Tuesday, July 5, 2016

Post Olympic Trials, Life Returns to Normal, Close to an Entry Signal

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Personal note:  Life is slowly returning to normal.  My older son successfully competed at Olympic Team Trials and although he did not qualify, the experience for both him and our family was amazing.  The athletes we send to the Olympics are truly amazing, and I think our son has a great shot at qualifying for the team in Tokyo in 2020.  Of all the pictures that I took, this one is the most special:



Click on the image to enlarge.

This picture was captured at the start of the 3m Springboard Olympic Team Trials competition on 6/20. Greg is standing on the base of the 3m diving board. There are probably 300-400 people in the stands, and they are all waiting for the start of the event. He is first up in the competition - no other divers have dove -- and is standing there with his eyes closed. I've not asked him what he was thinking and I will not -- although very public, this is his private time. I can only imagine what is going through his mind.

Read more here.  
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Market Overview

Long-Term Timer:  Long
Intermediate-Term Timer:  Cash
Short-Term Timer:  Cash

Despite the run-up last week from oversold levels due to Brexit, we are still relatively early and bearish in the overall market tone.  The following table provides a historical view of a recommended cash vs. fully-invested level as a function of market performance:



As you can see, we are at 67% in cash right now, and have been there for about a month.  The fact that the long-term timer is still showing "Long" is a positive sign, but even the internals for that signal are quite weak.  If we do not get a major turn this week I could see all of the indicators hitting the lower bound and telling us that extreme caution is advised.

Whether you pick 33% invested or 50% invested is up to you.  What matters most is the next chart:

Long-Cash Ratio

The Long-Cash Ratio (LCR) table is near a buy signal:


Click on the image to enlarge.

On the left side of the table, in the "slopes of LCR EMAs" portion, you can see that the 2d, 3d, and 5d slopes are positive (pointing upward) but the 8d is still negative (but less negative day-over-day).  As many of you know, when the 8d transitions to green/positive I attempt to move long in the markets using quality stocks.  We may see that today.

On the right side of the table you can see that we have had solid acceleration (slope of the slope is acceleration) to the upside, as indicated by the green.  Friday saw a weak pullback in terms of acceleration on the shortest of time frames -- this is due largely to the weekend holiday.  Continued green on the right will be good to see expansion (more green) on the left.

Cumulative Tick

The CT is also indicating positive behavior, but also shows Friday's weakness:



Click on the image to enlarge.

I have covered this chart numerous times in previous blog entries -- suffice to say that Tu-We-Th saw extremely good buying action, and Friday was more/less neutral, as expected.

Percent Longs

Another valuable indicator of mine is the number of stocks that are "long"-rated that are in my database:


Click on the image to enlarge.

As you can see, we are in the "green" area, which means (historically) that on a longer-termed basis we tend to move up from here rather than down.  Yes, we certainly may move down but on average, history favors more stocks appreciating in terms of price and doing so with increased volume.  The move from the local low (below the solid green line) indicates a reversal from oversold levels and is normal.

The take-away for you is that buying stocks when in the "green" area has historically worked out over a longer-period, e.g., 3-6 weeks or so (somewhat follows the Intermediate Timer signal but they are not related).

Buy Candidates

Subscribers to my Dropbox folder have access to the various leader lists that I develop. Instructions on how to subscribe are below.

Two very important lists, which are my primary buying lists, are shown in the following charts:



Click on the image to enlarge.

The stocks that comprise the Dividend Leaders list are, well, dividend payers that are leading stocks.  As you can see on the far left, my GGT system has the top 4 with new entry signals and the rest are recommended as a "hold".  All are performing extremely well in terms of price action, revenue growth, and EPS growth.  As dividend payers these are some of the best performers in terms of capital appreciation that you will find in the market today.

The other list is a non-dividend payer leader list:



Click on the image to enlarge.

The stocks in this list also follow the same behavior as the previous list, but these do not pay a dividend.  Again, note that there are several that are recommended as "buy", so more on that below.

Note that the recent performance of this list of stocks is stellar:



Click on the image to enlarge.

Note that in the figure the top blue line is relative performance to the $SPX over the past 30 days, which is shown in the top pane as the light green line.

The stocks are all holding the 21d EMA (green line in the 2nd pane Price Window), even in the recent downtrend, so they are literally "leaders".  I do not screen on this criteria -- it simply is a characteristic of a leader.  Of course they all hold the 50d MA (yellow), and I don't even know why I plot the 200 (red), as nothing ever hits that level.

Both of these lists are in a full uptrend on a monthly, weekly, and daily horizon, again measured using a set of proprietary indicators that I've developed.  I believe that these stocks are some of the best performers in terms of price, revenue growth, and earnings growth that you can find.

Of course, actual mileage for you may be different, so do your own diligence.  I simply am providing the lists that are on my TradeStation Radar and will alert me if they take off.

Strategy

1) I only buy stocks that are moving higher in price.  Very little exception here.
2) I only buy stocks that are indicated as a "Buy" using the GGT_Rec_rx.x.x indicator shown in the tables above.  This means I do not buy "hold", or heaven forbid, "sell" or "avoid" recommended stocks.  Very little exception here, except for the next criteria:
3) Stocks that are moving higher in price AND in volume get my attention and I'll buy a 25% position in those stocks.  The earlier this occurs in the day, but after 9:45 a/ET or so, the better.

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Greenfield Dividends Portfolio @ Collective 2

You can subscribe to my daily trades at Collective2:

https://www.collective2.com/details/94780986

Luckily, past performance isn't indicative of future performance and June was up 2.1%.  I've stabilized the strategy for this portfolio and have a full trading plan, which is available to subscribers.  Earlier months have underperformed the market due to a number of reasons but simply stated, a combination of being under-invested as well as being invested in high-beta stocks caused portfolio volatility.  As current subscribers know, the mechanics of the portfolio have changed dramatically from January, which was a terrible month and is keeping me underwater for the year.  While your crystal ball is as good as mine going forward, this is a real portfolio that I have real money in (about $40K), so I feel the same pain as well as joy as you do.  Performance numbers do not include dividend payments.

This portfolio will strive to maintain a 65% (or higher) level of equity.  It will re-purchase positions on a day-over-day basis, so entry levels are typically 20% or 25% of a full position.  Having 4-5 purchases of the same stock is not uncommon.  Buying and selling is conducted as described in my newsletter and other blog entries here.

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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 GreekGodTrading [ a t ] gmail {d o t] com, making the appropriate changes to the email address, with the word "DROPBOX" in the subject and I'll add your email.  I also ask that you subscribe to this list using the link to the left (if you are on the blog), 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.  The stocks I have listed here (if I have listed any) are not recommendations -- they are seeds for you to do your own research.

Regards,

pgd