Tuesday, May 3, 2016

Markets Up, but LCR Diverges Downward - May 2 Close

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Although price is what we put in our bank accounts and we typically welcome a movement upward in price, Monday's action has "caution" written all over it.  Let us start with the Long-Cash Ratio (LCR) table:

Click on the image to view a larger image.

The LCR table is explained in my latest newsletter so download it at the link above to review.

Prices on the main indexes moved up yesterday, as did my GGT index.  Despite this, stocks continued to slip below their optimized moving averages, causing them to move from a "long" status to a "cash" status.  This is reflected in the LCR value that you see above, to the far left.  The LCR fell another -3% to land at a final value of 2.294.  This is a 3-day move down, and I don't care what the major indexes are doing.

The left side of the table shows continued downward movement of the moving averages applied to the LCR.  The 2d through the 34d are pointing downward, so on a short-term and intermediate-term perspective more stocks are moving to a "cash" status than not.  Recall that "cash" means that prices are falling below adaptive, optimized moving averages, and as a result, the stocks have triggered a signal to exit any long positions.

The right side shows just how weak the movement was yesterday.  This is a table of values that shows how much the left side has changed, and what is more telling, only the shorter time frames saw any positive change.  To have any confidence in a buying opportunity I need to see green on the right -- we are not there.

Takeaway:  Continue to unload those positions that are underwater.  Trail a stop -- details of how to accomplish this are fully explained in my newsletter.  No new buying.

Timer Table

The following shows the status of my timers:

The short of the table is that it is telling me to be cautious.  We are whipsawing back and forth on the intermediate timer, which means we are right at thresholds.  Correspondingly, I favor no more than 33% invested as a target right now.

Cumulative Tick

The CT presentation is longer-term bullish but is taking a whacking today:

Click on the image to open a larger version.

The top traces show that we continue to hit new 52-week highs, relative to hitting new 52-week lows (red).  This is longer-termed bullish.

The middle trace resets daily and shows me sustained, algorithmic buying.  We started the sell-off at the open this morning and it continues as I write.  Today is not a buying day.

The bottom trace shows the ongoing cumulative tick and basically, the solid, uptrending red line is positive for entry to stocks.  As long as the white line, which is the instantaneous CT, remains above the red it will stay pointing upward.  If the white line crosses the longer red moving average line from above it will start pointing downward and this is a signal to me to not purchase stocks.


I am watching a number of stocks for possible entry:


Note that many of these report earnings this week so I will wait to enter those if we do get an entry signal.  All of these stocks are GGT "long" rated, at least for now (grin).

An entry signal looks like the following excerpt from my LCR table:

When the 8d slope of my LCR table turns positive this *generally* has signaled a good time to enter.  Of course, stock selection matters too, and the list provided above changes daily.

I will post an entry signal when it occurs here, as well as a post to Twitter (grems8544) and to FB.


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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.  The stocks I have listed here are not recommendations -- they are seeds for you to do your own research.