Thursday, January 28, 2016

Near an initial buy signal but limit exposure

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Summary

The Long-Cash Ratio is marginally improving, and strength today (Thursday) will most likely trigger an initial entry signal.  Other confirming indicators I have are not as bullish, so caution is advised.

Long Cash Ratio

The LCR Table shows the thawing that I discussed all last week:


Click on the image to enlarge.

The LCR is improving despite the downward days that we've experienced in the markets.  This means that there is buying on price and volume action, so people are stepping in.

The middle of the table shows growing "green", or positive slopes that stocks are improving on a short-term basis.  The red in the middle of the table indicates a huge pool of stocks that are beaten down, and we need continued, day-over-day improvement off the recent low for this area to turn green.  One of my internal signals is triggered when the 8d slope turns green, but note that this action was not confirmed by other internals, so I did not post it.

The right side of the table shows the problem.  Foward-backwards-forward-backwards is the characteristic, and the red shows weakness in the buying of the bottom.  This being said, as a longer-termed investor, the green on the right shows that we are not aggressively moving downward (in fact, we are moving upward, albeit slowly), so the bottom is clearly in.

This being stated, we can dawdle here if the markets decide to do so.  I'm seeing lots of churning, or turnover occurring, so I'm not convinced that we're out of the woods.

I've placed orders in the longer-termed portfolios at C2 and in my personal holdings, but am limited in committing resources to less than 30% or so in investments.

Cumulative Tick


Click on the image to enlarge.

The cumulative tick is not as strong as I'd like to see.  The white trace, which is the instantaneous value, is mixed in with the moving averages, and the result is a tightening of the band and a possible break above or continued drop below the longest moving average, which is in heavy red.  The implications here are that it's hard to tell if we have short-covering occurring or if this is actual buying of this market.  If short-covering, I would not be surprised if we resumed a downward slope and that selling would dominate.

Hence, extreme caution is advised based on this chart alone.  I like to see clear buying of the bottoms with this chart, and we do not have this.  

Strategy

I'm staring to place orders in stocks that I want to hold for the longer-term.  These orders are BUY STOPS, set to 0.1% above the previous day's high, and effective after 9:45 a/ET.  If they do not fill I will adjust the entry value downward, never upward, after the market closes and to prepare for the next day.

Stock selection is found in my stock files, specifically on the Portfolio tab of the shared Dropbox files.  Instructions on how to access those files follows.

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Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to pduncan [ a t} v _ t (dot] e du, fixing the address of course, with the word "DROPBOX" in the subject and I'll add your email.  I attended Virginia Tech many moons ago and it is my alumni address, so it should be easy to see how to fix the address -- simply use "vt.edu".  I also ask that you subscribe to this list using the link to the left, as it's the only way I can communicate with Dropbox users, if the need arises.

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New Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 for all interested parties at the following location:

Burke Centre Library
Room: Burke Centre Meeting Room 116K
Address: 5935 Freds Oak Rd, Burke, VA 22015
Library Phone:(703) 249-1520
Time: 10:00 AM to 1:00 PM
Meeting Start Time: 10:00 AM

I will attempt to stream the meeting audio, and perhaps video, as per past meetings, via GotoMeeting.  Attendance via GotoMeeting is limited to the first 25 call-ins.  The ability to do this is completely controlled by the library and I have no say in Internet access.

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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