Friday, February 12, 2016

Buy the Dip? Not so fast....

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Meeting Announcement

We will be holding a face-to-face meeting on 2/13/2016 (tomorrow, Saturday) 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 (GTM) 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.

To obtain the GTM information, you must be a member of my closed Yahoo! group.  Send a note here:

greekgodtrading-subscribe@yahoogroups.com

Summary

Thursday's action was strong enough to signal that a broad move to the sidelines would be prudent for Friday and beyond in the near term.  Futures are higher due to the OPEC agreement to curtail production, and I intend to use the day to reduce short-term exposure.

From a medium/long-term perspective with my timing systems, I am on the sidelines.

From a long-term perspective in my non-GGT portfolio, and have limited exposure.

Long-Cash Ratio (LCR) Table

Frequent readers will know the context; new readers will have to dig back a few blog entries to understand the LCR.

My LCR table has taken on a fully-bearish stance:

Click on the image to enlarge.

The middle of the table indicates confirmation that I should be on the sidelines; the right side of the table shows that we started getting signals a week ago on 2/5.  The action of 2/5 and 2/8 certainly indicated weakness and my buying this week was suspended pending the downturn.  It's difficult to buy stocks that are appreciating when the tide is flowing out of the bay.

The red on the left, the solid red in the middle, and the red on the right indicate that stocks are being sold en masse on lower prices, and although not shown here, many are being sold on substantially higher volume.

Although there certainly are bargains, I do not plan to purchase quality stocks until we see some stabilization (green) on the right side of the table.

Cumulative Tick

Simply put, the CT transitioned to a bearish mode early on 2/8 and has been on that side of the table all week:


Click on the image to enlarge.

Thursday's action was a hard sell and was confirmed by the middle plot, which shows sustained selling, with over 500 stocks per minute ending in a downtick (lower price for the next bid/ask sequence) on the NYSE.  This is significant and often shows algorithmic buying/selling -- selling in this case.

The running cumulative tick presentation on the bottom of the figure tells me to simply avoid buying.  The white trace, which is the instantaneous CT, is pulling the moving averages down on all time frames.  This is a selling environment, and until we see the white trace move upwards, I'd be wasting my money at entering the market right now.

There are more sellers of this market than there are buyers.

Strategy

I'm selling stocks that are transitioning to GGT "New Cash" recommendations in all portfolios except my Accelerating REV and EPS portfolio.  That portfolio does not use the GGT timing system as buy/sell recommendations at the stock level, although I hold off buying until I see some uptrend in the CT and the LCR.

I'm holding quality stocks across the board but many are getting beat up.  I intent to continue to hold until they 

1) transition to a "cash" recommendation, per my GGT system, or
2) show a decelerating EPS or REV value on a trailing 12 months basis and THEN transition to a "cash" status.

I'll talk more about this in my presentation tomorrow at the library.

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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.

Here's how to find me:

InvestFeed/Twitter:  grems8544
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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