Monday, October 24, 2016

Buying Continues - Getting the Shopping Lists Ready

.
If you are on the blog page in a browser, please subscribe to this using the "Follow by Email" link to the left.  Having your email helps me to notify you when Google mucks up email distribution, as they did at the beginning of May.

~~~~~~~~~~~~~~~

Cumulative Tick



Click on the image to enlarge.

For those of you who follow the cumulative tick (CT), you saw it steadily improve last week, possibly presenting a short-term change in trend.  Refer to the figure that I've posted.

The top plot shows the number of new highs (NH) and new lows (NL) that are occurring on the NYSE.  Tuesday through Friday saw NHs being generated, indicating that prices were moving upward.  Only Monday of last week saw more NL than NH, which was more/less negated throughout the remainder of the week.  From last Monday's perspective, caution was/is certainly advised.

The middle plot shows relatively strong buying early in the trading days on Tuesday and Wednesday, as well as a weak Thursday and Friday.  The algorithmic buying trends are upward, so we need to pay attention to a possible short-term turn in the markets.

The bottom plot is the CT.  The white trace is the real-time, 1-minute trace, and everything else is a moving average.  When the white trace is above all the other traces, which occurred this past Friday October 21st, we should take note.  

Note taken.

Long-Cash Ratio

The GGT Long-Cash Ratio (LCR) table is starting to turn positive, but we are not there yet:

Click on the image to enlarge.

The left side of the LCR figure shows that we have a very low ratio of stocks that are rated long to those that are rated cash (hence the L-C Ratio).  Anything below 1.0 means that cash-rated stocks dominate, and anything above 1.0 means that long-rated stocks dominate.

Whereas the raw LCR number on the left is a snapshot in time, the left-portion of the red-dominated table shows various moving averages of the LCR.  Important here is that down-markets are denoted by red, and up-markets are denoted by green.

The fact that we only have the 2d and 3d moving averages with a slope that is positive (green) indicates we are REALLY EARLY in any possible move to the upside.  More importantly, if you look back to the presentation in September, you see that these signals have been weak and have typically failed.  It has been hard to be a trend follower the past month.  Nevertheless, your crystal ball is as good as mine, and I have to be ready for the next possible move upward.

Here is what I'm looking for in the LCR table:


Click on the image to enlarge.

The key to the table above is the transition of the 8d LCR slope to green.  I've put a solid black line around it, as it tends to be the confirmation day for the markets moving upward.  Note that the right side of the table is a sea of green, which indicates that the day-over-day change of the slope (also known as acceleration) is positive.  We have more/less that same thing going on now with the present setup.

Greenfield Dividends

My Greenfield Dividends portfolio at Collective2 ( https://collective2.com/details/94780986 ) continues to do well, relative to the S&P 500.  Rules changed just after the January 2016 drop in markets and have been in place since February 1st, 2016.  Here's the performance plot since February:

Click on the image to enlarge.



The account has a significant amount of cash right now and is attempting to re-join the markets, but is having a difficult time finding improving stocks.  Subscribers of this portfolio receive automated emails of new orders and can follow the trades as they wish.  There will be a flurry of orders pending as markets turn, but once capital is deployed, the account falls into more of a maintenance mode with a few signals generated nightly as conditions dictate.  The more horizontal the markets, the more orders that are generated.  

Basic entry rules are these:
  1. The candidate stock must pay a dividend that is steady to increasing.
  2. The candidate stock must have accelerating revenues AND earnings relative to the same quarter a year ago as well as on a TTM basis.
  3. The candidate stock must be GGT rated as "New Long", "Affirmed Long", or be in a weekly/daily setup that supports movement to the upside on the day that the order is placed.  This shows both price and volume increases (stock is in demand relative to a set of optimized moving averages and rates of change).
  4. The candidate stock must be above the 21d exponential moving average (EMA).
  5. The candidate stock must not have earnings being announced on the day of entry.
My goal with this portfolio is capital appreciation as well as capturing dividends.  It is my intent to hold these stocks as long as possible.  I just unloaded AO Smith, which I held since May 2016.  Note that AOS went up a significant amount in this time, but not all stocks are as stellar as AOS.  The current holdings in this portfolio are as presented -- and some of these stocks have re-entry orders pending for Monday, October 24th.  Note that CZZ is on a tear and my system identified it early as it was taking off:


Click on the image to enlarge.

NTRI will report earnings this week, as will JBT and AM, so they will be reduced to core positions just prior to earnings release.  This methodology captures gains (or small losses) and ensures that exposure is reduced to possible bad news.

Strategy

My list of quality stocks, both dividend and non-dividend, is producing the following group performance:

Click on the image to enlarge.

The top plot shows the group performance relative to the S&P500 for the past month and *if* I had purchased the entire list of stocks with equal weighting, performance would be as shown.  The price plot in the middle shows the group price and the 21d EMA, 50d MA, and the 200d MA.  Clearly, these stocks are all in an uptrend.  

Capturing this performance is not realistic for me.  I do not have a strategy nor enough money in my portfolios to buy 47 different positions so this is a blue-sky approach.  Maintenance of this number of positions also becomes a challenge in managing time.  Nevertheless, if you want an equity curve that moves from the lower left to the upper right then -- wait for it -- you have to buy stocks that are moving from the lower left to the upper right.

My list shows those.  

Subscribers to my Dropbox folder have access to this list for free.

Stocks from this list that:
  1. Pay dividends
  2. Are GGT buy candidates or
  3. Are in a weekly/daily uptrend 
  4. Are above their 21d EMA
  5. Have accelerating earnings and revenues
are:

AM, DLNG, and PZZA.  Note that AM announces earnings on Wednesday, so do your homework.  These are not recommendations to buy -- you MUST review these stocks in detail.

~~~~~~~~

My stock alerting service is fully functional and is available at https://twitter.com/grems8544.  Follow me and "Turn on Mobile Notifications" from within Twitter to get notified every time a breakout or pocket pivot is detected on a stock worthy of further consideration.  This service is free and those that are subscribed tell me they really enjoy the notifications and their review of the quality of the stocks is quite positive.  

~~~~~~~~~~~~~~~~~~~~~~~~

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.

Please do not use my stock files for your own professional (paid) gain.  

~~~~~~~~~~~~~~~~

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