Monday, February 8, 2016

Latest Short-Term Entry Signal Under Pressure

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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.

To get the GotoMeeting information you must register with my Yahoo! group:

GreekGodTrading@yahoogroups.com

If you are a member I'll post the info later this week.

Summary

As I write the market is setting up for ugliness this morning.  Futures are down hard, so I expect the positions that I hold to be under pressure.  We are still within a short-term buy but longer-term cash signal (33% invested, remainder in cash), so the present weakness should be no surprise.  Buying will be opportunistic and only if it meets conditions.

Long-Term View

Cash.  I have a large amount of cash and am on the sidelines.  My money management guidelines are pointing to 33% equity / 67% cash right now.   With little exception any positions that I hold (aside from cash-secured puts) are dividend-paying stocks with historically good track records.

Cumulative Tick

The cumulative tick indicator is a short-term indicator.  It does nothing for the long-term view of the markets.

Friday's CT presentation shows that the sell-off was broad and deep:

Click on the image to enlarge

The middle trace shows that algorithmic and/or strong selling started at the open and was more/less constant until the mid afternoon.    The impact on the present signal can be seen in the lower plot -- we are within a close range to the white, instantaneous cumulative tick dropping below the red moving average, which will pull everything downward.  If white crosses red from above we could certainly retest the lows of January.

This chart suggests to me that I should not be entering any positions.

LCR Table

The LCR table provides me a short-term and intermediate-term view of the markets.

Presently, the LCR table is showing short-term weakness in the present buy signal:

Click on the image to enlarge

On the left side, for the first time in weeks, the LCR moved downward.  This weakness was not overly strong but it stopped the run upward.  The LCR fell to 0.358, and although one-day-does-not-make-a-market, I take it as a warning shot over the bow.

Combined with the CT presentation, we are certainly under selling pressure.

The middle of the table shows the first sign of red in awhile.  This "red" means that the slope of the 2d LCR is downward, so on the shortest of measured time frames we have weakness.  The rest of the slopes are still positive, which is good but as you can see, the values are less than Thursday's values.

The right side of the table shows the first deceleration of the LCR in some time, again on all measured time frames.  Continued "red" on the right side of the table will bring red to the left side, and this will negate our short-term buy signal.

Strategy

My long-term view is unchanged.  Cash is king.

On a shorter-term basis, my existing positions are going to see weakness.  GGT "New Cash" signals fired for the following holdings and I need to decide if they are in a "follow the sell signal" or "hold due to dividends and yield" category:

CTSH
CUBE
HEI
IOSP

I've linked the symbols to their charts; if you click through you should see why I really like CTSH (no dividend but EPS growth is perfect) and HEI.

I've done an analysis on CTSH and HEI and you can find them here and here respectively.  Not recommendations to buy/sell/hold, and of course, do your own diligence.  CTSH announces earnings today (Feb 8) and HEI on Feb 23rd.  CUBE announces earnings in 10 days (Feb 16) and IOSP in 8 days (Feb 16).

Looking forward, my position in SSS is probably next to fire a "New Cash"; we'll see how today goes.

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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