Sunday, January 11, 2015

Still on a 33% Equity Signal, Close of Friday, January 9

Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  MIXED and WEAKER
Long-term timer:  LONG
Long-Cash Ratio (LCR):  0.687, falling

As you can see above, the short-term timer is in cash and has been so since the beginning of the year.

The intermediate-termed timer is in "mixed" status, which means that internally things are not confirming.  This occurs in a weak and/or uncertain market, and basically, on an intermediate term basis (2-6 weeks or so), we're really choppy and if this is your typical holding time frame, you're probably better off in cash.

The long-term timer is still long, so on a 1-4 month time frame, we're still in positive territory.  It's important though to understand DELTAs, and this is what the next table does:

Long-Cash Ratio (LCR) table, aka the "slope table"

From the left:

The long-cash ratio (LCR) is at 0.687, which means that for every 1000 stocks that are recommended to be in CASH, only 687 are recommended as potential candidates (subject to further screening).  The key here is that the trend is downward, except for 1/7 and 1/8, so the market trends are not with us.

This is not a buying climate, at least not yet.

The left side of the table, which is red, simply tells me that on multiple time frames that the LCR slopes are negative, e.g., more stocks are moving to CASH recommendation on a day-over-day basis relative to stocks that are moving LONG.  If you believe that a "rising tide lifts all boats" then the ebbing tide is lowering all boats -- this is what we're seeing now.

More importantly is the right side of the table -- we had two solid days upward BUT you can see that the slope of the slope, or the change in slope on a day-over-day basis, was mixed to negative.  This isn't good, and it certainly is NOT buying time.

Cash is king, at least in my portfolio.  You do what you want.

Just to stir it up a bit is the following:

Cumulative Tick Chart:

Despite recent performance in the markets to the downside, this set of indicators tells me that the markets are buying, at least in an underlying sense.  From the upper right:

1) the green line over the red line tells me that the 52 week New Highs is greater than the 52 week New Lows on a daily basis.  This is necessary for me to buy stocks.
2) in the middle graph, you see the reversal in algorithmic buying, which ended up with a positive slope for the day.  This too is a good sign

In the lower pane, note that

a)  note that all the slopes are positive.
b) note that white is over red, e.g., the short-term instantaneous cumulative tick is above the moving averages.

Both of these indicators are good.  Hence, the "gates" are enabled, but we are still weak in the markets.


I'm targeting 25%-50% equity with the rest in cash.

With the Cumulative Tick setup above, we're a go for buying, BUT, I need to see the LCR stabilize and start moving upward.  It's not doing that, so as far as Monday is concerned, I'm not buying.

Take the day off and enjoy something else.  If we see positive action Monday then we'll probably get a buy signal.  I'll post if that occurs.