Top 25 Portfolio Update for Thursday, March 3rd

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Please "Subscribe" using the tools at the left so that you get automatic notification, via Google Desktop, Google Reader, or your selected subscribe method.  I've been getting a number of notes from folks asking how they can get notified of updates and this is the easiest way.

There is NO face-to-face meeting in March; I'm obligated with family-centric things on our normal weekend.  I will be conducting a WebEx sometime during the month, so stay tuned.


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Summary

• There are no changes to the GGT-TSP portfolio.  Stay the course.
• The Elder Market Capitalization Favoritism (EMCF) Portfolio will sell QCOM at a 8.8% gain today because it has failed the Elder FI(13) tests as of the close of markets on 3/2.
• Our Price Change tool is sitting at +14, the highest reading possible, and is telling us that purchasing stocks today is doing so in a high risk/low return environment.  The time to purchase stocks was yesterday, when the tool indicated a value of -14.  There really is little exception to this, so if you play today, ensure you have strong momentum behind you to boost your 1-day gains.
• The GGT Short-Term LCR Change timer transitioned to CASH with the close of markets yesterday. 
• The Elder 13d Force Index timer is giving a MIXED (neither CASH nor LONG) reading.  This results because of a mismatch between using different calculation methods to arrive at the same result -- when they do not match, we need to pay attention.
• The Long-Cash Ratio (LCR) FELL yesterday, indicating that the database is not participating in this expansion.  It is not a good idea to purchase stocks when the LCR is falling, period.
• The strongest GGT industries that are appreciating in STRENGTH (not necessarily price) are:
  
  Enrg-O&G Drilling (15 stocks in group)
  Health-HMO (13)
  Enrg-Coal (11)
  Enrg-Other (4)
  Enrg-O&G Services (26)
  Enrg-O&G Refining (21)
  Enrg-O&G Equip (16)
  Comp-Heath (8)
  Media-Book/New/Mag (9)
  Retail-Major Chains (6)
  
  To determine which stocks are in each group, log in to the GGT Yahoo! site and download the most recent "ALL" files (presently February 28th upload), and go to the "By Industry" group page.  Note that the industry group above corresponds to what is provided in Quotes Plus / HGSI.
  
• I note with interest that as of the close of Wednesday's market, Precious Metals, as determined by $DJGSP, has confirmed a LONG trend on the weekly chart.  Gold, Silver have already confirmed a few weeks ago, and Palladium is about to confirm.
  
• I note with interest that as of the close of Wendesday's market, the Financials, as measured by a couple of ETFs, most notably FAS (the 3x Direxion ETF), has confirmed a downtrend.  Pay heed.

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Top 25 ETF Updates

The Top 25 ETF Portfolio, which is now the Top 22 ETF portfolio, continues to perform well in this market.  Here are the following actions for today:

Buy:

EFV

FCG

IGN

IJJ

JJG

RJI

Sell:

DAG

IEZ

IVE

IYE

MVV

RJA

UYM

Hold:

BGU

DBA

DBC

DIG

DRN

ERX

IEO

IGE

IXC

OIH

SSO

UPRO

URE

VDE

XLE

XOP

In terms of holdings and strength, here are the gains/losses for each position, going into the market on Thursday:

Some positions are not listed above because they were sold as they moved to "New Cash" recommendations over the past week.

The portfolio has a beta of 1.6 (60% more volatile than the S&P500).  The portfolio is up 12.2% since inception on 11/26/10, and is outperforming the S&P500 by +2.42% over the same period.  I've not calculated Calmar Ratio nor I have calculated mathematical expectation.

The ranking of the top 25 ETFs, from strongest to weakest (which is still very strong), is as follows:

Here are the color codes:

• Yellow:  unchanged from the previous week
• Bright Green:  moved up in relative ranking compared to last week
• Red:  fell in relative ranking compared to last week
• white: new addition to the top 25 list compared to last week (not in last week's top 100)
• dark green:  was in the prior week's top 100 and transitioned up into the top 25.

If you are not participating in this portfolio I would not jump in right now with the levered ETFs, but the 1x ETFs should be all right.  I'd wait for a day of pullback before entering.

I am trading this in a personal account with $30K, since 1/14/11, and the account is up $700.37 in locked-in gains (positions that have been sold) and is sitting on another $324 gains in open positions.  The positions that will be closed today have the following gains/losses going into the open Thursday morning:

• DAG:  +7.56%
• IEZ: +0.91%
• IVE:  already sold
• IYE:  already sold
• MVV: already sold
• RJA:  +4.88%
• UYM:  already sold

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Trading Plan for Thursday

I'm sitting defensively in the GGT, LLC portfolio, with positions in Gold & Silver (GG, GLD), a bond fund (TIP), Oil & Gas (NXY, DWSN), a travel company (EXPE), tobacco (BTI), and the Swiss Franc (FXF).  EXPE has the worse stats, but the Large Effective Volume (LEV) is impressive and diverging from price, so I'm going to hang in there unless it hits my 2ATR stop.

I intend to move ETFs around according to the changes in the Top 25 ETF portfolio listed above.  I do not use stops in this portfolio, due mainly to the wide diversification.

Although futures are up almost +0.80% as I write this, I do not intend to move into new long positions in the market at this time, but may add to existing positions if they continue to show strength.  I take this action due mainly to the GGT Price Accumulator Change tool indicating that the reward/risk ratios are poor for entry today.

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Remember, you are responsible for your own trading decisions, and I am not.  Continued following of my blog indicates your acceptance of the "Disclaimer", found on the masthead at the upper left of this blog.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd

Top 25 Portfolio Update for Thursday, February 24th

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As of the close of markets on Wednesday, February 23rd, here are the suggested changes to the top 25 portfolio:

Buy:
DAG
DBA
RJA
DBC
IEZ
IGE
IVE
IXC
IYE
URE
VDE
XLE

We will be selling 1 more ETF than we are buying, dropping the total number to 23.

Sell:
DDM
FAS
MWJ
QLD
ROM
RSU
TNA
TQQQ
TYH
UDOW
USD
UYG
XSD

Hold:
BGU
DIG
DRN
ERX
IEO
MVV
OIH
SSO
UPRO
UYM
XOP


The equity curve, as monitored at Marketocracy, can be found here.  The fund's inception was November 26th, 2010.  Since that time the fund has appreciated 12.17%, compared to the S&P 500 at 10.29%.

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The sells will be entered during the morning hours on Thursday.  The buys will be entered after all of the sells have cleared and the cash is available.  Due to the Elder sell signal from Tuesday, the invested portion will reduce exposure to just over 65% total (just under 35% cash).

Regards,

pgd

Updates to Top 24 ETF Portfolio for 2/17

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Here are the changes to the Top 25 ETF portfolio going into Thursday, 2/17.  The topic title is correct, the portfolio will hold 24, not 25, after this realignment round -- I intend to scale downwards per week, watching the statistics on the trades.

Positions will be sold on the open and new positions added after they have all settled (Marketocracy isn't instantaneous -- it needs volume in the market to sell the the position, so it takes time):

Sell
DAG
DBA
IEZ
ITB
IYE
RJA
SOXL
VDE
XLE

Buy
DDM
DRN
MWJ
ROM
RSU
UDOW
USD
XSD

*** Note that we are buying 1 less than we sold; I am going to scale into less of a "Top 25" and more of a "Top X", where X will settle in between 7 and 17 (undetermined yet).  25 is simply too many to handle but I have too much back-tested data to make an abrupt change.  Hence, I will be holding 24, not 25, stocks after this purchase round, and will decrease it weekly as we go forward until I can see the statistics start to expand faster in variance than what I'm comfortable with.

Hold
BGU
DIG
ERX
FAS
IEO
MVV
OIH
QLD
SSO
TNA
TQQQ
TYH
UPRO
UYG
UYM
XOP

A performance graph can be found at the following URL:  click me  The portfolio is shown in solid gold and the other major indexes are in the thinner lines.

Individual positions, prior to realignment on Thursday, are as follows:

As with all my images, right-click on it to open in a new tab or window.

I'm trading this in my actual account.  Here's the equity curve since inception on 1/14/11:

The account is up 2.18% for the month (since inception), with a total drawdown of 1.57%.  One month doesn't a year make but it's a start...

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Under no circumstances am I advocating that you follow me on this.  This is a test portfolio that I choose to use this strategy.  Please read the disclaimer to the left of this blog; continued following of this explicitly conveys your acceptance of the disclaimer.

Regards,

pgd

Mixed Elder Intermediate Timer Signal (of course)

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Nothing is ever easy.

The Intermediate-Termed Elder Force Index timer has transitioned to FI(13) < 0 if we use the exponential moving average method, and it still remains long if we use a simple moving average method.

The implications on the Top 25 portfolios are simple:  we need to transition out of stocks and into the contra ETFs if you are conservative, else if you are aggressive, remain invested in stocks.  If today is another down day and if today results in the FI(13) < 0 by the SMA method, then we move to the contra ETFs, without question.

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Remember, you are responsible for your actions, and I am not.  Please do your diligence, and please take ownership for your decisions.

Regards,

pgd

A Belated Top 25 Stock Change

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Yes, this is a day late.

Yes, it's probably a dollar short too.

My day job got in the way of this extracurricular activity and I could not post the Top 25 Stock changes to the world.  I need someone else to cover me for instances like this.  Any volunteers?

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Here's how I'm handling the SNAFU.  I'm using the data file of 1/20, just as normal.  We'll sell the stocks according to that file, and we'll buy the new stocks recommended.  BUT, I've run the updates for today (Thursday) on the Top 25 stocks and I know which ones were a sell for Thursday, so we won't buy those.  The result is that we'll have 22 stocks when we're all said and done with this.

Sell:

AMRN (-2.02%)
APKT (-13.79%)
FCS (+6.14%)
FRG (-20.05%)
HL (previously sold intra week)
JRCC (-13.04%)
KOG (previously sold intra week)
LNG (+2.60%)
NXPI (previously sold intra week)
OCLR (-7.10%)
REE (-11.63%)
WLT (-7.70%)
WNC (-7.54%)
WNR  (previously sold intra week)

These stocks will be staged for sell at the open and will execute as Marketocracy allows, dependent upon market volume.

Buy:

AREX
HDY
MHR
NCT
SFI
SGMO
SRZ
AXL
CIEN
ENTR
VVUS

Buying will start with available equity once the majority of the stocks above are sold.

Hold:


ACLS (-2.54%)
XOMA (+10.10 %)
WTNY (-0.02%)
LULU (-4.80%)
JAZZ (+16.55%)
ITMN (-2.10%)
GTLS (+2.94%)
FTK (+4.53%)
EXEL (-8.51%)
CVI (+3.01%)
ATML (+2.19%)


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An obvious challenge for the Top 25 stock portfolio at Marketocracy is the lack of ability to short stocks.  Additionally, the ability to use any form of leverage does not exist (e.g., margin), hence once the Elder Intermediate Timer rolls below 0, this portfolio is sold and we are in cash.

I'm backtesting an approach that appears to work and allows enhancement of returns when the Elder FI(13)<0.  It utilizes -1x ETFs only, and basically allows us to use the following ETFs:

• DOG (-1x of DJ30)
• PSQ (-1x of NASDAQ 100)
• SH (-1x of S&P500)
• RWM (-1x of Russell 2000)

I'm testing 20% per position with these, with 20% in cash, because Marketocracy requires a 65% invested amount at all time and at no time can any one position exceed 25% of the portfolio.

A variant on this is to use the -2x ETFs:

• DXD (-2x of DJ30)
• QID (-2x of NASDAQ 100)
• SDS (-2x of S&P500)
• TWM (-2x of Russell 2000)

Results are a little less than double the 1x performance.

These ETFs cannot be purchased until they signal "New Long",  I note with interest that:

• DOG and DXD are both still GGT-rated in CASH
• PSQ and QID are both still GGT-rated in CASH
• SH & SDS are both still GGT-rated in CASH
• RWM is in CASH
• TWM has signaled NEW LONG as of the close of Thursday, January 20th.

Under the methods that I have backtested, I would be allowed to enter a 20% position of TWM on Friday IF the Elder FI(13) of the GGT database is < 0.  I will not know this until Friday morning which is when the GGT stock universe will complete it's update.

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The Top 25 Stock Portfolio is performing poorly relative to the Top 25 ETF portfolio, as well as the S&P 500.  Since inception on 10/28/10, and through closing on 1/20/11, the portfolio has dropped -0.11%.  It reached a peak of 5.87% on 12/29 and has given up all of these gains.

One of the major difficulties of the Top 25 Stock portfolio is that the GGT method is relatively slow on the exit of a given equity once it starts to break down.  This can delay exiting, and as a result, cause us to hold onto a position until it drops to -20% or greater (FRG is the case in point).  Hence position management other than relying on the Wednesday rotation or a drop out of the GGT Top 25 needs to be affected.

As many of you know, I'm a big fan of Elder, and I'm also a big fan of using the slopes of the 13d and 34d EMAs as a buy/sell window.  This is incredibly difficult to backtest though, because each of the GGT lists has to be hand reviewed.  The data exists in HGSI, which is what I used to backtest many of these variants, but going back to March of last year with a new set of test requirements simply does not appeal to me.

The introduction of effective volume also can play a role here.  We can simply block entry into any stock that does not have a positively-trending large effective volume (LEV) on the day of selection.  Additionally, we can sell any stock that experiences significant (define significant?) drop of LEV, long before GGT will react.  Again, backtesting is virtually impossible. 

I'd like your comments on these ideas.

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Please check back before the open on Friday to see if the GGT Elder FI(13) value is below 0.

Remember, the Top 25 portfolios are TEST portfolios only.  

Regards,

pgd

Top 25 ETF Changes for Thursday, 1/20/11

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Drum roll please maestro ...

Actually, even with today's serious downdraft, the impact to the Top 25 ETF portfolio was not as bad as you would expect in terms of turnover.  This is because most of the held ETFs are still GGT long-rated equities, and while we did have some 2x and 3x leverage in play, the drop of -2.90% was tolerable.

Here are the changes going into Thursday:

Sell

AGQ (already sold intra week)
FAS (-4.24%)
RFG (already sold intra week)
TMV (-0.22%)
XME (+3.85%)

The sell orders will be staged prior to open and will execute as Marketocracy and market volume dictate.

Buy

MVV
SIVR
IYE
RKH
SSO

This will be a good litmus test of these equities.  MVV is actually even, if not up a tad, concerning large effective volume (LEV) over the last 8 days, even with today's downdraft.  SIVR has been in a general drift downward in terms of LEV, but nothing that I would consider a fire sale.  IYE is relatively even, much like MVV, over the past 8 days, so that is a net wash.  RKH has been steadily trending upwards in terms of price and LEV, which I find interesting and hence the reason it appears here.  SSO, the +2x leveraged ETF in the S&P500 index, has been getting wacked more than any of the other new buys, but ended the day with a last minute surge, so we'll see.

Hold

The following are NOT in order of strength, but are randomly presented:

ERX
UWM
PALL
OIH
BGU
DIG
IEO
IEZ
KOL
SLV
SOXX
SOXL
TNA
TQQQ
TYH
UPRO
UYM
VDE
XLE
XOP

The following is the implied order of relative strength, compared to the top 100 ETFs that are long as of the screen, AND compared to those appearing from last week:

As allways, the color scheme is as follows:

• Red:  moved down in relative ranking, compared to level last week
• Yellow:  same relative ranking as last week
• Green:  moved upward in relative ranking, compared to last week
• White:  new addition to top 100 list, was either rated "CASH" the prior week OR was so darned strong that it jumped into the top 25 without going through the lower 75.

As far as the shadow portfolio over at Marketocracy is concerned, here's the holdings and individual performance as of this writing:

As with all my images, right-click on it to open in a new window or new tab.

You can see from the very top line that the total gain is 8.5%.  This portfolio was created Thanksgiving weekend, or 11/26, so it's not done badly.

Going into tomorrow (Thursday), these are the Top 25 ETFs that have a postive LEV over the last 8 days and show a positive divergence from small effective volume (you and me, SmEV):

PALL
UPRO
TQQQ
IEZ
OIH
TYH
XLE
RKH

No order above is implied -- I simply went down the list and eliminated those with a negatively-trending LEV over the last 8 days.  RKH is by far the strongest in terms of LEV, then I'd say PALL is next.

This latter methodology is with some merit -- that is, only selecting those top 25 ETFs with a positively-trending LEV at the time of purchase.  Last week I purchased ONLY those top 25 ETFs with positively-trending LEV using about $30K of capital, and today I sustained only a tad LESS than 0.97% loss on the entire basis, so overall I'm encouraged that we can modulate the selection with those ETFs with institutional buying.

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Remember, the Top 25 portfolios are test portfolios.  Trade them if you desire, but you do so with no guarantees or representations from me.  Continued following of my blog and these test strategies implies that you have read and accepted the terms of the disclaimer found at the top of the blog masthead when you first log into this site.

Also remember that you, not I, are responsible for your actions.  Do your diligence, point out my errors, ask questions, but above all, take responsibility for trading/investing/whatever.

Regards,

pgd

Top25 Stock Update for Thursday, January 13th

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Here are the changes to the Top 25 stock portfolio:

Sell

AH 3.25%
EXK -1.30%
LDSH 2.83%
MWW -4.80%
PAL (previously sold intra week)
ROSE (previously sold intra week)
SFI (dropped off top 100 due to $-volume)
URZ 3.22%
WTI 8.35%

Buy

AMRN
ITMN
LULU
WLT
WNC
APKT
ATML
JRCC
WTNY

Hold

ACLS
CVI
EXEL
FCS
FRG
FTK
GTLS
HL
JAZZ
KOG
LNG
NXPI
OCLR
REE
WNR
XOMA

Here is a graphic of the relative rankings.  The color scheme is as follows:

• Green:  moved up in relative ranking compared to last week
• Yellow:  unchanged in relative ranking
• Red:  moved down in relative ranking compared to last week
• White:  new addition to top 100, and obviously now in the top 25, compared to last week

The account is up 6.8% since inception on 10/28.  I expect that this portfolio will underperform the Top 25 ETF portfolio simply due to the lack of leveraged ETFs during long periods.

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This strategy is being forward tested on Marketocracy in real time.  If you follow the trades, you do so at your own risk, as I make no representations to the timeliness and accuracy of the reporting.

Remember, you are responsible for your investment decisions, and I am not.  Please do your diligence, and please take owership for your actions.

Regards,

pgd

Changes to Top25 ETF Portfolio for Thursday, 1/13/11

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Here are the changes to the Top 25 ETF portfolio.  These ETFs will be sold early in the market day; the orders have been staged at Marketocracy:

Sell:

IYE +1.91%
MVV (previously sold intra-week)
SIVR +2.82%
SMH +1.34%
XES (volume dropped below $6Msh)

Buy:

IEZ
OIH
SOXL
SOXX
FAS

Hold:

AGU
BGU
DIG
ERX
IEO
KOL
PALL
RFG
SLV
TMV
TNA
TQQQ
TYH
UPRO
UWM
UYM
VDE
XLE
XME
XOP

Here's the comparison of the top 25 to last week's values. 

Here, the colors mean:

• Green:  moved up in position, compared to last week
• Yellow: no change in relative position
• Red: moved down in relative position
• White: newly added to the list -- not in top 100 last week

The portfolio is up 10.2% since inception on 11/26 with neglible drawdown.  There is no provision in this portfolio to sell positions early or diversify and preclude leveraged funds -- I fully anticipate that some of this gain will be given up when/if the market reverses.

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Note that this is a test portfolio -- it is being forward tested in the open, for all to review.  If you choose to trade this portfolio you do so at your own risk.

The Top 25 STOCK portfolio should be ready in the morning for review.

Regards,

pgd

Top 25 Stock Portfolio Update for 1/6/11

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Finally!  The update completed, and here are the changes.

Much more rotation than in the ETF portfolio ...

Sells:

ALR +6.98%
AMRN +5.69%
ATML +7.05%
DDS +2.73%
DNN - previously sold intraweek
MEE +3.45%
NG - previously sold intraweek
TGA + 5.09%
UEC -6.76%
VSH - previously sold intraweek
VVTV +3.28%

Buys:

ACLS
AH
CVI
EXEL
GTLS
LNG
MWW
NXPI
OCLR
REE
SFI

Holds:

EXK
FCS
FRG
FTK
HL
JAZZ
KOG
LDSH
PAL
ROSE
URZ
WNR
WTI
XOMA

Since inception on 10/28, the portfolio is up 4.9%.  Maximum drawdown levels are presently unattainable because Marketocracy web site is having log in problems.

Here are the rankings, compared to last week.  Order does imply strength, with the strongest at the top:

Color codes are the same as previously listed in the top 25 ETF submission earlier today.  Note the new rotation of stocks in (10 of 25), the drop of existing stocks (11), two remaining in place (YELLOW) and two increasing in strength (GREEN).

The market feels toppy, but with the new rotation, if we continue higher, the portfolio should creep upward slightly.

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Please read the disclaimer listed to the left of this blog.  Continued following of this blog is predicated on your acceptance of the terms specified in the disclaimer.

Please take responsibility for your actions.

Regards,

pgd

Top 25 ETF Changes for Thursday, 1/6/11

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The STOCK updates are running late; I had issues with my updating process and had to restart it when I awoke this morning.

Here are the updates for ETFs:

The following positions have already been sold due to intra-week changes, but for the record, they are no longer being held:

GDXJ
IEZ
OIH
QLD
TBT

The following positions will be bought early this morning:

IEO
IYE
RFG
SMH
XES

The following positions are being held with no change:

AGQ
BGU
DIG
ERX
KOL
MVV
PALL
SIVR
SLV
TMV
TNA
TQQQ
TYH
UPRO
UWM
UYM
VDE
XLE
XME
XOP

Order does NOT imply strength.

The following is a comparison of last week's selections to this week.  Here, order DOES IMPLY STRENGTH, with the strongest performing at the top of the list:

Color coding is as follows: 

• YELLOW = no change in position
• GREEN = moved upward in position relative to last week
• RED = moved down in position relative to last week
• WHITE = new entry; not in top 100 relative to last week

What I find interesting about the above graph is that we have a large number of ETFs that have remained in position (YELLOW) or have moved upward (GREEN), resulting in little rotation.  This is significant, and it is the first time this has occured since I started this method back in late March 2010.

Overall, the Top 25 ETF fund is up 7.95% since inception on 11/26/10.  The maximum drawdown in this period is less than 2%.

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The Top 25 ETF porfolio is being provided for educational purposes, and is not a recommendation to buy securities.  If you choose to purchase the securities listed here, you do so on your own and with the acknowledgement that this information could be in error, resulting in significant loss to your portfolio.

Please read the disclaimer listed on the left of this blog.

Remember, you are responsible for your investment decisions, and I am not.  Please take ownership for your actions.

Regards,

pgd

Top 25 Portfolio Updates, GGT New Longs are Interesting, LCR has a Crack in the Bull Ice ...

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Meeting Reminder:


There is a monthly meeting this coming Saturday, December 18th, from 1 p.m. to 3 p.m. at the Great Falls Library, 9830 Georgetown Pike, Great Falls, VA 22066. The GGT, LLC investment club will meet immediately following the advertised meeting. WebEx information will be provided in the Yahoo! groups.

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Summary

• The LCR System turned "somewhat unhealthy" today, at least through the slope of the 55d EMA.  Specifically, the slope of every EMA from the 5d to the 55d has turned downward, and this is problematic for bulls.  Protecting profits would be a good thing at this time, so I think I will.
• The LCR EMA "slope of the slopes" has now had 5 of 6 days with a negative pointing slope.  This is what caused the slopes of the LCR EMAs to point downward and if this continues, the bears will be sitting around the Christmas tree instead of the bulls.  If Thursday is a down day too for the "slope of the LCR slopes" it will be the 4th consecutive day of this occurring.  This occurs more often with the LCR system than the pricing system, with the last few periods being 11/9 - 11/12, 10/14 - 10/10, 8/19 - 8/24, and 10/15/09 - 10/21/09. 
• Unlike the LCR System, the Pricing System is healthy, with all of the slopes of the pricing EMAs (5d through 65d) pointing upward.  This tells me to keep my strongest holdings and sell the weakest.
• Despite the Pricing System slopes all pointing upward, the "slope of the slopes" of the pricing EMAs have all been red the last three consecutive trading days.  4 consecutive days is VERY rare (December 28 -December 31st 2009 was the last time), so if we get 4 consecutive down days, I think we'll have to move to the sidelines.
• %B and the GGT Strength index fell, but are still indicating more gas in the tank.  I need the values to fall further before I get myself into a "sell everything" mentality.
• The Short-Term LCR Change Timer is in a confirmed CASH condition, and has been here since 12/9.  It will take two up days on solid prices/volume to change this (e.g., close of b'ness Friday at the earliest).
• The Elder Intermediate-Termed Force Index Timer is LONG, indicating that we should be purchasing stocks LONG on this pullback.  Keep your shopping lists ready.

Yes, the markets are pulling back.  As you will see below, there has been a complete rotation of the Top 25 stock portfolio -- e.g., all the high-flying stocks that were on the list last week have been knocked OFF the list (because they no longer have a long status), or they have fallen in ranking below the top 25.  Either way, the markets are rotating.  Elder's method tells us that we should buy stocks on this pullback, so do not run for the hills just yet, as you should be figuring out what stocks you want to enter on the long side.

The next day or two will be important to the bulls.  If we see one more day of LCR "slope of the slope" negativity this will drive the markets into a short-term oversold condition.  If we meander sideways it's anybody's guess what could happen.  If we bounce from here on the news I'll use the opportunity to lock in profits, especially since I am traveling on vacation starting December 22nd.

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Top 25 Stock Portfolio

The close of the markets Wednesday night has revealed a nearly 100% turnover in the top 25 stock portfolio. 

The following positions should be closed, with (+gain/-loss) in parens:

AAPL (-0.29%)
AMZN (-2.60%)
AZO (+8.69%)
CEO (+1.41%)
CKH (-2.91%)
CME (+5.14%)\
CMG (-2.21%)
DECK (+13.98%)
DRQ (+2.87%)
ETN (+1.38%)
FCX (+14.47%)
FFIV (+9.18%)
FOSL (+5.63%)
LNN (+4.02%)
MEE (+0.81%)
MTD (+4.84%)
NFLX (+5.28%)
NOV (+2.18%)
RL (+4.96%)
SLB (-0.11%)

The only position left "standing" is BSFT, which is DOWN -4.85%.  Go figure.

BSFT will be adjusted to a 4% position on Thursday.  Positions heading downward at 10:00 a.m. will be sold and the portfolio will not be added to until the positions below turn upward, or near the end of the day, whichever occurs first.

New to the list are the following stocks:

ACPW
AREX
ENMD
FCS
FTK
FXEN
IGOI
IMAX
JAZZ
LNG
MWW
NCT
NG
SGY
SIMG
ST
TGA
UEC
URZ
VRUS
VSH
VVTV
WTI
XIDE

Of these stocks, these stocks were previously on the "top 100" list and are obviously in the top 25:

BSFT
IMAX
ST
VRUS

This simply goes to show that when the high-fliers rotate, they do so hard.  Also note that we had a number of stocks hit "New Cash" status today:

AAPL
NOV
SLB
MEE

PCLN had already been sold and confirmed it's sell status with a "Affirmed Cash" recommendation.  Ditto MIDD.

Since inception on 10/28/10, the portfolio is up +1.5%.  It reached it's peak value on 12/6/10, when it was up +2.34%.  The maximum draw down since inception is 5.3%, which occurred from the peak of 11/8/10 to the valley of 11/16/10.

In the last 30 days the fund has increased 4.86%.  According to Google Finance, the S&P500 has increased 3.39% in the same time frame.

The fund has been alive for 48 trading days.

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Top 25 ETF Portfolio

11 ETFs will be rotated out of the ETF portfolio:

IJK (+3.44%)
IJT (+4.06%)
IWO (+4.91%)
MDY (+2.66%)
QLD (-0.45%)
RFG (+2.10%)
SOXL (+5.91%)
VPRO (+1.53%)
VBK (+4.57%)
VDE (-0.21%)
XLE (+4.45%)

11 ETFs will be added to the portfolio, at a 4% level:

DBS
MWJ
NLR
PXJ
SIVR
SLV
SMH
SOXX
UWM
XES
XSD

Positionally, the only ETF in the entire lot of 25 that remained in the same relative ranking position is AGQ.

The following ETFs are weaker, but still made the top 25 list:

PALL
OIH
MVV
TQQQ
BGU

The following ETFs are stronger, and have moved up in relative ranking.  Note that many of these are new purchases, but were previously in the "top 100" and are now in the "top 25" due to their strength:

ERX
USD
TNA
DIG
IEZ
SIVR
UYM
TYH
XES
KOL
SMH

New to the list are the following ETFs:

DBS
SLV
MWJ
UWM
PXJ
XSD
SOXX
NLR

The Top 25 ETF portfolio was started on 11/25/10, and since that time is up +4.75%.  It reached it's peak value on 12/13/10, when it was up +4.99%. The maximum draw down since inception is 0.46%, which occurred from the day the fund was started to the valley of 11/30/10.  This is not a normal circumstance and indicates that we need far more trades to judge the performance of this ETF portfolio before we commit our monies.


The fund has been alive for 20 trading days.

Positions heading downward at 10:00 a.m. will be sold and the portfolio will not be added to until the positions below turn upward, or near the end of the day, whichever occurs first.  All trades will occur sometime on Thursday.

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New Longs

I note with considerable interest that the GGT New Longs, going into Thursday, are heavily weighted in Drugs, Bio, and Healthcare.  Here's the list of NL stocks:

AMRN
VPHM
RP
EXAS
ALKS
INWK
COT
ABV
CPSL
OSIS
PRXL
NWL
MOH
VM
PDCO
ARAY
KGC
MSG
ABM
MR
DVOX

To our resident Dr. Scott -- any thoughts here?

ETFs look interesting too:

XPH

SSG
OIL
UUP
FXP
DBO
PPH
SOXS

XPY is the Health/Pharma ETF, but is too thinly traded for my liking.

Note that SSG is the Ultra SHORT Semiconductors

Note that UUP is the DOLLAR -- a new long here does not occur frequently, and according to GGT, when it has occurred in the past, we've had more whipsaw action than not.  Be careful with this one.

FXP is the -2x Leveraged Contra China Xinhua25 -- this is confirming with many indicators.
PPH is the HLDRs Pharma, and completely dwarfs XPY.  THIS is one worth watching, and the stocks above confirm this (or the other way around).  Dr. Jeff?
 
SOXS is the -3x Semiconductors, so it confirms SSG.
 
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Remember, you are responsible for your own trading decisions, and I am not.  Investing in the Top 25 portfolios is very risky, as these are being forward tested at the present time.  If you do so, you acknowledge that you may get the heck beat out of you by the markets and that you have no one to blame but yourself.  We are in a period of consolidation, yet every one of the 50 stocks/etfs mentioned is on the long side of the market -- if we move down, they will get hammered. 
 
TAKE OWNERSHIP for your actions, and make sure you do your diligence.
 
Regards,
 
pgd

Changes to Top 25 Stock Portfolio

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With the close of markets on Monday, December 13th, GGT has indicated that the following positions in the Top 25 Stock Portfolios should be closed:

• CSTR - New Cash as of 12/13
• MIDD - New Cash as of 12/13
• OII - New Cash as of 12/10

These positions will be closed after 10 a.m. on Tuesday, December 14th, and will be replaced with normal portfolio rotation the morning of Thursday, December 16th

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Remember, you are responsible for your own trading decisions, and I am not.  Please take ownership for your actions.

Regards,

pgd

Short Term Timer = CASH, VTI Transitioned to CASH

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First, I'd like to thank Bob Wilson, Jeff Williams, and Dave Steckler for an enjoyable evening here in Ft. Worth.  Always enjoy talking about the markets....

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Summary

• The Long-Cash Ratio (LCR) fell today.  This has caused the Short-Term LCR Change Timer to transition to CASH with the close of the markets today.  If you are holding short-term equities, you'd better lock in those gains.
• The VTI timer, which is related to the Short-Term LCR Change Timer, also signaled a move to CASH.  If you are holding VTI lock your profits in now.
• The GGT price index moved up +0.25% on 7% higher volume than the 50d MA.  This is bullish, but the LCR eroding away for two consecutive days says that we need to watch this.
• Overall, the LCR subsystem is bullish.  The slopes of all the EMAs are pointing upward, which is healthy.  This is telling us that on time lengths greater than 5 days the database is expanding in terms of available numbers of stocks with a LONG status.
• Like the LCR subsystem, the pricing subsystem is bullish.  The slopes of all the pricing EMAs are pointing upward, much like the LCR subsystem, and since we put prices in the bank, this is good.
• %B for the database fell again for a third consecutive day, ending the day at 0.775.  Database strength ROSE a bit, thus adding another divergence to the equation.
• The Elder Intermediate-Termed timer is still long -- entry of stocks on the long side is ok.

Overall, two divergences exist:  price moves up but the underlying database is getting smaller in terms of stocks with a LONG status, and %B decreases but GGT database strength increased.  It's difficult to reconcile these two sets of divergences, but I typically put more weight on the price/LCR system.  Climbing prices on a shrinking database cannot be sustained, so either we will see falling prices to match the shrinking LCR system, or we'll see the LCR system start expanding to match rising prices.

Time will tell.

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Top 25 Stocks and ETFs

So, I'm traveling this week.  I started traveling Tuesday, so somehow in my mind that was "Monday".  Today is Wednesday, right?  Wrong.  It's Thursday.  Well, on Wednesday night, I'm supposed to calculate the Top25 stocks and ETFs.  It didn't happen last night because in my mind it was Tuesday, not Wednesday.  This is the problem when you hold multiple jobs.

You might think that I should simply use yesterday's data and update the portfolios... but I can't do this.  I'm actually using a 3rd party to independently track the portfolio, and since I didn't make the trades today, I can't backdate.

Soooooooo, the Top 25 Stock and ETF portfolios will be calculated with today's data, and the actual transfer in accounts will be Friday morning.  Welcome to real-world trading.

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Top 25 Stocks

Here are the new top 25 stocks, from strongest to weakest, although these are the strongest out of 1846 LONG-rated stocks.  I note with interest that EVERY one of these is only rated LONG, not New Long, not Affirmed Long, but simply Long.  Telling?

CMG

PCLN
AZO
CEO
AAPL
BSFT
CME
NFLX
FFIV
CKH
MTD
DECK
RL
CSTR
MIDD
NOV
AMZN
SLB
LNN
DRQ
FCX
MEE
ETN
FOSL
OII

Stocks moving up in position since last week:

CMG
AZO
FFIV
DECK
CSTR
FOSL
OII

Stocks falling in position since last week:

PCLN
CEO
CME
NFLX
MTD
RL
MIDD
NOV
AMZN
SLB
DRQ
FCX
ETN

Stocks remaining at the same relative level:

CKH
MEE

Stocks newly appearing on the list: that were not in last week's top 100 list:

AAPL
BSFT
LNN

Stocks removed from the portfolio (sell these):

BIDU
LVS
NEU
TIF

Stocks being purchased for this week:

AAPL
BSFT
FOSL
LNN
OII

For the period ending December 9th, the Top 25 Stock portfolio is up 1.5% since inception on 10/28/10.  The Maximum Drawdown in this time is 4.77%.

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Top 25 ETFs

Here's the list of Top 25 ETFs, in decending order of strength:

AGQ

UPRO
TQQQ
OIH
SOXL
PALL
ERX
TNA
MDY
VDE
QLD
USD
RFG
IJK
BGU
MVV
IEZ
DIG
IWO
XLE
VBK
XME
TYH
UYM
IJT

Unchanged ETFs in terms of relative position on the list:

AGQ
MVV
VBK
IJT

ETFs that are new additions to the list:

UPRO
VDE
QLD

ETFs that have risen in strength:

SOXL
PALL
USD
RFG
IEZ
DIG
XLE
XME

ETFs that have fallen in strength:

TQQQ
OIH
ERX
TNA
MDY
IJK
BGU
IWO
TYH
UYM

I'll place orders to sell the following ETFs:

IWR
IYT
MWJ
SGG
SOXX

I'll place orders to buy the following ETFs, at full positions (since the Elder Force Index Timer is LONG):

QLD
UPRO
VDE
XME

For the period ending December 9th, the Top 25 ETF portfolio is up 4.0% since inception on 11/25/10. The Maximum Drawdown in this time is 0.01%.


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Trading Plan for Friday:

First, I need to make the phantom trades of the two portfolios as listed above.  This will be done prior to market open.

Next, I'm watching the following stocks for appreciation, and will enter if they show strength and appropriate intra-day volume:

EWX

BEAV
STEC
MCRS
SHO
TBF
TBT
TMV
TWX
SUSQ


These stocks need to appreciate before entry but appear that they are starting new up-trends:

MAA

CYD
DBA
CEO
BBL

These stocks need to pull back prior to entry, as they are overextended:

PTP

ADTN
UN
BLK
MTB
RF
STO
TCB
WTS
AAWW
AF
BOH
CCC
COF
CQB
HIG
IRE
KIE
MDT
ZION
ZMH

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Remember, you are responsible for your own investment decisions, and I am not.  Please do your diligence and take ownership for your actions.

Regards,

pgd

Bearish Price/Strength and Price/LCR Divergence

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Summary

• Rising prices but falling strength index does not point to a healthy bull market.  This is our current situation.
• Because of rising prices, we see that the slope of the 55d EMA on price has turned up.  This is necessary for a bull run to resume, but note, all the EMAs below the 55d are still pointing downward.  This effectively will continue to kill the bull if these do not reverse.
•  The LCR continues to fall despite the increase in prices, giving us another bearish divergence.  The synchronization of the LCR and the strength index presents a bearish bias to the market, futures up nearly 1% as I write this notwithstanding.
• I'm going to let the divergences work themselves out before I commit substantial monies to the market.

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Let's start with the dashboard:

As with all my images, right-click on the pictures to open in a different tab or window.

The GGT price index rose +0.43% on Wednesday on volume that was -11% below the 50d MA.  Rising prices on lower volume does not make for a raging bull, but -11% is within the standard deviation of being normal, so read into this what you may.  I don't think it is a great sign.

The pricing EMAs are intact, with only the 8d < 13d.  This means that the decline that we have experienced (nearly 10% in GGT prices) is still not enough to cause these EMAs to invert, which overall is bullish.

Wednesday saw a bit of recovery in the pricing slopes, with the 55d pricing slope turning upward.  Hence, although we are still pointing down on the 8d, 13d, 21d, and 34d, this drop over the last week or so has not been severe enough to persist when we have an up day.  I take this as a crack in the bear ice and we need to be ready to play the markets to the upside, should the indicators point us that way.

Despite the increase in prices, the underlying strength of the database fell -5.9% on Wednesday, which means that we have a divergence, and in this case, a bearish one.  Strength is a function of a number of things -- prices, volume, and rates of change -- whereas price is simply that.  A falling strength means that the underlying number of stocks in the database is not supportive of the increase in price, volume, and/or rate of change, and this generally is not a good thing.  Either 1) GGT prices must fall to align themselves with the falling strength, or 2) strength must improve in order to support the increase in prices.  Only time will tell.  This is a bad sign though, because the strength index is broad and deep, whereas price is simply broad.

Note that the strength index is at 0.249, which is the lowest value it has been at since July 2010.  This does suggest that we could see upside movement, as a number of stocks have "reset".

The Long-Cash Ratio (LCR) fell an additional -9% on Wednesday, aligning with the fall in the strength index, but giving us a bearish divergence against the rising price index.  The final value of 0.585 indicates that we have 1076 stocks that have some form of LONG status and 1838 stocks with some form of CASH status.  Put another way, 37% of the database is LONG.  The bearish divergence between the LCR and price cannot be sustained, much like the price/strength divergence.  Either we will see 1) GGT prices fall to align themselves with the falling LCR, or 2) the LCR must reverse and move upward to support the increase in price.  The fact that LCR and strength are working in synchronization tells me that we have a sustained bearish bias in the markets, futures being up nearly 1% notwithstanding.

Overall, the bias is downward, but with the GM IPO today, the govern't need to save face in view of the GM IPO (if the GM IPO fails Joe-Taxpayer will NEVER allow the government to bail out any company going forward, giving the market no reason to move up because a safety net will have been removed).  Hence, today is a sucker's rally, as there is too much news to play.  I will be content to sit on the sidelines and watch. I need these divergences to work themselves out before I commit substantial cash to the market.

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Short-Term LCR Change Timer

The timer is now in it's 6th day of being in CASH.  The GGT index has fallen nearly -9.3% in this time, so I suppose that this is a good timer to watch.  I plan to stay the course for my short-term investments.

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Intermediate-Term Elder Force Index Timer

This timer has been in CASH for the past 4 days, with two days confirming out of this 4, and is telling us that it is NOT prudent to play positions for the intermediate-term.  Hence, I'm not playing positions.

Nevertheless, I run an internal portfolio of Elder candidates that are showing strength in light of existing market conditions.  Here's the list of candidates going into Thursday's action:

PETS
AHS
FALC
STRA
AIB

Note that AIB is early, as the slope of the 34d EMA is negative but will cross into positive territory if the stock moves up.  Note that with all the noise about Europe and the PIIGS, you may want to avoid this equity.

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Top 25

We've had a major rotation in the Top 25 since last Wednesday.  Here's the new list:


ABV
AZO
BBL
BIDU
CKH
CLW
CMG
DRQ
FCX
FFIV
FOSL
GYMB
IBM
LNN
MIDD
NFLX
NOV
NVO
PCLN
PH
PXD
RL
UFS
UNP
WLL

I launched this portfolio a couple of weeks ago (probably not a great time to launch a new concept), and we have fallen -2.7% since that time.  Note that CLW and MIDD are new additions to the Top 100 source list, as they were New Longs or Affirmed Longs within the last week and have maintained this status.  All other stocks have moved up in the leader's list, which I find interesting.  Under the rules of this test portfolio I will purchase equal-weighted positions with available cash, and will sell everything not on this list.

The Top 25 does not use any form of Elder criteria to enter/exit.  It is purely managed once per week.

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India

In general, India's long stock market, as measured by the ETFs FNI, EPI, PIN, INDY, INR, INP, and ICN is moving downward:

• Bull power is negative
• Elder Force Index is negative, both methods
• MACD histogram is negative and trending downward
• The slopes of the 13d and 34d EMA on price are pointing downward and the 13d slope is below 0 (losing money day over day)
• The 8d EMA on price just crossed the 13d EMA from above, which is bearish.

I see no compelling reason to do anything with India at the present time.

INDZ is the Direxion -2x leveraged contra ETF for India.  While it looks compelling for entry, the volume is very low -- 7300 shares on 50d MA of 4442 shares -- it simply isn't liquid enough for me.  But I'll keep checking it week over week...

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Platinum

Platimum has reversed off of it's peak on 11/9 and is plunging, preventing any form of long entry.  Here's the setup:

• Bull power is negative
• Elder Force Index is negative, both methods
• MACD histogram is negative and trending downward
• The slopes of the 13d and 34d EMA on price are pointing downward and both are below 0 (both are losing money day over day)
• The 8d EMA on price just crossed the 13d EMA from above, which is bearish.

I'm avoiding any long position in platinum.

Although PTD is the -1x contra ETF for platinum, there is no volume to speak of.

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Natural Gas

My NatGas index, formed with UNG, GAZ, FCG, and UNL, has just moved long.  Here's the composite chart:

The challenge here is that it's been long, moved to cash per Elder with Tuesday's action, and has just moved long again.  On the positive side it seems to beholding the 40d MA with the close Wednesday, so we may see it move up from here.  On the negative side Bull Power is barely positive, the MACD histogram just moved negative, and both the slopes of the 13d and 34d EMAs are negative and pointing down.

I plan to avoid NatGas for now.

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The Yen

The Long Yen, as measured by the FXY and the JYF, continues to collapse, so there is no change here.  I plan to avoid the Yen.

The YCS is the -2x leveraged contra ETF of the Yen, and it looks interesting:

Of significance here is:

• Bull power is positive
• Both Elder Force Index methods are positive
• MACD histogram is positive
• %B is 0.78, suggesting more upside room exists
• The slopes of the EMAs are positive and pointing upward.
• 8d EMA of price just crossed above all the other EMAs, which is a very bullish indicator.
• Volume looks good overall.

Here's what GGT has to say about YCS:

Correspondingly, I will pick up a position in YCS if it continues to show strength today.

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Remember, you are responsible for your own investment choices, not I.  Please take ownership for your work.

Regards,

pgd