Wednesday, March 25, 2015

Short-term and Medium-term timers transition to CASH, 66% Cash Target, March 25 Close

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This was entitled "Uptrend continues - March 24th Close" as I wrote the blog this morning (Wednesday).

For continuity, I've included the early-morning March 25th entry (describing March 24th) below since it's been posted all day.

What a day a market makes....

The LCR took a significant hit today, dropping nearly 20% in 1 day from it's previous value.  This has had a dramatic impact on the LCR Table:


With the 2d, 3d, and 5d LCR slopes transitioning negative we have a change in the short-term timer and as such, raise cash to at least 66% of total portfolio value.

"Trade the market presented, not the one you want."

This was a severe move today and the volatility will cause me to pause about being long in this market.

Timer Table:


The table status tells the story.  Not much to add.

Strategy:

Even though I'm a medium to long-term investor, it's important to react to these signals as the model is based on next-day execution.  All the metrics I've developed presume that I've obtained the next day's close (or better) in my pricing on exit.  Hence, time to act.

1) I will sort my holdings from weakest to strongest
2) I will place a 1% Trailing Stop Loss (TSL) order, Good 'til Canceled (GTC), effective after 9:45 a.m., on all positions that are underwater.  Period.
3) I will place a 1% TSL GTC order on all positions above the water line that get me to 66% cash position when fully executed.
4) No buying, not even for my Greenfield Dividend portfolio.

Your crystal ball is as good as mine.  We could have a 1-day dip or this could be something deeper.  It's not worth holding on to.

Execute flawlessly and live to make money another day, to paraphrase the well-known saying.

Regards,

pgd

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BLOG ENTRY FROM EARLY WEDNESDAY, MARCH 25, BEFORE MARKET OPEN:

No changes to the model.  The uptrend continues and the short-term weakness is abating.


The LCR nudged upward +3% to 1.489.  This means that there are 1785 stocks in the database who have some form of "long" recommendation and 1199 who have some form of "cash" recommendation.  The numbers are increasing day over day for the past 7 consecutive days.

All slopes are positive through the 143rd day moving average.  The slope angle is increasing, which means that the trend is presently strong.  It could change, so this is only a day-over-day observation.

On the right side of the table I see that the slope of the slopes are negative from the 2d through the 13d, BUT, note that the values of the 2d through the 8d are less negative (more positive) than the action on 3/23.  This means that although the slopes (on the left) are trending down, they are doing so less and less on a day-over-day view.  This is a normal setup for a short-term reversal higher.

Again, no changes to strategy.  Just an update.