Monday, November 7, 2016

Not taking the bounce today (Monday, Nov 7)

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The news over the weekend has created a large jump upward in futures, indicating that we will rocket upwards today.

Perhaps.

I am nearly 100% in cash right now, and intend to stay there.  I do not intend to buy any CC's or NPs, even though we are at a possible turning point.

The following figure shows that we have some repair to go through before I will start buying:

Click on the image to enlarge.

The top row of plots are daily 52-week new highs (green), 52-week new lows (red), and their net (yellow).  Any time red is over green is a bad sign for buying, as more stocks are hitting lows than highs.

I like to put my money to work in expanding markets, not contracting.

The middle row of plots are daily indications of algorithmic buying.  The number resets daily.  When the red line is above the blue line, more than 500 stocks per minute are ending on an up-tick, meaning that supply is getting more scarce, driving prices upward.  You see the converse above -- supply is becoming more plentiful, driving prices downward.  When we see the afternoons selling off and effectively moving negative, then more people (and algos) are unloading so that they do not have to carry their trades over night.  Now, there is obviously a buyer on the other side of these trades, but the presentation shows that the tick is DOWN after the trade, which means there were more bottom fishers waiting and prices were lower.

When I see the trace heading lower I simply refrain from buying en masse.

The bottom plot is the cumulative tick, and it is a running accumulator that stretches back to 2011 and it shows minute-over-minute net of buying and selling.  When the white trace, which is the real-time CT, is below all of the lines (like now), it means that not only is selling dominating, it is doing so consistently, day-over-day.  The solid red line that you see also shows a negative slope, and historically, this is my threshold.  If that line is pointing down I do not enter the markets on a broad scale.

While I have a few trial balloons waiting to enter the market in my Greenfield Dividends portfolio, for the most part I nearly 100% in cash.

If the presentation or my stance changes in a notable manner I will post an update here.

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Make sure you vote Tuesday if you have not.  As a veteran, we signed a pledge to give our lives so that you have that right.  The least you can do is take the time to exercise that right in accordance with your beliefs.

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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.

Regards,

pgd