Thursday, May 19, 2016

Pay Attention to the Leaders

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Short-term:  markets are in a downtrend
Intermediate-term:  downtrend
Long-term:  Uptrend, but weakening

Long-Cash Ratio:

Click on the image to enlarge.

The very left shows a falling LCR:  more stocks are eroding in price than are gaining.  This is the "falling knife".

The middle/left shows a sea of red.  Every moving average, each with a unique measurement timeframe, is pointing downward.  Do not buy stocks, on a day-over-day basis, when this is happening.

The right side shows some green but it is not across the board.  The falling moving averages (middle/left) are starting to "slow" in their rates of descent, which is a necessary step to identifying a turning point.  We are not there as of Wednesday's close, so Thursday is an easy day:  no stock buying.

Cumulative Tick:

Click on the image to enlarge.

The top shows that the number of stocks making new 52-week highs (green) is nearly equivalent to those making new 52-week lows.  Not a good buying climate.

The middle trace shows the impact of the FOMC minutes -- coasting/flat for the majority of the day, then sustained selling by algorithms as the market digested the minutes.  Interesting to me that the market starting sustained BUYING at exactly 1:00 p/ET and then SELLING at exactly 2:00 p/ET.  I re-iterate that the period between 11 a/ET and 2-ish is a dangerous period to buy (or sell) stocks.

The bottom trace is the money shot.  The cumulative tick war has been lost on a short-term basis, and now with the real-time CT line (bold white) below the solid red line all moving averages will start sloping downward.   I do not buy stocks when this is the situation, and I strongly urge you to reconsider entry to stocks for ANY time frame when this is the case.  The risk/reward simply is not there.

Leader's List

The list is getting thinner due to the recent market turndown.

The following stocks continue to exhibit strength despite the market conditions:


Under no circumstances am I advocating that these stocks be bought.  These are "teaching stocks" -- you need to understand why these are leaders.

Click on the image to enlarge.

Frequent readers of this blog will see a common display on the left -- my "Greenfield" display.  I've written extensively about this and my most recent newsletter has details of the fields (near the back of the newsletter).  Get a free copy here: 

The right side is new for readers, not-so-much for me.  The far right shows a leader's list and WEEKLY trend performance. The "-1d()" columns contain data from Tuesday, and the "Today()" column contains data from Wednesday.  Two "-1d()/Today()" pairs exist because I use confirming methods to look at the individual trend of the stock.

On the far right, I've circled a "Down/Up" indicator transition.  One exists for PLPM and the other for WBMD.  These stocks are just confirming, within the last week, that they are in an up trend on a weekly perspective.

You can see that on the left many stocks are in a downtrend on a day-over-day basis -- this is indicated by the red "Down".  The natural conclusion is that if this continues for these stocks that the weekly trend will be under attack -- this is the correct conclusion so it is prudent to stay away from these specific stocks.  Despite this observation, some of the leading stocks are working within this market.

As an example of this, PLPM is showing "Up" on a daily evaluation -- it is holding up well in this market on both a daily and weekly basis.  Here is what it looks like in a familiar candlestick chart:

Click on the image to enlarge

The two plots on the left are WEEKLY; the two plots on the right are DAILY.  The top two plots use the same method to look at trend (Method 1), and the bottom two plots use the same method but different from the top (Method 2).

You can see in the upper left that PLPM is transitioning to "Up" on a weekly basis.  You can see on the upper right (daily basis) that it has been moving upward for the past 3 days, and my trend indicator shows that it picked up on the daily trend change 5 days ago.

The bottom two plots (Method 2) both show that the weekly and daily "Up" trends are intact.

Again, I must caution, this is not a recommendation to enter PLPM or any of these stocks.  The market is in a downtrend.  The purpose here is to show you that my leading stocks are doing well in this climate and when I say "Leading" you have a good idea of what this means.

For those of you with itchy fingers, take a really close look at PATK.  The following multi-period quad chart is provided without commentary, for your review and learning:

Click on the image to enlarge



I received a couple of notes from folks asking when my next newsletter is going to be distributed.  Soon.  I intend to finish the most recent edition this weekend and will email to registered subscribers.  A combination of work, home-life, and focusing on streamlining/communicating market trends has prevented me from completing the most recent edition.

If you want to be on the newsletter distribution, then please send an email to GreekGodTrading [ a t ] gmail {d o t] com, making the appropriate changes to the email address, with the word "NEWSLETTER" in the subject and I'll add your email.

As stated above, the most recent edition is here: 



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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.