Friday, September 14, 2012

Update for Friday, September 14 - Method of Stock Selection and Entry

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For those of you with Dropbox access, you will note that in the stock file has 166 New Longs and the ETF file has 26 New Longs. 

I've not listed the number of Affirmed Longs but they are even greater in numbers.

With so many equities firing long or reaffirming their long status, how to evaluate which ones should be in consideration?

The Dashboard tab of the stock file can provide some guidance. 

The stocks on this tab are selected based upon what I would consider "quality" data:
  1. The stock must be well above the 200d, 150d, and 50d MAs of price
  2. The stock must have each of these MAs in an up trend (slope is positive)
  3. Year over Year revenues must be > 2% and must be accelerating over a minimum of 2 quarters
  4. Year over Year earnings must be > 2% and must be accelerating over a minimum of 2 quarters

Provided the above is true, I then integrate the list with Pascal's repository file which contains EV data for each. I then sort based on the EV Rating, which combines numerous EV values into a single indicator that ranges from 0 to 100.

Many of the stocks at the top of this list are already extended well above their 10d EMA, which means they have been running faster than the day-over-day gains of the last 10 days. It is noteworthy to add these to a short-term watchlist, and review these for possible pull back and entry on the pull-back.

I'm a big fan of Dr. Elder's Force Index, not necessarily because it makes sense to multiply volume with change in price, but because averages and change in averages of these values can give us some confidence with what is going on in general.

Key criteria that I look for on entering a stock is to determine the status of various Dr. Elder parameters. On the day of entry I specifically want:
  1. The slope of the 13d MA of the equity to be positive
  2. The slope of the 34d MA of the equity to be positive
  3. The 13d Force Index of the equity to be positive
  4. The 2d Force Index of the equity to be negative

The first three in this list ensure that the stock is on a sustained up trend path and the last criteria means that it has pulled back in a local consolidation.

The trigger entry for me depends upon whether I'm aggressive or conservative:
  • Aggressive: the real-time stock price has taken out the previous day's close (price > close)
  • Conservative: the real-time stock price has taken out the previous day's high (price > high)

Looking down the EV list on the Dashboard page, if I select only those stocks with a Rating > 50, and apply the Elder criteria going into the open today (Friday, 9/14), I get the following list:

EW
FISV
VSI

Everything else is over-extended.

Whether you like these stocks or not is subjective; they are on my radar list for possible entry today if they move above my trigger points.

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

Make it a good Friday, and enjoy the weekend!

pgd

Wednesday, September 5, 2012

Update for Wednesday, September 5th -- GGT Combo Timer Issues Long Signal

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With the close of markets on Tuesday, Sept 4th, the GGT combo timer has issued a long call (right click on the image to open in a new tab or window):



Positive attributes are that we are

1) above the GGT 200d simple moving average (long-term up trend)
2) positive slope on the 65d SMA (not shown, but also a long-term up trend).
3) volume was the strongest in some time, appearing at -4% below the 50d MA of volume (folks are returning back from vacation, e.g., there are buyers and sellers)

Statistically, the signal has a positive expectation:



These stats are calculated using the GGT index, which looks very much like the ETFs VTI or IWM, depending upon market conditions. Right now the IWM most closely resembles the GGT index on a 34d, 65d, and 100d look back review, so I will consider moving into IWM based on these stats.

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The GGT Price Slope Model is fully bullish, with two major price accelerations over the past two days (right click on the image to open in a new tab or window):



Note that the database strength index, which is a composite value made up of price, volume, and price rate of change, has moved up quickly from 0.46 to 0.64, and while it may pull back a bit, has considerable room to move upward. The fact that the 65d slope on price is positive and the latest round of negative slopes on shorter time frames did not extend to the longer time frames tells me that the trend is intact.

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The GGT LCR Slope Model has a wrinkle in it, but only slightly at the 13d level (right click on the image to open in a new tab or window):



Again, the 2-day acceleration in LCR gives me some confidence, and the fact that all slopes except the 13d are positive also gives me confidence at the longer-termed trend.

I note that the 4% and 10% gains of the LCR over the past two days are not "knock the skin off the ball" gains (I would have rather seen some massive volume and movement in the entire database), so we certainly can test the trend. I intend to buy small positions on pullbacks and reversals upward.

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With respect to entering a core IWM position, the money management looks like this:




There was some accumulation in IWM during the afternoon trading session yesterday, so some big boys have left footprints (right click on the image to open in a new tab or window):




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Make it a great day! I am traveling tonight and tomorrow and will post as time allows. With respect to signals, obviously, you are responsible for your own trades and are obligated to do your own diligence. Please take ownership for your actions.

Regards,

pgd