Monday, December 14, 2015

Not buying, but getting shopping lists ready

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 I received a note over the weekend asking what I'm planning to do for the next couple of days.  Without overthinking this too much, here is what I see:

The markets continue to show weakness, as we all are experiencing.  Probably the greatest indicator (other than our unrealized gains) is the Cumulative Tick indicator:


Click on the image to make larger.

The top plots show the new 52-week lows (red) and the new 52-week highs (green).  The net between each is yellow.  Bottom line:  continued decrease on a 52-week basis, with large numbers of stocks hitting their 52-week lows.   Conclusion?  Not a good buying environment.

The middle plot shows algorithmic buying and selling.  When the red trace is above the blue line, we have buying.  When it is below the blue line, it is selling.  The indicator is reset daily.   As you can see, Friday was a strong selling day as far as computer selling was concerned.  In fact, it lasted almost into the final bell, which again, is not a good buying environment.

The bottom plot is my Cumulative Tick plot, and the white is the instantaneous cumulative tick, and the red is a long moving average (about 3 days).  When white is below red we have sustained selling, and when all the slopes are pointing down (upper left to lower right), we have a greater indication of sustained selling.  Terrible buying environment right now -- in fact, don't participate in bottom fishing, because the tide is still flowing out.

What I'm looking for in the above plots are:

1) top plot:  green above red.  This means that more stocks are hitting new 52-week highs than those hitting 52-week lows.
2) bottom plot:  white above red AND all slopes are positive (pointing to the upper right).  This means that the markets are starting to get interested in buying stocks, so hitch your wagon at that time.

We are not there, so Monday isn't a buying day.  Period.

Long-Cash Ratio (LCR) Table

My LCR table is solidly indicating that there is no chance of buying stocks on Monday:

Click on the image to make larger.

The latest data shows red-red-red.  The left side refers to the slopes of numerous moving averages -- moving averages of the number of stocks transitioning from a "long" rating (using my system) to a "cash" rating.  When this multiple-timeframe analysis has all the slopes pointing downward, money is flowing out of stocks and they are getting cheaper.  When we see it across short and long time frames it tells you that it is a broad move to safety.

The left side of the table is red, and has been since around 12/4, which is when I issued a sell signal.

The right side of the table is the rate-of-change of the left side of the table.  For you math types, if the left side is velocity, the right side is acceleration.  Again, considerable red on the RIGHT side means that we are accelerating downward.  An analogy is that the car is in reverse and it is accelerating in reverse -- the number of stocks flipping to a CASH recommendation increases on a day-over-day basis.

I'm looking for green on the RIGHT side, and if it is sustained, it will make green on the LEFT side.  This is when I start buying -- when we start seeing emergence of green on the LEFT side.

We're not there, so Monday is a selling day or sit-pat day.

Percent Longs in Database

All this being stated, we're in prime buying territory, WHEN we get the LCR table and Cumulative Tick to confirm it's time to start buying.  Here's the chart:


Click on the image to make larger.

We are in "green" territory, which means historically, buying stocks when in this zone has been a better proposition than when buying in the red area.  Graphically, this chart shows the percentage of stocks in the database that have a "long" recommendation, and as you can see, the number is dropping, e.g., we are approaching oversold territory.  Most of you will recognize that this is a good place to be, as supply will be high and when the buyers do step in, they will be buying a local lows.

It's not enough to simply start buying when we're in the green area above.  We need the confirmation of the Cumulative Tick as well as the LCR table -- so again, it's time to pay attention, but Monday is not a buying day.

Getting my Shopping Lists Ready

For GGT subscribers of my Dropbox, you have access to the updated stock and ETF files and which stocks are rated "long" and which ones are rated "cash".  The file is updated nightly and obviously, it follows that you should not be in any stock that is rated "cash" and that long candidates are those that are most attractive.

Although I'm not buying on Monday, here's my shopping list for the week:


If we get a signal after the Fed does what it's going to do this week I'll update the list (in the file).

If you're interested in having access to the file simply send me a note to pduncan {a t] v t {dot  ] e du  (fixing the address, of course) with "DROPBOX" in the subject and I'll send you an invite.  Also, PLEASE please please subscribe to this list using the link to the left on this web page -- it's the only way I can communicate with subscribers as Dropbox corporate does not make this very easy for large number of subscribers.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

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

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UPDATE:

Another question came in while I was writing this concerning the overall performance of different stock portfolios that I have.

In addition to the three links above, here is the relative performance of the stocks in each of my tracked portfolios.  The way to use this information is to

1) subscribe to the Dropbox to get the nightly file
2) look at the individual group behaviors and pick the performance / volatility that you are comfortable with
3) ensure that if you are going to trade something, that it is rated "long" (as per the nightly stock file)
4) unload any position that moves to a "cash" recommendation

SOOOOOOOO, *** IF *** a buy signal were presented (and we do NOT have one right now), the following charts show the relative performance of the stocks in that specific portfolio.

Note that this includes both "long" rated and "cash" rated, so the performance is most likely conservative and volatility is most likely a bit less.

Caveat emptor and all of that.

Greenfield Accelerating Dividends



Click on the image to view a larger version.

Greenfield Active Watch List


Click on the image to view a larger version.

Greenfield Bargains



Click on the image to view a larger version.

Greenfield Dividend Champions


Click on the image to view a larger version.

Greenfield Leaders


Click on the image to view a larger version.

Greenfield Low Beta


Click on the image to view a larger version.

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As you can tell from above, the Greenfield Leaders and Greenfield Active Watch Lists are the best performing portfolios in this present climate, and this is WITHOUT a buy signal.

Again, buyer beware.  Take ownership for your actions.