Sunday, March 8, 2015

Intermediate-Timer Confirms Move to Cash, Mar 6 Close

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Summary:  The intermediate-termed timer has solidly confirmed a move to CASH.  The short-term and intermediate-termed timers are now recommending CASH status, and this indicates that equity exposure should be no higher than 25-33%, 25% if you are more conservative, 33% if you are more aggressive.

Timer Table:


LCR Slope Table:

Discussion:   The long-cash ratio fell -22% to a value below parity, or 0.969.  This means more stocks in the database are recommended in CASH compared to those that are recommended as LONG.  The trend is down, so I expect to see this get worse before it gets better.

Study the slope indications above.  All the slopes of the moving averages are now negative, meaning that we're entering a bearish period.  On the right side of the table, there is far more red than green -- and we need the slopes of the slopes to turn upward before the left side of the table will turn green.  We are not there yet, so I'm being cautious.

Cumulative Tick


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

Discussion:  More stocks hit their 52-week New Lows than new highs by a thin margin.  I do not buy stocks when this is occurring.

The middle trace shows a red line that fell throughout the day.  This is the cumulative tick, but with a 500 stock/minute filter on it -- when it ticks down, you know that on net, more than 500 stocks are being sold per minute (net).  This usually occurs in short bursts -- not like what you see above.  Many people unwound positions all day long.

The bottom trace is the ominous one.  At about 12:15 pm ET or so the cumulative tick plunged below the 10-day MA, and it never looked back.  I DO NOT BUY STOCKS when this value is below the red trace -- stocks are being sold, not bought.  If the slope of the white line is down I don't even consider buying, not even breakouts.  The headwinds are simply too strong.

My Strategy:

Raising cash.  I plan to continue raising cash, as I did most of last week.  My new target is between 25-33% invested, with the rest sitting in cash.  Here's how I do it:

1) sort all holdings from worse to best
2) sell weakest positions with a 1% trailing stop loss (TSL), good-til-cancelled (GTC), effective after 9.:45 a.m ET
3) keep the sell orders in place until they execute or until we get a buy signal.  Doubtful that Monday will reverse as strongly to the upside.

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You are responsible for your investment decisions, and I am not.  Do your ow diligence, and please take ownership for your actions.

Regards,

pgd