Tuesday, October 28, 2014

Outstanding Day, Tuesday, Oct 28 Close

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Overview:  Markets had a notable up day.  Operating on a 75% equity position target.

Timer Status:

Short-term timer:  LONG
Intermediate-term timer:  LONG
Long-term timer:  CASH
Long-Cash Ratio:  Jumped +51% to 1.002 -- the database is at parity (equal number of stocks that are rated "LONG" and those that are rated "CASH".  There are 3029 stocks being tracked right now.

Slope Table:


All measured time frames now have a slope value that is positive.

We have a sea of green on the right, which is the slope of the slope.

This is a bullish table any way you take it.

Cumulative Tick:


Everything here looks solid.  From the top, Green over red means that more stocks are making 52-week highs on the NYSE than are making 52-week lows.  This is a requirement for me.

The middle plot is an algorithm buying/selling detector.  You can see that this afternoon was incredibly strong and that stocks were being bought and bid upwards at the end of every tick.  This chart advances upward when the number of ticks/minute exceeds 500/min to the advancing bid, so there was much strong buying going on this afternoon.

The bottom plot shows that we are in a steady uptrend in buying on all measured time frames.


This set of charts simply shows buying across the board on the S&P500, Russell 2000, and the NASDAQ.

Today was a solid day, and the 38th strongest day since September 2008 in terms of underlying market buying.

Strategy:

I'm at 50% equity right now.  I've not been too aggressive in getting into the market, and as a result, I missed 33% of the rise today (since my equity target is 75%).  I have a number of holdings and will add to them:

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My gains to date are about +4% of my invested amount.  I've had no major losses yet on this new upward cycle.

My buy list is taken from my Greenfield Leaders list:


I also am watching today's breakouts:


Folks who choose to can get the breakouts, for a limited time, as they happen via their cell phone or email.  Send me a note if interested.

I plan on to keep buying until I hit 75% capital deployed.  It's a considerable amount of work, as I'm not using one simple portfolio.

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Standard disclaimers apply.  You are responsible for your investment actions, and I am not.

Regards,

pgd

Thursday, October 23, 2014

Thursday, October 23rd Close

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Overview:  Buying continued today but the intermediate timer is still MIXED, which is cautionary.  Operating on a target corresponding to 50-75% deployment of capital to equity.

Timer Status:

Short-term timer:  LONG
Intermediate-term timer:  MIXED
Long-term timer:  CASH
Long-Cash Ratio:  Increased +25% to 0.54 from 0.433, which is very bullish.
Percentage of stocks with a LONG recommendation:  35.1%, up 4.9% from Wednesday on 3031 stocks in the database.  This is bullish.

Timer Table:


The mixed status of the intermediate-termed timer gives me pause.  The longer this timer keeps this status, the greater the chances that this signal will reverse to the down side.  "Mixed" occurs when the internal signals of this timer are not aligned, meaning that one of the indicators is suggesting weakness while all the others have moved long.  The next few days will be critical to this signal; a reversal to the downside, given that this is the 8th trading day that we've seen an expansion, would not be a surprise to me.

Slope Table:


The LCR slope table looks good.  I am showing continued expansion of the database in terms of "Long" rated stocks, and you can see that the slope of the 34d moving average just turned positive.  You can see this on the left side.

We have a sea of green on the right, which is necessary for an expanding market.  In isolation, this is a great figure.

Transition Probabilities

A slight wrinkle to the moving long story is that it's important to get invested as soon as possible.  This has been more difficult with this signal, as the leaders are not surging to new highs across the board.

The transition table above shows historically, since September of 2008, what happens when the 2d - 21d LCR moving averages are already long (positive), as can be seen in the previous table, and the 34d moves to positive territory.  This is the situation that we have with today's action.

Historically, trades placed tomorrow (the day after the transition of the 34d transition) only work between 17-18% of the time to the end of the macro signal (e.g., when the timers all transition to CASH).  The set of stocks is much larger now than it was last week, so that is partly to blame (not a perfect system), but also, we're getting long in the tooth on this signal.  Again, I would not be surprised at a slight pullback here.


Cumulative Tick -- S&P500, Russell 2000, and the NASDAQ


On the good side, each of the major indexes showed more new 52-week highs than lows, with the NAS doing so by a thin margin.

The SPX putzed around today and didn't do much algo buying despite the high index gains.  Unless you are investing in a mutual or ETF tied to the indexes, you should ignore their action.  I ignore the major index values in general because the underlying stocks do not show the massive gains in terms of Cumulative Tick that we saw in the prices.

If you're not familiar with the Cumulative Tick, read more here.

The positives in the chart above are that the S&P500 and the NASDAQ finished strong for the day in the last few minutes.  This jump upward means that there was considerable buying and that the bid prices were advancing for the constituent stocks after each tick transaction.  This is bullish.

The Russell 2000 was a laggard in this regard.  The R2K is comprised of smaller-cap stocks, so the bigger, dividend paying and larger market cap stocks were the winners today, along with tech.

Cumulative Tick - NYSE


The NYSE Cumulative Tick looks good overall.  Not nearly the gains that we saw in the index increases, which should give you pause.  Algo buying was not overly present on the NYSE today.

Strategy

I'm a buyer, but with some caution.  I have many positions that are up, for a collective 1-2% on my portfolio, but these gains could fade quickly.

I'm continuing to deploy capital, but I'm not aggressively going after stocks that haven't yet fired.  I received a note about this today and what this means is this:

1) under normal conditions, when an order does not fill for the day, the stock did not break out.  My normal procedure is to re-adjust the price for entry downward to 0.1% above the day's high (which will be lower than my present price), and if the stock take out today's high with tomorrow's action, then I'm in.  This is what I consider "Aggressive".

2) What I plan to do tomorrow is different, e.g., less aggressive.  My orders that I have standing tonight will sit with the higher valued trigger prices, e.g., the levels that correspond to 0.1% higher than YESTERDAY's high.  This means that the stock has to work hard to get to this higher level before my Buy Stop will trigger.

Yes, I'm giving up some gains.  More importantly, if the stock is headed downward, GGT will fire a "New Cash" recommendation and I'll kill the buy order, and then the cash is safe.  For now though, with an expanding LCR, there are few "New Cash" recommendations.  In fact, out of a database of over 3000 stocks, today only produced 23 "New Cash" recommendations, and NONE of them were in my present holdings nor were they in my watch lists.

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Remember, you are solely responsible for your actions, and I am not.  Please do your diligence, and please take ownership for your actions.

Regards,

pgd


Wednesday, October 22, 2014

Indecision, Wednesday, October 22nd Close

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Overview:  The intermediate-termed timer has transitioned back a step and is now in a mixed mode, meaning that internal indicators are not aligned 100% to either side (CASH or LONG).  Critical period for this bull leg.

Timer Status:

Short-term timer:  LONG
Intermediate-term timer:  MIXED (transitioned from LONG, so a step backwards)
Long-term timer:  CASH
Percentage of stocks in the database that are rated LONG:  30.2%, up 2.6% from Tuesday (bullish)
Long-Cash Ratio:  0.433, up +14% from Tuesday's value of 0.380 (bullish)

Timer Table:


As I stated in the overview, the "Mixed" moniker on the intermediate-termed timer stems from internal signals not being in alignment to the long side (in this case).  How this will resolve itself is anybody's guess -- your crystal ball is as good as mine -- but given that we still are seeing strength in the Long-Cash Ratio (LCR) and that the number of stocks with a "LONG" rating is growing, I'm still leaning that this will turn positive.

Until it does, I'm not buying too aggressively.

Slope Table:


Obviously, there is slight weakness in the 2d and 3d slope of the slopes, shown on the right.  This is to be expected with today's actions.  The left side of the table is intact, which is good.  We did not lose ground in any appreciable sense today, which is bullish (for now).

Cumulative Tick Chart:


The top shows that on a day-over-day basis, we have more 52-week New Highs than new lows.  This is desired and necessary for me to buy stocks on the long side.

The middle plot shows that about mid-day, around 12:30, the selling algos kicked in and never really subsided.  This dropped the cumulative tick (white) throughout the day, which put a chink in the armor but that's about it.

The solid, thick red trace has a positive slope, with the instantaneous cumulative tick (white) above it, so overall, we're still quite bullish.  I'm on the long side.

Strategy

Buy orders.  Today represents an opportunity to get some stocks about 1% cheaper than yesterday, so I am resetting my GTC orders to 0.1% higher than today's high, fired with a BUY STOP, active after 9:45 a.m. ET.

My list of stocks is taken from the Greenfield Leaders and Greenfield Bargains list in the dropbox file that I share with many of you.  It's free (for now) for the asking.

I'm operating on a 75% equity target for available funds.  The move of the Intermediate-termed timer to MIXED will slow me down in my aggressiveness, so 50% is still my first target (I'm a bit over 30% invested) and when/if the timer gets back to LONG I'll move a bit faster in getting into positions.

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Standard disclaimers apply, of course.

Regards,

pgd

Tuesday, October 21, 2014

Intermediate-Term Timer Now Long, October 21 Close

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Overview:  With both the short-term and intermediate-term timers now long, equity positions will be raised to 75% of capital.

Timer Status:

Short-term Timer:  LONG
Intermediate-term Timer:  LONG
Long-term Timer:  CASH
Long-Cash Ratio:  Jumped +33% to 0.380 from 0.285, the 77th largest jump in over 1000+ up days
Percent stocks with a LONG rating in the database:  27.6% out of 3034 stocks, up 5.4% from Monday.

Timer Table:


Historically, the progression shown above has worked out well.  It is possible for a slight pullback given today's action, so maintaining the Intermediate-term Timer recommendation will be key for continued buying of stocks.

Slope Table:


More green.  If you are not aware of the significance, please refer to older entries.  The right side of the table looks great.

Cumulative Tick Chart:



Continued upward slopes on all measured time frames.  Steady buying in the morning and afternoon.


Same chart as above, only zoomed so that you can see that we do have a large number of stocks on the NYSE making new 52-week highs.  This is significant and is worthy of continuing on the long side of stocks.

Strategy:

Continued buying on the long side.  The list of Greenfield Leaders is as follows:


This list is growing fast from just a few days ago and I'm trying to get into as many of these stocks as my different portfolio specifications will allow.

Beaten down stocks that have good fundamentals are in my Greenfield Bargains list:


The "red" here simply shows that pricing criteria has been violated in some fashion, an as soon as price moves higher most of these stocks will graduate to the Leaders list.

The complete list, to save you from typing each symbol, can be found in the Dropbox shared "stock" file that is updated nightly.  If you are not a member please send a note to pduncan {a t] v t [dot] e d u (figure it out, without spaces, etc.) with "Dropbox" in the subject and you'll get added to the shared folder.

I'm a buyer, attempting to get to a 75% deployed status.  It's hard.  Even with the buying over the past week I'm only at 25%; finding stocks that meet my portfolio criteria has not been as easy as it seems.   Historically, it's taken me about a week to deploy monies once a new signal is received; the first few days of this signal were slow and most stocks did not flip to "GGT LONG" status, preventing entry.  Tonight saw a large number transition, so the game is on.

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Standard disclaimers apply.

Regards,

pgd


Monday, October 20, 2014

Continued Thawing, Monday, October 20th Close

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Overview: continued progress on the long side of the market, but not all indicators are in alignment.  Still acting on 50% equities, 50% cash signal.

Timer Status:

Short-term timer:  LONG
Intermediate-term timer:  MIXED (transitioned from CASH to MIXED)
Long-term timer:  CASH
Percentage stocks in database that are long:  22.2%, up 2.9% from Friday
Long-Cash Ratio:  0.285, up 0.037 from Friday's value, 3035 stocks in database

Timer Table:


The intermediate-termed timer has moved to "MIXED", which means that not all of its internal signals are in alignment.  This is a test period for the markets, and we've failed at this point in the past (hence why I built in more than one indicator).  We need this timer to transition to LONG in the next day or so in order to have confidence in the overall signals.

Slope Table:


The LCR finished the day at 0.285 and is up over the past 5 days.  The left side of the table shows that the 13d slope has transitioned positive, and you can see on the right side that the slope of the slopes are all still positive.

This is constructive.

Cumulative Tick Chart


This is a transitory chart.  We still are not seeing more 52-week New Highs than New Lows on the NYSE, which should give you pause.  You can see this in the top plot.

With respect to the middle plot, we saw an acceleration of buying in the afternoon today.  Again, constructive.

The bottom plot has positive slopes for all indicated time frames, and the "white is above red", so we're in buy mode.

Strategy

With the short-term timer LONG but the others still in MIXED/CASH, I am operating on a 50% cash position / 50% equity target.  My present holdings are:


I will continue to purchase from my Dividend Portfolio, Greenfield Bargains, Greenfield Leaders, and Steady-Eddies portfolios.

I buy strength.  The price must be 0.1% higher than yesterday's high, and this new level is entered as a BUY STOP, GTC, active after 9:45 a.m.  If the order does not trigger with the day's action (price never took out the level) then I adjust downward the next day's order as long as the stock is in some form of GGT "Long" status.  If you don't know what this means just ask.

Stocks are listed in my stock file, which can be found in my shared Dropbox folder.  Send me a note if you are not a member or if you do not know where to look for this information.

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Standard disclaimers apply.  Please, do your own diligence, and take ownership for your actions.  You are solely responsible for your trades and I have ZERO responsibility regarding what you do.  This blog is intended to show you what I am doing in the present market climate.

Regards,

pgd

Wednesday, October 15, 2014

Buy Signal Continuing, Wednesday, October 15th Close

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Overview: Yesterday's initial 50%-equity buy signal was not negated with today's action. Late day rally caused across-the-board gains.
Timer Status:
Short-term timer: LONG
Intermediate-term timer: CASH
Long-term timer: CASH
Long-Cash Ratio: Increased +8% to 0.204, 3034 stocks in the database.
Slope Table

Aside from the 2d slope of the slope (SOS) turning negative, we continued the less-negative movement of the long-cash ratio (LCR) exponential moving averages (EMAs). The 5d slope, shown on the left side of the table, actually improved despite the markets today.
Continued "green" on the right, and more "green" on the left are required to confirm the initial short-term entry signal. Vigilance is key here.
Cumulative Tick Chart, SP500, R2K, NAS

This is a slightly different presentation of the Cumulative Tick chart, and it shows the cumulative tick of the individual stocks that comprise the S&P500, the Russell 2000, and the NASDAQ-100.
Key here is that at about 1:27 pm ET the buying algos kicked in full-force, and you can see this very clearly in the middle plot in the S&P500 window to the left. The trajectory upward at a steady angle shows that the S&P500 stocks were steadily bought almost to the end of the day. Only in the last few minutes did we see some selling, and you can see it clearly in the S&P500 and NASDAQ charts on the left and right respectively.
While the number of 52-week New Lows dominates across the exchanges relative to the 52-week New Highs, this behavior of the individual cumulative tick on each exchange is constructive.
Cumulative Tick, NYSE
Despite the selloff in the major indexes, the NYSE simply kept the selling pressure at a constant level (more or less) until the aforementioned 1:27 pm ET. From then on a reversal was apparent, and buying started and continued throughout the afternoon.
We are a long way from being in "full long" territory but the behavior today was not nearly as bad as suggested by the prices of the indexes. I'm encouraged by what I see.
Strategy
I was a buyer today, but I have only about 8% of my assets in equities. I buy strength, and many individual stocks that I'm interested in FELL in price today, so no entry.
I've reset the entry for tomorrow to be 0.1% higher than today's high, GTC, BUY STOP valid after 9:45 a.m. ET. Obviously, these are still rated "LONG" and I'll most likely get a better entry. A few more stocks in my dividend portfolio signaled long, and new entries will be created.
The Greenfield Bargains portfolio is growing dramatically with candidates. These stocks have solid EPS and revenue fundamentals, but have been beaten down into the ground on this latest pullback:
Many of my candidate stocks are still indicating some form of "CASH" status and will not be entered. I simply do not have enough stocks to take me to 50% equity position, which is normal in this type of pullback. I expect this will change quickly over the next week as we get a new set of leaders to emerge.
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Standard disclaimers apply. 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

Tuesday, October 14, 2014

Early Buy Signal - Tuesday, October 14 Close

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Overview:  Effectively a repeat of the same signal last week.  Early, tentative.

Timer Status:

Short-term timer:  LONG
Intermediate-term timer:  CASH
Long-term timer:  CASH
Long-Cash Ratio:  Increased +19% to 0.189 (hit a low of 0.158 on 10/13)
Percentage Stocks with a "Long" Recommendation:  15.9%, up 2.2% from 13.7% on 10/13 (incredibly oversold).

Slope Table:


The right side of the table has a bit more green on all measured time frames, so the past two days are showing a significant slowing of the decline in the number of stocks that are moving from a LONG status to a CASH status.

The left side of the table shows that the 2d, 3d, and 5d moving averages are above zero.  This means that we're starting a trajectory upward, and is my initial buy signal.

This buy signal failed last week -- it may fail again, I don't know.  Your crystal ball is as good as mine.

Cumulative Tick:



The cumulative tick chart shows that we are early on multiple indicators.  The top series simply shows that we are still seeing far more 52-week lows than we are highs -- in fact, it ticked upward near the end of the day, which is bad.

The middle plot shows the behavior of algorithmic buying/selling.  We started to see some buying going on early, but as the day progressed, we eventually gave up the ground we gained.  Again, not a good sign.

The most telling thing here is the bottom plot.  Steady downward slope of the longest moving average (red), telling us that there is far more selling going on than buying.  This is not a good market to be buying stocks, period.

Strategy:

For those stocks that are GGT "New Long", "Aff. Long", or "Long", with a Calmar Ratio of greater than 3.0 and listed on the "Dashboard" tab (check the dropbox file), I'll place an order to enter 50% of a position size.  For my dividend portfolio this is a 2% position.  For my Greenfield Leaders and Greenfield Bargains portfolio it will be determined in the morning -- if you're interested send me a private message and I'll send you my allocations.

I'm suspect of this market, so I'll keep entering on the signals but I'm not going to be overly aggressive.  I am honing the watch list though, and the "Dashboard" tab of the dropbox stock file has the latest listings of what I consider value stocks.

I'm not losing any money in this market despite having some positions in my dividend portfolio.  Granted, I'm not making any money, so the system seems to be working.

Here's the latest equity curve:



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Standard disclaimers apply.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd


Monday, October 13, 2014

Blog Will Return 10/18/2014

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Updates will resume no later than 10/18, sooner if we get a status change.  Busy week for me this week and need to refocus on other priorities.

Regards,

pgd

Friday, October 10, 2014

Reversal -- Thursday, Oct 9 Close

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Overview:  Timing signal from yesterday to enter up to 50% equity reversed with today's action.  Back to cash.

Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  CASH
Long-term timer:  CASH
Long-Cash Ratio:  FELL -12% to 0.215 


A reversal.  Back to cash.

Slope Table:


No extended commentary required.  A reversal.  2nd time this has occurred in the last month.

Cumulative Tick, by Index:


The number of 52-week New Lows completely dominated across the board, and this is not what we need.

Strong algorithmic selling across the board in all major indexes, all day (middle plots).

Overall trend, although attempting to bounce back during the day, was characterized by lower highs and lower lows.  Today was a selling market, which we all know.  No hidden nuttin' -- the exits were clearly visible.

Cumulative Tick


Almost the same commentary here, so not much to add.  Across the board, selling at the NYSE, and much of it was program selling.  Note the lower low on the (white) cumulative tick -- this isn't a favorable setup.

Strategy:

A signal reversal, when everything was previously in cash, means get back to cash.  Wrong time to enter.  I entered a number of positions today and I'm setting a 1% trailing stop loss, GTC, on all positions except those in my Dividend Payers portfolio (which is not timed using the macro signal).

Reversals happen, and the important thing is to be nimble.  I may get a signal to re-enter on Friday (for Monday's market), or Monday (for Tuesday's market), etc.  I simply do not know.  Positions with sell orders that do not execute when a new buy signal is generated will be "accepted", e.g., the sell orders will be cancelled.

Although we are quite oversold here, we could go lower.

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Standard disclaimers apply.

Regards,

pgd

Thursday, October 9, 2014

New Short-term Entry Signal, Wed, Oct 8 Close

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Overall:  We have a change in the short-term timer status, which will move up to 50% of my holdings into the market.

Timer Status:

Short-term timer:  LONG
Intermediate-term timer:  CASH
Long-term timer:  CASH
Long-Cash Ratio:  Increased +30% to 0.244
# Stocks with LONG rating:  Increased +3.8% to 19.6%

Slope Table:


The trigger to move into equity markets was signaled using the 2d, 3d, and 5d, indicators above.  Historically, this has proven to be a good entry, but of course, your crystal ball is as good as mine.  Aside from yesterday, we do have a good amount of "green" on the right side of the table, indicating that the selling, while continuing, was doing so on a less-per-day-over-day rate.  Net-net, not a perfect signal, but good enough to start looking for stocks.

Cumulative Tick:


The top plot shows that the 52-week New Lows are still significantly outpacing the 52w New Highs.  This is NOT a good setup for a sustained bull, so this needs to change within the next day or two.  Look for green over red.

The middle plot shows that at about 1:30 pm ET today the buying algorithms kicked in.  Buying remained strong for the remainder of the day.

The bottom plot is the most bullish plot that we've had in some time.  This shows that all the slopes of the cumulative tick averages are now positive, and it shows that we have a solid push of the real-time cumulative tick over the averages, causing them to turn up.  This is a good signal.

What we need over the next few days is for the white to remain significantly above the red average, which will pull everything upward.  This means that buying is occurring in the market, and it means that the tide will start lifting all the boats.

Strategy

My greenfield leaders list is my go-to list for stocks that are leading the market:


These stocks will most likely continue to perform well in the near future.

The following stocks have solid fundamentals but have been beaten down below their 50d MAs.  Value could be recognized quickly in these, especially those near their 50d MAs, and they could jump to the greenfield leaders list quite easily:



Dividend stocks that are on my buy list are as follows:



The top dividend stocks are beaten down -- you can see this in the close-50 column.  The bottom three stocks have held up well.  All of these stocks have accelerating dividends, relative to the prior quarter as well as one year ago.

In intend to add to my existing dividend portfolio positions.  These positions are rated some form of long status in the GGT stock file, which is available to subscribers in the shared dropbox folder.

I intend to buy other long-rated stocks that can be found on the "Dashboard" tab of the file.  I do not do any form of allocation with the dividend portfolio -- each stock gets 2% of my capital until I have 50 positions.

I intend to buy other long-rated stocks that are in the greenfield leaders list.  I will be determining positions using Sharp allocations.  The actual allocation amounts are listed in the stocks file on the Portfolio tab.

Entry for all positions will be using a BUY STOP that is 0.1% higher than today's high, measured after 9:45 a.m.

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

Regards,

pgd


Tuesday, October 7, 2014

Tuesday, October 7 Close Update

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Overall:  no change.  Keep your powder dry.

Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  CASH
Long-term timer:  CASH
Long-Cash Ratio:  Increased Monday +3% to 0.213 but FELL Tuesday -12% to 0.188
% Longs in the Database:  15.8%

Slope Table:


Overall down day but mixed in severity.  A falling LCR, combined with a sea of negative slopes (left side) and mixed signals on the slopes of slopes (right side) means go do something fun and ignore the markets.

Cumulative Tick Chart:



Increased number of stocks making 52-week New Lows is the wrong direction.  Serious algorithmic selling in the afternoon ended the day with a net negative in terms of net buying/selling.  The long-term cumulative tick average has turned more negative again, and is being taken south by the real-time cumulative tick (white).

Strategy:

I'm taking Wednesday off, as their is little chance of a buy signal.  I'm nearly 100% in cash.  While we are oversold, we can go further down.  There is no indication that we're at a bottom.

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Standard disclaimers apply.

Regards,

pgd

Sunday, October 5, 2014

Weekend Update, Friday, October 3 Close

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Admin Note:  On the left is a field to enter your email address to automatically receive my updates.  Please use this.  I promise I will not use your email for anything (I only check to see who has recently joined).  Note that you'll get a message from Feedburner to confirm the subscription, then you shouldn't get anything more except this blog.

Timer Status:

Short-term Timer:  CASH
Intermediate-term Timer: CASH
Long-term Timer:  CASH
Long-Cash Ratio:  INCREASED +7% to 0.207
% Long-Rated Stocks in Database:  INCREASED +1.4% to 17.1% out of ~3000 total

Timer Table:


(right click on the image to open in a new tab or window)

Nothing new here -- although we had a one-day rebound, it was not nearly enough to reverse any of the timers.  The table obviously indicates that we should be extremely careful on the long side.

Slope Table:


We are still incredibly bearish and oversold in the markets.  The LCR reading of 0.207 is very low, but as I've said in prior posts, we can go lower.

The right side of the table now has two days of across-the-board "green".  "green" means that the slope of the slope is positive for the indicated time range, and this means that day-over-day, the left side of the table (all "red") is improving.  We need to continue this behavior in order to get the left side of the table to turn green (why?  make sure you understand why).

With respect to the left side of the table, the slopes show that while they are still negative, they are improving (becoming less negative, and this is indicated by the green on the right).  I'm specifically watching the 2d, 3d, and 5d moving averages on the left side of the table -- we are close to a transition, and when this occurs, it's time to enter the market on the long side (but not jump in with both feet).

Here's a graphical view of the left side of the table:


You can clearly see that the 2d is almost ready to move positive.  This, by itself, will NOT be a buy signal, but it will be an improvement over what we've had as of late.

I need the 2d and 3d to transition to positive territory in order for me to start buying.  The 5d will confirm either the same day or the next day.  There's a significant edge to catching this timing correctly:


The data used to create the table above spans from September 2008 to present.  The table above shows the number of buy signals that went on to yield a positive GGT index value (closely correlated to the Russell 2000 index or the ETF IWM) by the time a sell signal was generated.  Right now all the LCR slope moving averages are RED, which means they are in cash.

Let's suppose that the 2d does transition positive, but the 3d and 5d remain in the red.  The table above tells me that when the 3d transitions to positive (but not the 5d), that 71% of the time the GGT index, if it could be bought at today's close on the next day, would remain above the waterline for the rest of the signal.

Now, let's suppose that the 2d and 3d transition positive, but the 5d remains in the red.  On the next day when the 5d turns history tells us that 43% of the time that trades placed on the next day will end positively.

If the 2d, 3d, and 5d transition all at the same time, then 38%-40% trades placed on the next day (in the GGT index only) work out with a positive return until the next database sell signal.

Since I typically start selling long before the database issues a full sell signal my methods typically improve on these stats, but these are "worse case".

Note that the longer I wait to enter the market after the signals transition the poorer the entry does over the long haul.  This makes sense -- it's the initial rocket off the bottom that causes me to establish gains, not later after money has already rushed in and profits (selling) are being captured.

You can see from the table above that re-entry, once a signal is mature, can also be hazardous to your portfolio unless it is done carefully and in context.  Let's say that everything was "green", then we moved (temporarily) red on the 13d time frame (and everything shorter).  If we return to "green" on the 2d - 13d, with the 21d-65d already being green, buying on the day after the signal only works 14-19% of the time.  This means that 86%-81% of the time the signals fail when taken late in the cycle.  Food for thought.

For me, initial buying will start with the transition of the 2d and 3d.  I'll start ramping up fast when the 5d goes, but only to 50% invested, as I'll presume that the intermediate and long-term timers will still be in cash.  I'll increase to 75% when the intermediate timer goes long, and then to 100% when the long-term timer goes long.  With rare exception all the slopes will be green by the time the intermediate or long-term timers transition.  It typically takes me about 1 week (5 trading days) to go from full cash to fully invested, but of course, this is dependent upon the timer transitions.

Cumulative Tick Chart:


This is a slightly-different view of the cumulative tick chart than what I normally provide.  This one breaks apart the stocks of the SP500 (left), Russell 2000 (middle) and the NASDAQ.  The overall format is the same as my broad cumulative tick chart, which I'll present below.

In the above figure the SP500 ended the day with some strong buying, which I view as positive if you're in the SP500.  On the other hand, the Russell 2000 and the NASDAQ saw selling for a good portion of the day, which is NOT a healthy market.  Although the indexes were up Friday, the chart above proves that it was largely window dressing on the large-cap SP500, and the small-cap R2K and NAS both saw net selling.

Buyer beware if you are considering anything other than the SPY or options tied to the SPY.



Here's the more familiar cumulative tick on the NYSE.  52 Week New Lows still are outpacing the 52 Week New Highs, but at the smallest level all week, so while bad overall, this is the right trend.  Look for green over red for a more healthy market.

Overall, we had net buying in the markets on the NYSE on Friday.  This is good, and we need more of it, or at least, less net selling.

The bottom graphic is important as it shows improving conditions, but we are not out of the woods yet.  First, the slope on the longest moving average (red) is still negative, but it is less negative than the previous few days.  The real-time cumulative tick (white) is very close to crossing the red line from below, and this is absolutely required to turn the red line positive, and get the rest of the ribbons to turn upward.  Hence, we're much closer, but we are not there (yet).

We may get sustained white-above-red starting on Monday, as we did back on 9/30, only to fail, or it may continue higher.  Your crystal ball is as good as mine.  While this does not influence my timer status it does impact how I perceive the markets, and white-over-red is required for me to move aggressively into the markets.

Equity Capture



The chart above reflects the change in equity since I went live with my various portfolios.  I'm still honing some of these portfolios, so past results are no guarantee of future performance.  I expect that, because of GGT recommendations of moving to CASH on future holdings, that the near-term equity curve will look like the left part of the curve (the curve does not report unrealized profits).  Note that the large jumps upward in equity are due to positions being closed when my model issues a sell signal or a partial move to cash.

TradeStation allows me to report on Mark-to-Market rolling analysis, so this gives a month-to date performance so that I can see where the system models are converging.  Note that these percentages presume 100% investment of cash, which is not correct since I scale-in/scale-out, so actual performance per trade is better than indicated.  At the end of the day all that matters is what is in the account, so perhaps scale in/out errors in the reported calculations are moot.

The account is up +8.49% since 4/1/14 with a profit factor of 2.37, which appears to have stabilized.  We'll see if I can keep this up going forward - it's a considerable amount of work.



Watchlist:


The table above is my "Greenfield" watch list.  The stocks above the black line have solid fundamentals AND solid (recent) price performance.  The stocks below the black line have solid fundamentals BUT have been (recently) beaten down below their 50d MA.

Both sets of stocks are good candidates (in my opinion) for future gains when we get a new buy signal.  Indeed, some of the stocks in the top section are already breaking out (take a look at FNHC, CP, BABY, EW, KNX, AGN).  These early breakouts rotate depending upon the market, so if the market tanks here, expect that these too will see some hit.

Nevertheless, here are links to the two sets of stock files so that you can do your own diligence:

Greenfield Stocks:   http://goo.gl/iExJR2

Greenfield Bargains:  http://goo.gl/wFa0Wi

Strategy

No buying planned for Monday.  With the exception of my holding ABT, these stocks self-trigger using the GGT timing recommendations.  My present holdings in the only portfolio that is active -- the GGT Dividend Players Portfolio -- are:


I'm looking specifically at adding to all of these positions as well as adding TJX, NKE, PLOW, NVO, PEP, MCD, CBRL and BLK.  My addition/new position strategy is to buy strength, and I will only buy if the price after 9:40-ish a.m. takes out the previous day's high by 0.1% AND the purchase price is higher than this threshold.  I'll say it again -- I buy strength, not bargains.

As I said, ABT is a holdover from a different portfolio and somehow the sell order got cancelled and had to be re-initiated.

Late Monday is a travel day, and I'll be on the west coast all week.  There will be no blog entry Monday night unless we have a signal to move long.  Check Twitter (@grems8544) if you are interested in tracking the next signal (along with my other ramblings).

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As with all my postings, you are responsible for your own decisions and I am not.  Please take ownership for your actions, please do your own diligence, and above all, please understand WHY you are doing what you are doing.

Regards,

pgd