Sunday, September 13, 2015

(Weak) Short-term Entry Signal, Sep 11th Close

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A few readers sent personal questions asking the same thing -- do we have a signal to enter?  The short answer:  yes.  Target equity for stocks that are working is 33% equity, balance in cash.  The only exception is the Dividend portfolio, which is striving to become 100% invested.

All this being said, the entry signal is a weak one at best.  What is making it weak are two indicators, one which is internal to the GGT method and one that I frequently publish.

Weak Indicator #1:  Cumulative Tick


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My old friend, the Cumulative Tick, is flashing warnings everywhere.  From the top:

1) Red over green.  The 52-week New Lows are outpacing the 52-week New Highs.  Incredibly difficult to buy this market, or float a ship, when the bathtub is being drained.  Serious caution is advised.

2) The buying/selling algos are favoring selling into strength.  Admittedly, it's not strong either way, but it isn't confirming that the algos are buying.  I like to see algos buy, especially from 3 p/ET to 4 p/ET, which is when they are most active.

3) The instantaneous Cumulative Tick (white) is below the moving averages.  Yes, it's moving up, and doing so within intraday higher lows, but it's nothing to write home to grandma about.  Seriously, this is not a great presentation, so as in 1) above, serious caution is advised.

Weak Indicator #2:  GGT Recommendations with and without Volume

I've not talked about this one much but I've been running it since 2008.  For those of you familiar with the GGT recommendation system, you know the following:

1)   The only way we get to a "New Long" recommendation from any of the cash recommendations is to have BOTH price action and volume
2)   (Important)  The only way we get to a "New Cash" recommendation is to have price action drop below the optimized historical levels.  Volume doesn't matter.

Even though volume doesn't matter in a "New Cash", I still watch volume.  I keep track of two indicators -- one that has the net "how many stocks are transitioning to some form of cash status without any volume control", and "how many stocks are transitioning to some form of cash status WITH volume that is higher than the historical optimized threshhold?

The latter point is significant -- if we have a down day with higher volume than the historical optimized level then the stock is being sold, often by BIG BOYZ.  The take away is simple -- when the end-of-day price is negative, relative to the open, more stocks are showing an increase in volume.  A comparable situation is that stocks are dropping in price and their 20-day moving average is being squashed by the daily sell volume.

Caution is advised.

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This isn't to say that if your horizon is longer that you shouldn't be jumping in here.  I am moving long with my Dividend portfolio and am trying to get into the mix as fast as I can.  My primary objective is to have stocks that are generating dividends, and price appreciation (or depreciation) is secondary.  Finding quality stocks with a "Long" rating isn't as easy as you may think.

This being stated, all the "good" performing stocks are updated in the dropbox folder.  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.


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Strategy

In the Dropbox folder, pay specific attention to the Leaders and BigFootprints stocks.  The former are quality stocks that are seriously outperforming the market right now and BigFootprints are being bought by institutionals over the last 5d, 10d, 15d, and 20d time frames.

I'm seriously thinking of buying some of the BigFootprint stocks if they continue to move higher.

My Dividend portfolio, which is available for free for a limited time and is a low monthly subscription (really, it is a low cost relative to others of the same quality), is doing well right now.  The links to the C2 portfolios are below.

I'm going to take the Bargains, Leaders, and Low Beta portfolios to 33% as stocks allow.

I only buy strength.

I only buy GGT "long"-rated stocks.  A listing of these stocks is provided in the nightly GGT stock file, under the "Dashboard" tab.

In buying strength, I place a BUY STOP that is 1.001 x the HIGH of the previous day.  This is 0.1% above the previous day's high.  The order is only valid after 9:45 a/ET, in order to permit the book on the exchanges to clear.

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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