Friday, June 21, 2013

Gotta Love Whipsaws -- Confirmed Move Back to Cash June 20

.
With the close of markets on June 20th, my models have whipsawed completely back to the cash side.  I knew this signal was suspect, but as I indicated in my previous entry, I'm compelled to take every signal.

The damage has been quite light overall.  My underlying methodology when a new signal is generated is to do the following:

1) Update all candidates in terms of my "green screen".  I've presented the details elsewhere in this blog on what I look for -- I simply remove any stock that is not indicating "green" in my TradeStation scan and add new ones that meet this criteria.

2) I take this new list of "leaders" and I use a proprietary method of ranking 5d, 10d, 15d, and 20d Effective Volume.  I want EV to be indicating new buying in the stock, so 5d > 10d > 15d > 20d with all values positive.  This gives me a list from the best EV candidates to the "worse", although "worse" hasn't been proven as these are all good stocks from my list.

3) I ensure the stock is a GGT "Long"-rated stock:  New Long, Aff. Long, or Long.  Rare exceptions will allow me to review a CASH-indicated stock.

4) I buy on strength.  I typically place a BUY STOP order for the previous day's high price + 0.1%.  So if the stock was $20 high as of yesterday, I place a BUY STOP for $20.02.  If it was $150.00, the BUY STOP is $150.15.  The duration is for the next trading day only.  If the stop never triggers yet the stock is good as far as GGT is concerned I lower the BUY STOP and the process repeats, as long as my macro indicators are still showing an expanding market.

The last point is where we are now.  My macro indicators, namely the LCR (Long-Cash Ratio), have all moved negative in momentum.  I'm not buying stocks, I have no pending orders, and I'm exiting my holdings as GGT indicates.

Damage has been quite slight using this method.  I still have substantial gains in some of my positions, keeping the accounts above break even.  Nevertheless, I'm seeing the tides change, so I expect to be moving to Contra ETFs very soon.

Regards,

Paul

Tuesday, June 18, 2013

Model Signals Conditional Long Entry

Good day all,

A number of you have sent private notes asking how I'm doing and if I still post. The quick answer is that 1) yes, I'm quite well, and 2) there hasn't been much to post about, so my time is filled with other activities. Just so you are aware, aside from my day job, I've been actively seeking my birth parents (I'm adopted), and I've recently found their family lines using DNA and am working to narrow the field down to a few individuals, and 2) I'm in the process of selling my company and this is taking a considerable amount of attention. I continue to update GGT on a daily basis, post the files in the Dropbox, and keep abreast of the signals generated from my model. I've all but shut out all external noise from the talking heads, and I think my trading/investing is better for it.

With the close of markets today (June 18), my primary timers are indicating a conditional long entry. "Conditional" status is simply because not every timer is confirming the signal, but my primary one has fired and it is often more right than wrong, so here I am.

Here's the GGT Long-Cash Ratio (LCR) table:


Right click on the image to open it in a different tab or window.

The LCR has had two days of advancing into positive territory, and the transition of the 5d and 8d signals is generally a positive move, indicating that as a whole, the database is starting to see prices and volume move upward. This is a reliable signal in general, but in this state of QE-infinity all bets are off. Nevertheless, I've taken the most favorable stocks from this list and have entered conditional orders for Wednesday, and if they fill, they fill.

Here's my list: https://www.dropbox.com/s/gm1pmdowe3fwhf4/13Jun18-CombinedLeaders.txt 

These are sorted most favorable EV pattern descending, so BEAV sits on the top spot and it goes down from there. These are all "Green" stocks, meaning that they meet my tight screening criteria (covered elsewhere in this forum), and as you can see, the list is small as of right now because we've been in the throws of a consolidation.

I have no idea if this is a valid signal. With performance history as my guide, I'm taking this signal. Here's the performance of the timer since 11/2008:


These stats are compiled using the GGT index, which is mostly duplicated by investing in the IWM or VTI ETFs. I tend to invest in stocks with much higher beta than IWM or VTI, so my performance generally is better.

For those of you who subscribe to the Real Time Thrust Monitor at the Effective Volume site (www.effectivevolume.com), I've uploaded this latest list and you can get intra-day breakouts as they occur.


As always, do your diligence, and take ownership for your actions. 

Regards,

pgd