Wednesday, January 6, 2016

Underlying markets are buying this dip

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My trading methodology does not incorporate the Cumulative Tick (CT) behavior, but I use the CT to watch what the markets are doing (as compared to the major indexes, which I think manipulated to some degree).

The CT is showing that the markets are buying this dip:

Click on the chart to view a larger image.

Although the 52-week new lows are still outpacing the 52-week new highs (top trace), the middle and bottom traces confirm that there is significant buying of this dip occurring.  The middle trace is an algorithmic buying/selling indicator, and it shows that starting about 12:55 p/ET buying started and continued until 2:28 p/ET.  Very little net selling occurred during the day, as measured on a minute-over-minute basis.

If you are not familiar with the CT indicator you can read about it here and in previous posts of mine.  I've been using it for years, having learned about it from the group over at Effective Volume.

The big "so what?" is that although my developed indicators are still quite short-term bearish, the CT is indicating that from a value point of view, it's time to move into the markets.  Put another way, get your shopping lists ready.


As stated above, my internal methodology is short-term bearish and long-term bullish.  Here's my Long-Cash Ratio (LCR) Table, which many of you are familiar:

Click on the chart to view a larger image.

The far left shows that as a whole, more stocks joined the "avoid" column with Monday's action than those that became "New Longs".  This means that prices of stocks continue to fall as a whole (3037 stocks presently in the database), and until price and volume pick up, the LCR will remain quite bearish.

The middle/left of the table indicates a sea of red and that on multiple time frames that the trend of the LCR is down.  Falling prices are the only thing that can cause the LCR to drop, and right now the database is indicating that on all measured time frames -- out to 143 days -- that the prices of constituent stocks are continuing to fall.

The right side of the table shows the day-over-day change of the middle/left side of the table, and this side of the table LEADS the middle/left side.  I pay particular attention to this chart on a daily basis -- - I only buy when this chart is turning green.

You can see that the right chart attempted to move positive on Monday -- perhaps there is a thawing occurring.  Your crystal ball is as good as mine.


The Percent Longs chart that I presented yesterday is relatively unchanged.  Since the LCR fell with Monday's action, we are bit more into the "green' area (number of stocks that are "long" rated fell).


What I'm Doing Tuesday:

Four more stocks are indicating that I exit:

ALK Alaska Air Transportation New Cash
LRCX Lam Research Electronic New Cash
NGHC National Gen Insurance New Cash
USNA USANA Inc Personal New Cash

I've set my exit criteria and will be out of the positions if they hit their stops.  For those of you subscribing to the real-time alerts, you'll get automatic notification when the positions are exited.

For the non-Collective2 accounts, I will set a 1% trailing stop loss, GTC, effective after 9:45 a/ET and will forget about these positions until they either 1) reverse to a "New Long" recommendation or are sold.

For the Collective2 accounts, I will set a 1% stop loss, GTC, effective after 9:45 a/ET and that will be adjusted upward (never downward) nightly until triggered.

This will free up some cash that can be deployed elsewhere.

I will not be buying today, although I will spend time reviewing the various stocks that pass my Greenfield Screen.


These recommendations 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 "".  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.


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.