Thursday, December 24, 2015

Initial Buy Signal, December 23rd

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My trusty LCR table continues to show signs of strength, specifically on the left side where we have the 5d slope of the Long-Cash Ratio transitioning to a positive value:

Click on the image to enlarge.

The right side of the table is a sea of green, indicating that acceleration to the upside for the entire database is picking up.  This is a necessary condition to get the left side to turn green.

The cumulative tick is showing strength too:

Click on the image to enlarge.

The number of stocks on the NYSE that are hitting new 52-week highs equaled the number that were hitting 52-week new lows, so we're moving in the right direction.

The middle plot shows 2 days of sustained buying in the markets -- the big boys leave big tracks.

The bottom plot shows that there was no weakness yesterday -- sustained buying has provided us a nice upward/right movement of the cumulative tick.


Now, all of this being said, this is an early signal.  I intend to commit fully, but I also intend to put some stops in place -- about 3% below my entry.  I am going to commit fully because we are in prime buying area on this cycle:

Click on the image to enlarge.

We are below 1 standard deviation where the markets typically turn  upward -- some would call it "oversold" in terms of placement -- I simply call it a high probability location for price increases for the overall database.

Markets are prone to failure around light volume periods, so have a plan -- have protection.

I buy strength -- period.  I set my order to a BUY STOP that is 0.1% higher than the previous day's high, timed to be effective after 9:45 a/ET, good-til-canceled.  If it doesn't fill and the stock still looks good I will lower it the following day.

My perfect setup is multiple days of decreasing volatility and today's action rocketing upward, both in price and volume that takes out at least the volume of the previous 10 days.


Shopping Lists

We are in prime shopping territory.  I have my lists ready, and they are comprised of quality stocks.  Some lists are better than others.

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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.