had any banner days with +14 accelerations upward, telling me that volume and price rate of change are not part of the equation. We do NOT have excitement in the markets -- we are just trudging forward, barely a step-over-step, making slight upward progress on average.

This chart shows you that while slopes are positive, they are positive in a very small fashion relative to spikes we've seen in the last two weeks: 


The Long-Cash Ratio, or LCR slope model gave us our first signal for a short-term entry on 11/21 and continued to improve since then. On 11/30 the 65d EMA slope turned positive, confirming this leg up. This signal has whipsawed only a couple of times since September 2008 so it pays to watch it.

Somewhat disconcerting is the prevalence of "red" on the "Slopes of the Slopes of the LCR EMAs" side of the table. As many of you know, this SoS area precedes changes on the left side of the table, so we have caution smacking us in the face. The SoS simply tells us that the rate of stocks surpassing historical, optimized levels is slowing, although it is still going up.

Again, the following chart shows all slopes positive, so the database is expanding, but note, it is doing so quite tenuously:


My timer system / dashboard indicates that we are LONG, and that stocks on the short side, or contra ETFs, should be avoided:


I am long in all my positions, although I have a couple of dogs and few stellar performers. Let's take a look at a few of the dogs and how I'm using EV to make determinations on them.

I bought AGQ weeks ago on a new GGT "New Long" signal and rode it up, then down. It's presently below the waterline at -6% over my entry. GGT has a "Long" status on it and is relatively strong in terms of daily price, volume, and rate-of-change (RoC) data. Unfortunately, LEV is decreasing for AGQ, so I think my days in the ETF are numbered if we get a reversal in silver in general. 

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Silver's prices have been weak lately, but accumulation has continued.


I have a position in DDS -- Dillard's Class "A" stock, and I'm down -5% from entry. GGT has the stock as a "Long", and overall, I'm a believer.

Friday saw some constructive behavior. There was a large set of transactions which drove EV and price up marketedly off the VWAP, indicating that buying was occurring at these low levels. Although short-term LEV has been decreasing, long-term LEV is quite solid, showing that the accumulation of the stock over the last 20 days by the big boys is intact.


MOV is something that I picked up on a GGT "New Long" and it's performed poorly since peaking on 11/29. Both short-term (5d and 20d) LEV have been decreasing significantly, and if the near future does not change for MOV, I'll be out of it. GGT has the stock as "Long" but it is by a thread. On a 10d, 15d, and 20d view MOV hasn't done much, so there is concern on my part.

The stock sold off on Wednesday at the close and has been fighting back ever since. LEV has been clawing back in a positive sense, and there was some significant LEV buying near the end of the market on Friday. Down -9% is a ways to go but there is nothing indicating I should sell at this time ...

Everything else I have is near the water line or above, so even with the dogs above in the portfolio, I'm neutral in my overall portfolios. I'm using GGT "New Longs" as my entry, and will only enter if I see LEV significantly on the growth curve over the last few days and with a positive 5d and 10d (and perhaps 15d/20d) at the entry. I like equities that have institutional support.

So, good luck this week. We'll see what happens.