Wednesday, May 25, 2016

Significant Up Day - May 24th Close

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Outlook: short-term improving, prone to failure

Short-term:  Continued "up" progress.  Completed Day 3, depending on how you count.
Intermediate-term:  New Up Trend
Long-term:  Uptrend intact but not accelerating upward

The weekly trends are down OR MIXED up/down in all the major indices.  The NAS and Russell 2000 *just* went to mixed mode.

The daily trends are all newly up.

When the longer-termed trends are opposing (or at least not fully confirming) the daily trends, being fully invested in the markets simply is risky.  New entries are prone to failure.

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Newsletter sent out to subscribers.  The latest version is at this link:  https://goo.gl/i2kXXf 

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Long-Cash Ratio Table

I discuss this table in detail in my latest newsletter.

Click on the image to enlarge.

From left to right, this is what I see:
  1. The LCR has moved +22% upwards on a day-over-day comparison.  This is the 195th strongest up day in almost 2000 observations, placing it in the upper 10% of all up days.  Given where it occurs (after a significant down period), I'm paying attention to the long side of the market.
  2. The 2d, 3d, and 5d slopes are positive and pointing upwards.  The 8d almost made it -- and as many of you are aware, this is my trigger for broad entry into the markets.  I saw this coming with the number of alerts that were sent out yesterday and started acquiring positions throughout the day.
  3. On the right, we have had 3 solid days of upward acceleration.  The right side looks really good.
Although we certainly can fail from here, I am buying positions from my Leaders list.  My dividend portfolio is getting leading stocks that pay a dividend.

Strategy

I intend to deploy capital.  I sold a few puts yesterday, as well as entering a few stock positions:


The stocks that I sold puts fired price/volume alerts so I expect that they will move up, away from my strikes.

I provide a completely updated list of Leaders in the daily GGT stock file, which is in the shared Dropbox folder.  Instructions to join (it is free) are in the newsletter as well as at the end of this entry.

The following Leaders fired price and volume alerts during the trading day on Tuesday:

FIZZ
ORBK

The following Greenfield stocks, which also includes those that pay a dividend and are part of my dividend portfolio, also fired price and volume alerts.

CEVA
CHKP
CTXS
EBSB
MKTX
PPBI
PRI
REXR
SPGI
VEEV
WAL

Not all pay a dividend so do your own diligence please.

Group behavior of my Greenfield Leaders list is noteworthy and continues to outperform the S&P500:

Click on the image to enlarge.

From top to bottom, this is what you are looking at:
  1. The top pane shows the S&P 500 (green) and the group behavior of the Leaders list (blue).  The S&P 500 has fallen about -2% or so over the past month; the Leaders list, in hindsight, as grown a large amount.
  2. The middle pane shows the daily price series of the Leaders list.  The green line is the 21d EMA, the yellow line the 50d EMA, and the red line the 200d EMA.
  3. The bottom pane shows volume and the 50d MA on volume.
As Mark Minervini says "If you want alpha in your portfolio, then you had best buy alpha."  I believe that my Leaders list represents alpha.

I will continue to add to my portfolios today using price and projected volume alerts.

I note that we are at a critical failure point -- we are early in a newly emerging trend.  The stocks I am invested in and am considering could easily move against me, so it is important that I review my holdings and potential new purchases every evening.  You should consider doing the same thing -- turning points can be dangerous to our portfolios.

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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.

Regards,

pgd