Thursday, December 4, 2014

Timers Whipsaw - as of close of Dec 3

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A short note here; no action required.

With the close of markets on December 3 the markets have caused most of my indicators to move to the long side.  The back-forth nature of this is called a whipsaw and it occurs when we are right at the margins.


The slopes of the long-cash ratio (LCR) moving averages are quite mixed.  We're back to the scenario that I discussed a few blogs ago -- the mixed nature of the LCR slopes is not considered "clean" by my system and consequently, is not a solid buy (or sell) signal.

On a positive (long) side, the LCR value is moving back up, indicating that stocks are flipping to the "New Long" side on a day-over-day basis.  This means PRICE, VOLUME, and RATE OF CHANGE OF PRICE are all favorable.  This is necessary for a solid buy signal.

Here, "solid buy" means more green on the left side of the table.  I'd like to see ALL the LCR moving averages flip to green/positive in one day, but certainly, will consider the 5d and 8d moving positive, as these are generally key entry points in the market.  This being said, the "green" at the 55d, 65d, and beyond tells me that this is a mature market, so rocketing off to the moon from here is highly unlikely.

Strategy

I'm presently sitting about 40% invested in the markets.  The ideal target is 50%.  I'm not a buyer today; 1) I'm on travel and have client responsibilities, and 2) 4 out of 5 times, when backtested, entry at this point has failed in the past (as measured to the next down signal).  The risk/reward isn't there for me until we start seeing solid positive slopes on the left side of the table.

I've removed all pending sell orders on all accounts.  This will keep me at 40% invested.

Regards,

pgd