Sunday, December 21, 2014

Moving Long as of Close of Markets on 12-19

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Timer Table:


The timer table indicates a short-term entry signal for Friday, and while this was valid, it was not strong and I chose not to get aggressive with it.  Friday's action though pushed all the timers to the long side, which is bullish.

Notable here is that the long-term timer, the right column in the table, only spent 3 days in Cash.  This has never happened in the past, with the historical average length of this being nearly one month and the shortest time in Cash being 8 days.  3 days in Cash is a new record.

LCR Slopes


The LCR slope transition of the 8d to green (Long) is what has triggered entry on Monday.  This is a high probability entry, so pay attention.

Note that the LCR ranking on Friday was the 65 strongest 1-day jump relative to all the positive moves since 9/11/2008,  Again, strong, so pay attention.  I think this was more than just short covering or options expirations day.

Cumulative Tick


For those of you who follow me regularly, you know I watch the preceding figure very closely.

We're still early in this effort, and the number of 52 week New Highs, as shown at the very top right of the figure, is barely above the number of 52 week new Lows on the NYSE.  This is NOT ideal, and does not support the huge moves we had during the week.  Nevertheless, I don't look at the value, just whether the 52NH is > 52NL, and it is, so we're good.

Mid-day on Friday the buying algos started kicking in in terms of bid/ask on the next transaction. Prices moved up constantly and consistently until just late in the day, which is bullish.

Finally, as far as the cumulative tick is concerned, "white above red" and all the slopes are positive on all measured time frames.  As long as this holds I'm a buyer in this market.

Strategy:

The obvious question is what to buy?

Here are my Greenfield Leaders and Greenfield Bargains:


All of these are good stocks, and the Greenfield Bargains at the bottom all have solid fundamentals but are beaten down quite a bit.

Here is the list to save you time from copying the list:

~Greenfield Longs
AAPL
AFSI
AMBA
ANIP
BFR
BIDU
BMA
CARB
CAVM
CORE
CSCD
DXCM
ECHO
ENPH
EPAM
ISIG
LEAF
LTS
MDXG
NKTR
NOAH
PLNR
RCL
RFMD
SAIA
SAVE
SMCI
SWKS
UA
UAL
UEIC
UVE
ZUMZ

~Greenfield Bargains
APOG
APT
BITA
EVLV
FLTX
HDB
HSTM
ICLR
LCI
LXFT
PACB
RENT
SANM
SKX
VEEV
VIPS

There are a lot of stocks there, probably more than you want to choose.

What I do in this case is find the mixture that optimizes the efficient frontier.  That list is as follows:

AAPL 37.96%
BMA 11.42%
LEAF 9.56%
DXCM 5.83%
LTS 5.66%
BIDU 5.28%
RCL 4.83%
SMCI 3.75%
MDXG 3.70%
UAL 3.45%
ECHO 2.42%
SWKS 2.36%
NKTR 1.77%
SAVE 1.59%
UA 0.42%
An expectation for these stocks, based on the last 100 days of performance (or so), yields an estimated 3.5% better than holding just the SPY but at an increased volatility. Whether you choose to do this is up to you.

Further to this, note that not all of these stocks are rated "GGT Long".  Hence, they don't get my money:

AAPL Long
BMA Aff. Long
LEAF Aff. Long
DXCM Aff. Long
LTS Long
BIDU Long
RCL Long
SMCI Aff. Long
MDXG Aff. Long
UAL Long
ECHO Long
SWKS Aff. Long
NKTR Cash
SAVE Cash
UA Long
Hence, NKTR and SAVE will have to wait.

My buying on Monday is simple.  Buy at the allocations above, using the HIGH of the value on Friday plus another 0.1%.  So, I take the high price, multiply it by 1.001, and that becomes my new buying threshold.  I buy using a Good Til Canceled order, and I adjust the price downward for the GGT LONG-rated stocks (in green above) if they do not fill on the order day.  As long as they are green, they will eventually fill.

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

Regards,

pgd