Monday, February 1, 2016

I trust that your shopping lists are ready

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Summary

Thursday triggered an initial entry and Friday's strong action confirmed a short-term buy signal.  My target equity level is around 33% or so, perhaps a bit higher because we were so oversold.

Long-Cash Ratio Table

In a word, bullish:


Click on the image to enlarge.

The LCR jumped 74% from 0.159 on Thursday to 0.277 on Friday, confirming entry into the markets.  I've been writing about this for many days so this should not have been a big surprise.  The growing staircase of green in the middle of the table indicates that stocks are moving into a "new long" recommendation (volume plus price appreciation), and the right side indicates that on all measured timeframes that we are accelerating upward on a day-over-day basis.

Futures are down as I write this so I'm expecting a day of pullback / digesting gains.  I consider it healthy in that it helps to keep us from moving upward too quickly.

For new folks reading this, the table is bullish but in a young stage of growth.  Any red on the right side of the table would indicate short-term slowing (prices decreasing), and if sustained, would put the middle of the table under pressure.

Note that a reading of 0.277 is incredibly oversold.  We have a long way to go upwards just to reach parity (1.000), where the number of long-rated stocks equals the number of cash-rated stocks, let alone higher.  Expect some pullbacks.

Cumulative Tick

As previously mentioned in other blog entries, Friday's CT presentation was classic confirmation:



Click on the image to enlarge.

After messing around on Wednesday and Thursday with a tight range (the moving averages all converging and tight), Friday's explosive move upside and "fan" presentation of the moving averages to the upper right shows that buying was strong and sustained on all fronts on the NYSE.  This is a great confirmation presentation.

The middle plot shows that algorithmic buying was present and sustained at over 500 stocks per minute ending on an uptick.  Given the number of stocks on the NYSE you would think this is relatively easy to accomplish, but as I've shown in the past, it is not.  this sustained upward-moving trace shows that markets were stepping in aggressively.

As long as the white remains above the solid red line in the lower plot we are in an uptrend, albeit a short-term one (for now -- your crystal ball is as good as mine).

"Greenfield"

I'm initially focused on two primary portfolio constructions.  The first is the classic "Greenfield Dividend" portfolio, which has dividend-paying stocks as the primary criteria, and the secondary criteria being that the stock show constant to accelerating dividends, revenues, and EPS in the recent time frame.  Here is a subset of the stocks making this cut:


Click on the image to enlarge.

The list above is not exhaustive and subscribers to my Dropbox have access to the full list, with other important information.

The field titles should be self-explanatory, but here is a fast breakdown:

c-50: how far the close is from the 50d moving average
RevYoY: same year-over-year revenues  percent change
RevQtr-1: revenues in the present reported quarter compared to 1 quarter previous
RevQtr-1y: revenues in the present report quarter compared to the same quarter a year ago
%TTMRevChg:  trailing 12 month revenue change compared to the previous year's TTM rev change
QREV -- what the quarterly revenue is

EPSYoY: same year-over-year EPS percent change
EPSQtr-1: EPS in the present reported quarter compared to 1 quarter previous
EPSQtr-1y: EPS in the present report quarter compared to the same quarter a year ago
%TTMEPS:  trailing 12 month EPS change compared to the previous year's TTM EPS change
QEPS -- what the quarterly EPS is.  Negative isn't bad if the trend is upward.

YoYDivChg -- how much have dividends changed for the equity in the present year compared to the previous year?  Same as TTM
Score - an internal system I use to rank the stock.  Don't ask, and red/negative does not mean what you think it does.  I simply sorted it this way for the presentation.
V - does the stock have at least 100K shares 50d moving average volume?

The "yellow" in the table indicates that Tradestation does not have a value for that specific stock.  I've I'm familiar with the stock I typically ignore partial omissions from Tradestation.

If you are a Tradestation user the indicator is available.  I ask that you consider a donation (using the link on the web site, left side) if you are interest in the indicator.  Note that it is locked to your customer ID and network ID, so I'll need that information if you want a copy.  The most recent version is 2.1.4, which is shown above.  It runs flawlessly under Tradestation v9.1 and v9.5 still gives it intermittent fits.  I'm running v9.1 and expect many of you are too.

Within this dividend paying strategy I'm looking for stocks that would be adequate to be timed with the GGT timing system, as well as those that would work as long-term holdings and that do NOT use the GGT timing system.  Because time is limited, and because risk is presently high I am only investing in Greenfield stocks that meet both criteria, although this will not be the case as the market matures.

Strategy

I'm a buyer within this market, targeting 30-40% equity in all portfolios.  Note that I already have positions in a number of the stocks that I am going to discuss, as I entered over the past week as conditions improved.

My February cash secured puts are all massively in the money, as I bought them when the markets were at the extreme local lows but when we had "thawing" occurring on the right side of the LCR table.  Go back a few blog entries -- perhaps 1-2 weeks -- and you can read when I was buying them.  The LCR can provide a good indication when to collect some premiums but of course, it is possible to continue to fall when the LCR is in the single digits, so the stock could be put to you at expiration if the price has dropped that far.  Only write a CSP on a stock that you would want to own at the lower value.

As a gimmee, here is a sampling of the stocks that meet my dividend criteria and are in tune with the GGT system:


Click on the image to enlarge.

These are not recommendations and you should do your own diligence on these stocks.  Note that I own a few of these and have orders pending for others on this list.  Note that ANFI does not pay a dividend but is on the list due to a possible significant undervalue criteria being met.  All the stocks meet the Greenfield criteria I discussed earlier.

This list, as well as others, are available (for free!) to my Dropbox subscribers.  Instructions on how to subscribe are below.

Independent of time frame for holding, my entry methodology is the same:

1) BUY STOP LOSS entry only
2) entry price is 0.1% higher than the previous day's high (buy strength)
3) delayed entry until after 9:45 a/ET
4) if buy stop loss does not fill, then I adjust the price downward, never upward.
5) with little exception, the stock will be a GGT "long"-rated stock (New Long, Affirmed Long, or Long)

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Unless something really remarkable happens Monday, I will not be blogging on Tuesday due to travel.  My next blog entry will most likely be Wednesday morning.

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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.

Subscribe to my twitter feed if you want intra-day observations:  grems8544

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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