Thursday, September 3, 2015

No Buy Signal, as of September 3 Close

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All my timers are still recommending CASH.

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Although I was anticipating that we'd move higher, today saw barely a change in the markets as a whole.  Volume was noticeably light in front of the Labor Day weekend, and this impacts my LCR metric.

To refresh you:  The Long-Cash Ratio is a metric I developed that is based on the aggregate number of stocks that are rated some form of  "Long" and some form of "Cash".  To move to the "Long" side and become designated as a "New Long", price AND volume must be present.  Even if price moves up, the lack of volume will keep a stock in some form of "Cash".  Hence, when volume is low, we get less "New Longs", and today is no exception.  Average is 72 "New Longs" per day, on an up day, and today produced 34, with first standard deviations between 41 and 103.

A light day.

I expect that Friday will be light too.

My primary indicator of the market, the cumulative tick indicator, looks improved over yesterday:



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

We're still outpacing the New 52-week highs with more 52-week New Lows, which is bad overall.  We are well off our highs over the past year and many stocks are still getting beaten up.  Hence, the top trace tells me that risk is high -- the water is flowing OUT, lowering boats right now, not raising them.

The middle trace is constructive.  It started positive for the day and stayed there all day.  This is a filter set to 500 transactions per min.  If 500 ticks in one minute are ending on the next higher increment (indicating lack of supply and rising prices), then it moves up one notch.  The converse is true too.  This is a good algorithm indicator for buying/selling stocks electronically, although we're not seeing that now.  A positive bias here is good -- the markets generally are buying.

The bottom trace is bullish and there is nothing preventing me from entering the markets if they signal long.

Strategy.

With no confirmed buy signal, there is little to do Friday.  Enjoy the long weekend, and I'll post more later Monday night.

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Regards,

pgd