Friday, April 24, 2015

Fully Long Signal, Close of April 23rd Markets

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Summary:  With the close of markets on the 23rd, my indicators are showing that it's time to be fully invested in the market.  As always, there are warning clouds on the horizon, but there rarely is a perfect blue-sky environment when it comes to investing ...

Timers:


Taken in isolation, all indicators are now long which directs me to become 100% invested.

Long-Cash Ratio Slope Table:


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

The LCR table has transitioned to fully long, with the LCR moving from 1.193 to 1.263, or a move of 6% upward.  This is NOT a big move -- out of all the positive moves since September 2008 it ranks at 575 -- the lower the number the better.  Contrary to the news headlines about the NAS making new 15 year highs, etc. this is not a strong market when we look under the hood.  The "island" of red on the left side of the table indicates that we had a slight pullback, but not everything transitioned so we did not get a "full reset".  Investing in markets that are NOT coming off a bottom is risky business, and my model does not contemplate this specific scenario (but I do...)

You'll see in the next section that we're still in a risky position but certainly, indicators are more positive than negative.

Percent Longs

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

The takeaway from the figure above is that we're closer to where we have historically sold off (light red) than where we make major advances (light green).  This simply means that while my short/intermediate/long term timer models are saying to jump in with both feet, the reality of the situation is that we should be a bit more cautious.

Transitions Edge


I keep track of the success of signals given various conditions of the LCR table.  The figure above paints the current scenario.

Coming into yesterday morning the 2d, 3d, 55d, and 65d moving average slopes were positive with respect to the LCR.  We transitioned to a fully-long market with the close last evening (close of 4/23), so we had a transition of the 5d, 8d, 13d, 21d, 34d moving averages.  The table above indicates that the likelihood of investing today in the GGT index (a simple average of all the stocks in the present database and closely resembling the S&P500 or the Russell 2000) would likely work out between 13% and 41% of the time.

These aren't bad odds, but of course, actual mileage may vary.  This simply tells me that investing in breakouts today as well as other stocks that are moving long probably is a good risk, at least for the short term.

Note that table above uses ANY timer transition to stop the evaluation.  Hence, if the short-term timer moves south, the numbers are calculated, OR, if the intermediate-term timer moves south but the short remains long (possible in this environment) then we terminate the calculations.

Strategy:

I'm a buyer today.  Here are the candidates in my various watchlists:

Steady Eddies:
AZO
CERN
DLTR
HSIC
MD
NVO
ROL

Greenfield Accelerating Dividends:
AAPL
DL
HAR
MATX
MKTX
PZZA
Greenfield Bargains:
AXN
DL
TNET

Greenfield Leaders:
AEC
AFAM
AHS
AMAG
ANIP
APOG
ARIA
BABY
BONA
BSFT
CBM
CDXS
CHGG
CMPR
CNC
CORT
CVTI
CYNO
DEPO
DXCM
EIGI
ELLI
EW
HALO
HAR
HILL
HOFT
INFN
IPGP
ITG
KMX
LGND
LXFT
MACK
MASI
MATX
MKTX
MMS
MNTA
NLNK
NTES
NXPI
PZZA
QLYS
RAX
SCMP
SKUL
SWKS
TNK
TSEM
TWTR
ULTA
USPH
UTHR
VIPS
VRX
XON
BJRI
ISIS
KIRK
RAD

Greenfield Dividend Champions:
AAPL
AOS
ARMH
BNS
BR
CHE
DIS
EFX
FDS
JCOM
LAD
LEA
MCO
MKTX
NKE
OXM
OZRK
PRE
RY
SBUX
SCI
SIAL
SIG
SYA
TSCO
UDR
V

Breakouts on any of these stocks has to be checked in terms of earnings and when they report.  I'll try to buy any price/volume breakout that has already reported.

A breakout for me is taking out the previous day's high plus another 0.1%.  This has to occur after 9:45 a.m.  Volume predictions for the day need to be 100% or greater of the volume of the largest DOWN day in the previous 10 days.  

I am alerted in breakouts using a texting service.  I have room for two more FREE slots if you are interested -- send me a note at pduncan { a t ] V t _dot_ edu (removing the appropriate characters and using the appropriate symbol for at) with TEXTING in the subject line and I'll try to add you as soon as I receive.  Try to send this before 9:45 a.m. ET as once the service starts for the day I do not want to stop it to add your cell number.  I need your cell number as well as your carrier (e.g., 703-123-4567, AT&T).

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As always, these signals are for me and are provided to you for education purposes.  You are responsible for your own actions, and I am not.  Please do your own research, diligence, and thought processes, and please take ownership for your actions.

Regards,

pgd