Thursday, August 20, 2015

Risky to Buy Stocks at this Time - August 19th Close

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Independent of some of the tweets I'm seeing from some well-known momentum masters, it simply is not a good time to get into a new round of stocks right now.  As evidence of this I present a simple chart:  the Cumulative Tick



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

The top trace is the 52-week New Lows (red), the 52-week New Highs (green), and their difference (yellow).  When red is above green there are more stocks on the NYSE that are making 52-week new lows than new highs.  When the yellow trace is negative (it is at -589 in the picture) then we have a domination of new lows.

I [DON'T] buy stocks when we have such a strong domination to the downside. [EDITED THE ERROR]

The middle trace is a filter that I've created to watch algorithms in their buying/selling activity.  Right now it's set to 500/minute.  500 what?  500 NET stocks that are ticking lower (bids outpacing asks) per minute on the NYSE.  A transaction (buy or sell) occurs, and to get the next order filled, the price has to move up or down.  If it moves down that's a tick lower.  If it occurs 500 times per minute or more in aggregate then the red line moves down one mark.  If it occurs less than this it prints the same (previous) value, so you get a straight, horizontal line.  If you see a bunch of downward-directed lines then folks are selling their stocks -- they are unloading them.

You can see with the middle trace that we started to tick up -- the FED was giving their spin on things, and the market thought it was all good.  Unfortunately, once the market started reading the language and started to do their interpretation, it wasn't so good, so the markets resumed their spin down.  The afternoon peak in the 2nd plot occurred about 2:25 p/ET and the bears took over for the rest of the day.

The bottom trace is my cumulative tick.  It's an accumulator, nothing more, nothing less.  The real-time trace is white, the longest moving average is bright red.  When white is above red we're in good shape, and when white is above ALL of the lines, we're most likely in a short-term up-trend (just look back two days).  To get sustained buying of any confidence, I like to see white-above-red for 2-3 days without white crossing back below red.

The cumulative tick timer reset on 8/19, so I'm not in a hurry to buy new stocks.

Patience.

I'm working today, and doubt I'll be watching the markets much.  Sell orders on GGT "New Cash" recommendations have been placed, I've cancelled all outstanding buy orders in all accounts, including the Collective2 accounts, so there really isn't any need to waste time watching the markets today.

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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

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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