Tuesday, March 19, 2013

March 18 - Short Term Timer Transitions to Cash, Stay the Course (for Now)

With the close of markets on Monday, March 18th, my GGT short-term timer has transitioned to cash. Investing in the ETF VXF or IWM would have yielded about 1.1% gains since the signal transitioned long, if you close at or better than the closing price of March 18th.



This *could be* a good entry time if the markets reverse and continue their climb. Watch the MF indicator at the Effective Volume site (www.effectivevolume.com) and stay on the correct side of that recommendation. With my intermediate-term and long-term timers still solidly bullish, pullbacks in quality stocks should be examined closely for favorable EV patterns.

To this latter point, the link HERE is of the most recent leader's list and is sorted best EV patterns descending on a 5d, 10d, 15d, and 20d lookback timeframe. My focus is the top of the list.

Note that this list changes daily with respect to order and MINOR changes to composition are weekly. This is a very solid, relatively-static list, with major updates and close examination on the weekend.

Due to my pending travel schedule I'll try to post an update using Friday's close but then it will be static for the period 3/23 - 3/30.

Regards,

Paul

Monday, March 11, 2013

All Timers Long, Futures Pointing Down, Possibly Good Opportunity for Entering

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Futures are pointing downward this morning, and all my timers are LONG (short-term, intermediate term, long term). This could be a good buying opportunity.

The following stocks are from my Leader's List for the week and are valid Elder Entry Candidates. They have not been screened for EV (http:/www.effectivevolume.com), so do your own diligence on these:


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

An Elder candidate on my list meets the following criteria:

1) the 13d EMA of price is in an up slope condition (positive short-term day-over-day growth)
2) the 34d EMA of price is in an up slope condition (positive long-term day-over-day growth)
3) The 2d Force Index (google it) is NEGATIVE, indicating a short-term pullback in a long-term uptrend
4) The 13d Force Index is POSITIVE, indicating demand over a longer period for the equity

These 4 conditions set up the trigger.

If the price takes out the previous high, enter the equity a few pennies above the high. I typically add 0.05% or 0.1% to the high as my threshold. This is a conservative entry method, and it allows you to trigger entry if the stock continues moving upward.

A more aggressive approach is to use the previous close. More prone to failure in my opinion, but it also gets you in at a better price.

In either condition, if the BUY STOP does not trigger at your established level on the given day, simply readjust your order so that the new price is the entry on the next day. MAKE SURE the other conditions still apply (items 1-4 above).

Note that I own CVI, DXPE, OCN, and SPF from the previous list.

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My Long-Cash Ratio (LCR) Slope Model continues to show bullishness on all fronts:


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

Note that the LCR continues to grow, indicating stocks are participating in this new leg upward, and that the left side of the table is showing more green. These are positive slopes, so on multiple time frames we are seeing stocks participate in price, volume, AND price rate of change performance. This is healthy.

On the left side of the table we have a sea of green. This tells me that we are seeing continued acceleration upward in stock participation, e.g., more stocks are joining the party day-over-day than are leaving, and everybody loves a party.

All signals are prone to reversal, but for now, all my indicators continue to point to the long side. I'm buying the pullbacks in accordance with the Elder entry method described above.

Here's my timer status:



EV stocks that I have a particular interest in today if they continue their accumulation by the large players are as shown:






These three stocks are from my leader's list and all meet my criteria for possible entry.

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

Regards,

pgd


Thursday, March 7, 2013

Intermediate-termed Timer Transitions Long -- All Timers Long

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As I indicated yesterday, the intermediate-termed timer was holding a "mixed" status with the short-term and long-term timers indicating "long".

All timers are now "long".

This is a mature market, so ensure you are buying quality stocks.  A list of quality stocks can be found here, and has been updated as of March 5th.

My strategy for entering positions is as follows:

I'm watching intra-day for stocks on the provided list of quality stocks to have higher prices on higher volume, intra-day.  I use an algorithm that I copied from Mike Scott to predict whether the intra-day volume will be higher at end of day, and if prices are up and the value of the predicted volume is at least 150% above the 20d MA, then I'll most likely move long in that position.  Hence, move long on volume and price breakouts.

Performance of my timer system has been good overall.  Market conditions change, so whether the performance will continue is anyone's guess.  Since 11/21/08, using the GGT index (which looks like the VXF or IWM in general) has returned over 18% per year compounded.  I'm big on limiting drawdown, so the worse case trade using the index has been -2.4%.  Of course, if you invest in stocks with a higher beta than IWM or VXF, adjust accordingly.



Remember, you are responsible for your own investment decisions, and I am not.  Do your own diligence, and please take ownership for your actions.

Happy hunting.

Regards,

pgd


Wednesday, March 6, 2013

New Short-Term Buy Entry Signal - Effective March 6th

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With the close of markets on Tuesday, March 5th, the Long-Cash Ratio model I employ, which looks at a database of over 3000 stocks and individually assigns a "long" or "cash" rating, has moved to a short-term "buy" signal. Entry on the long side into stocks is enabled when we have unanimously have several days (or weeks) of decreasing slopes on multiple moving averages of the LCR, then we get a reversal on the 2d, 3d, 5d, and most importantly, 8d:


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

On the far left side of the table you see the Long-Cash Ratio (LCR). It closed at 1.167, meaning that we have nearly a 1:1 ratio of stocks that are performing above their historical out-performance thresholds relative to those that are under-performing these thresholds. In the slopes area, Monday saw the 2d MA move barely positive, and then on Tuesday we had the 2d, 3d, 5d, and 8d moving positive.

Providing some confidence is the sea of green on the right side of the table. This is the slope of the slopes, e.g. acceleration, and as you can see, on most measured time frames the markets have been reversing their downward movement and stocks are pulling upwards above their thresholds, moving into "long" status. 

The 8d threshold is not without whipsaws -- look back at 2/19 and you can see that we failed in that signal and subsequently moved lower. It certainly could happen here -- your crystal ball is as good as mine.

Consequently, my timer systems are moving back into the long side of the picture:


Note that the long-term timer has remained long for the duration and has kept me in the markets for the most part. The short-term timer just transitioned long for the first time in two weeks -- but note that this is quite sensitive and could whipsaw. My Elder intermediate timer still is on the fence -- the markets have not resumed their move upward in an aggressive fashion across the board (indexes are driven upward, broad stock performance still is moving slower relative to the indexes) hence the model is saying "move long, but do so smartly".


This last table is an analysis that I did concerning the movement of LCR transitions. On the day of a transition use the left-most vertical column to select the row (or rows) of applicable moving averages that were already long prior to the day. Since Monday produced a 2d transition to the long side in the LCR table shown at the top of this blog entry, we're restricted to just the top row. Now, with the action of Tuesday which caused the 3d, 5d, and 8d to transition, select the columns under 3dt, 5dt, and 8dt and read off the range of values. 

Historically, when the 2d has been already long, and the 3d, 5d, and 8d move long on the next day, we have between a 47% chance and 76% chance of long entries working out. This used the GGT price index -- not actual stocks -- so mileage may vary.

Stocks that are good candidates today are (best Effective Volume setup at top descending to bottom):

SPF
AOS
SIRO
SMP
EVR
VRTU
AB
SEIC
CYNO
HES
MTW
CVI
DK
AHS
BLC
BOFI
TISI
VMED
CLMT
MTZ
PIKE
SAM
TRN
DXPE
HVT
LGND

I'm long in a number of names: CVI, DK, DRN, DUST, DXJ, GEL, PIR, SCO, USAT, and WGO.

Regards,

pgd