Monday, February 29, 2016

Parity

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Summary

Buying continues despite the back/forth motion of the prices.  Two of three timers are "long" and indicating that on a short-term and intermediate-term basis we should be looking to the long side.  We have achieved, since late November/early December, database parity, which means that we have equivalent numbers of cash-rated stocks as well as long-rated stocks.  Simply put, we've come a long way in a short period of time.  I'm wanting to add to my positions, but we're overbought.  Patience...

Percent Longs

Click on the image to enlarge.

The chart above shows the percent longs in the database.  We just crossed 50%, and given that we were in single-digits in January, many, many stocks have moved upward in price and volume.

The "cloud" I'm watching is that blue line I've drawn.  Artificial -- yes.  Does it mean anything?  Probably not, because it's not a ceiling that is watched by anybody.  BUT, the constant lower highs since 2013 that show turns downward cannot be ignored.

1) we are between the pink and the green zones, which is a good short-term indicator that whatever direction we're in will most likely continue.  We're heading up, so I expect to head up.
2) when we get between 55-60% longs I'll not be surprised if we start a pull backwards.

So, a bit about buying:  the chart above also indicates that it's generally not a great idea to add to buys when we're in the zone between the pink and green areas.  We made most of our purchases when we were below the bright green line, and that's been a great decision in the past.

8-Day Slope of the Long-Cash Ratio Moving Average


Click on the image to enlarge.

The chart above *IS* actionable.  The 8-day EMA of the LCR has been a really good canary to getting into the markets, as well as getting out.  This is a short-term signal, so when it's really positive, the changes of going higher are limited.  We've had a long series of up days, and while it certainly can continue -- take a look at the chart.  We've not moved higher than present levels and stayed there for any major length of time, so risk is certainly high right now.

Take away:  Be careful buying stocks right now -- we've had quite a short-term run upward.

Timer Table


I was somewhat concerned about the Intermediate Termed Timer switching over, and the moving backwards, then forwards again, but 3 days usually works well overall.  It could change any day (see above), but for now, 33% is the target cash level.  If stocks are attractive I'll buy a position.

Cumulative Tick


  Click on the image to enlarge.

This cumulative tick chart continues to look mixed to good overall.  The last two days have been so-so in terms of algorithmic buying, but Wed/Thurs of last week were very strong buying sprees.

In the end, the positive slope of the solid red line is a great indicator -- stocks are being bought, at least on a short-term basis.

Long-Cash Ratio Table














Click on the image to enlarge

I've described this table elsewhere so I won't elaborate too deeply.  On the left we see that the LCR -- the ratio of the number of longs to the number of cash-rated stocks -- is now at parity.  Woo woo!

The next column shows a long series of up days in the LCR -- this is indicative of constant buying driving prices and volume upward.  This shows that we've moved from about 200 stocks to 1500 stocks that are "newly" long in a very quick period, which is the resilience of the market off the bottom.  No way to read this except as strength.

The sea of green in the middle to the right sides of the table show that on all measured time frame that we're heading upward.  This too is great.

Strategy

I'm targeting 67% equity / 33% cash, but we're overbought right now.  I'm not overly interested in buying right here.  This level is driving by my timer table.  The timer table is driven by the LCR.

The LCR table is a sea of green.  It can't last forever, but for now there is no weakness in buying.  If a stock looks good a trial position may be okay.

I continue to watch stocks that are showing great fundamentals, those that pay a dividend, and that are long-rated.  The full list is in my dropbox file -- instructions on how to get it are below.

I have one portfolio that is sold on GGT recommendation, the other that is sold on recommendation as well as fundamentals.  I've had to sell NEE, MATX, and KIM due to bad fundamentals after the last earnings report and GGT signal.

Join my Dropbox folder to see how my stocks, as well as stocks that you are holding, are doing in terms of my ranking system.

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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