Tuesday, September 8, 2015

Basing, and Still on the Threshold of a Long Call - Friday, Sep 4 Close

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Ahead of the long Labor Day weekend shows a mixed picture, but one that I see has a positive bias:

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

The table above is the Long-Cash Ratio (LCR) slope table, and the left side shows slope of an indicator I developed and the right side shows the slope of the slope, or acceleration (deceleration) of those moving averages.

The LCR is a construct that I developed years ago -- it is the composite of about 3000 stocks, equally weighted.  Each stock has a "long" or "cash" recommendation based on historical price and volume action, and when I total up the number of stocks with a "long" recommendation and compare to those with a "cash" recommendation I have the LCR.

On the far left the present LCR is 0.177 -- 1.000 is parity -- and this tells me I'm incredibly oversold in the market.  For every 177 stocks that are "long" there are 1000 that are "cash".  Friday was a weak day, which I attribute to the long holiday weekend.

The green on the left indicates moving averages where the slope is upward -- positive.  The 2d, 3d, and 5d are presently positive (green), indicating that on a very short term basis the number of stocks moving "long" in recommendation is positive.  Interpret this as water starting to fill the (very) drained pond -- but we're at the start.  The remainder of the LCR moving average slopes are NEGATIVE (red), indicating that we're not yet moving upward, e.g., on the longer time frames we are still collapsing.  We are at the beginning of a new signal.

On the right we see a sea of green.  This side of the table is the slope of the slope, and for you math / physics folks, you'll recognize that if slope is velocity, slope of the slope is acceleration.  Hence, the sea of green on the right means that we're moving positive in many time frames, especially when you look back over the past week-plus of trading.  The 2d, 3d, and 5d, are negative in terms of acceleration, only because the lack of volume on Friday will prevent many stocks from moving long (in my system).

You ALWAYS -- no exception -- need more green on the right in order to get green on the left.  If you don't understand this ask.  Hence, we have the proper setup to move higher in the markets, and more importantly, sustain it.

This being said, all is not rosy:

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

This is my cumulative tick chart, and the top trace shows red-over-green.  This is a track of the 52-week New Lows (red) compared to the 52-week New Highs (green), as reported by the NYSE.  When we have red over green we're inverted of sustained uptrend, and the bottom line here is that entering the market right now is quite risky.  I will not fully commit to the market unless green is over red -- more stock making new 52-week highs relative to those making new 52-week lows.

The middle trace shows a general unloading going into the weekend.  This is a filter -- 500 stocks per min to be specific -- either ticking up or down after a trade.  If more stocks are ticking up -- the price for the next lot being higher than the lot just transacted -- and it happens 500 times or greater per min for all stocks on the NYSE -- then the trace moves up.  The opposite is true too.  Here we have a bias south, and this means that Friday was a selling day.

The bottom trace is the cumulative tick, applied with moving averages, and you can see we're right on thresholds.  I want the white trace (instantaneous cumulative tick) to be well above all the moving averages, pulling them upward, much like you see from last Wednesday.  We had a bit of a reversal on Friday at the end of the day but in general, this is a risky chart.  If you don't understand why please ask.

The final cautionary view is one of the ETFs:

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

This is a screen grab from my ETF file that I put in the shared dropbox folder each evening.  It shows that across the board, without exception, that my system is still quite bearish.  As a lagging indicator it will always tell me what has happened -- it will never predict what is going to happen.  As such, you can see that over the past two weeks that for all the major indexes we are quite bearish, and have remained so.

Again, caution is advised.

The files in the shared dropbox folder are updated with the most viable candidates.  Please review these to get a sense of what is working right now and what is not.  If you are not a member of my dropbox folder, then ask.  To become a member, send an email to pduncan [ a t } v t {dot ] e d u  (fixing the address, of course), and in the subject put "Dropbox" and I'll add you to TWO groups -- my Yahoo group, as well as the Dropbox group.  I need you in the Yahoo group because it's the only way I can communicate with the Dropbox users.  If you do not accept the invitation to both I will kick you out of the list as I need you to be in both in order to effectively communicate.  It's that simple, and now you have my (only) ground rules.


There are presently no new buy signals, but I am close to entering the markets.  My primary focus is to get my Dividend portfolio up to being fully-loaded, and this is the only exception to my timers.  I'm close to buying positions, but only buy strength.

There are not many quality stocks on my "buy" list.  In fact, there are only 30 stocks in my universe that are quality (my definition) and are rated "long", so picking are slim.  These are stocks that have made it through the downturn and are looking solid -- fundamentals are good, price and volume behavior in this climate are good.  Some of these stocks have a considerable amount of buying going on that is "behind the scenes" and that is an indicator of solid accumulation by the Big Boyz.  Here's a short list of stocks being accumulated in a short-term that are quite attractive to me:


I am flying to the west coast Tuesday and will be there all week.  Posts most likely will be quite late in the evening or first thing in the morning.

I do not intend to enter en masse on Tuesday.  I will review the Dividend portfolio candidates and will set entries (quantity and buy point) as market conditions improve.

I will post any new signals as they occur.


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


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.