Thursday, August 13, 2015

All Timers are Recommending Cash - August 13 Close

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With the close of markets today, August 13, my short term, intermediate term, and long-term timers have transitioned to cash.



Correspondingly, the new target cash position is 100%, e.g., move out of equities at this time.

The LCR table moved to a bearish position today, indicating that despite the reversal yesterday (Wednesday), it's not safe to be in the markets, as the entire ocean is being drained (albeit slowly):


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The left side of the LCR table shows that the database long-cash ratio is dropping day-over-day, which means the air is slowing deflating out of the markets.  We're at low levels, with 0.526 indicating that for every 526 stocks that are recommended in some form of long, 1000 are recommended in cash, and the trend is dropping.  When this is occurring it's not a good time to purchase stocks.

The middle shows that all the slopes of the moving averages are now negative.  From very long, to very short moving averages, all are feeling this and all are pointing down.

The right side shows three consecutive days of downward-accelerating movement in the markets on all measured time frames -- on a day-over-day basis, more stocks than the previous day were moving to cash.  This is a downward acceleration.

There are exceptions, of course.  If we take all my "Greenfield" stocks (screening criteria is elsewhere in the history of this blog), and take those that are recommended long as an index, the index is relatively strong:


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Ignoring all the noise in the graph above (I'll explain some other time), the fact that all the various pricing moving averages are lower-left / upper-right AND they are not crossing tells you that the basket of Greenfield stocks are still good stocks (although if you look closely you can see that they are somewhat overbought and are struggling to make new highs).

The concept can be used to check various portfolio strategies, and as many of you know, the Greenfield Bargains portfolio is having a rough time of it:



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

This is a plot of all the stocks that are current long in the Greenfield Bargains portfolio.  Basically, you can see that it's flat in performance, and what this means is that it's going to be really hard to make money in this portfolio if the stocks in the portfolio are struggling.  Because this portfolio invests in stocks that are quality stocks BUT are beaten down, it is no wonder that this is a hard portfolio to move upward in the present climate.

Contrasting, my best performing portfolio is the Greenfield Dividends portfolio.  Here's the same presentation:



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

Again, note the lower-left to upper-right price appreciation and the moving average lines.  This portfolio is intact.

Because I'm sure someone will ask, here's the Low Beta portfolio:



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You can see that the Low Beta portfolio is intact and advancing, although it's not made much progress over the past week.

The Cumulative Tick is the biggest tell -- despite the mid-day reversal on Wednesday, today ended on a nasty note with a sell-off in the last 60 minutes, almost to the perfect 3 p/ET start time:


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

As I tweeted earlier in the day (around 11 a/ET), 52 week new lows were outpacing 52 week new highs.  You can see this in the top trace.

The middle trace was more/less flat -- indicating no program selling or buying.  If you are looking for a reason to be optimistic I guess that would be one.

The bottom trace is the cumulative tick and this one shows that the end-of-day tick started selling off (look at white trace).  It's starting to cut through the moving averages (bad), and if it drops below the lowest one (purple), all of the moving averages will start heading south with a negative slope.  Again, that is not the time to be buying stocks.

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Strategy:

The Dividend portfolio remains 100% invested.  It does not follow the timers. As I showed above, it's doing very well in this climate.

The Bargains portfolio will be closed and cash will be raised.  The target is 100% cash.  I plan to use a 1% stop loss, reset daily for the C2 portfolio, but use a 1% trailing stop loss for the TradeStation accounts.  In both cases orders are not valid until after 9:44 a/ET.

The Low Beta portfolio, although stronger than the Bargains portfolio, is under pressure.  I'll raise cash quickly if I see it falling apart.

The Leaders portfolio is only partially invested.  I will not add to it in this climate, but I'm not closing it fully either.  Stocks that move to a "New Cash" recommendation will be sold using the same method above as the Bargains portfolio.  In fact, this applies to all portfolios without exception.

In short:  choppy waters make the management a pain in the tail.  The easiest portfolio is the Dividend portfolio.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Bargains:  https://www.collective2.com/details/95793176
Greenfield Dividends: https://www.collective2.com/details/94780986
Greenfield Leaders: https://www.collective2.com/details/94921209
Greenfield Low Beta:  https://www.collective2.com/details/95702992

GGT Stock File (for AUG 13):  https://www.dropbox.com/s/tz6irmsncgkh18l/GGT20140503-Stocks-15AUG13.xlsm?dl=0

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As with all my ramblings, 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