Signal Change: GGT LCR Change Timer (fast) has moved to CASH

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Independent of what the popular markets did yesterday, the GGT Price index fell -0.3% on above-average volume of 2.0M shares.  Correspondingly, the GGT Long-Cash Ratio Fast Timer, which signaled a transition from LONG (+1) to CASH-LONG (0) over this past weekend, also transitioned to CASH (-1) with Monday's close.  The LCR continued to drop on Monday and is now at 3.178, indicating that 2425 stocks have some form of a LONG recommendation and 763 stocks have a CASH recommendation.  This is off the peak established last Thursday of 3.625.

The GGT LCR Timer will post a confirmation signal with tonight's close IF the broad markets continue south with today's action.  Yesterday saw 2433 Advancing stocks and 3668 Declining stocks -- hardly a loud bear -- but it was enough to pull the GGT Price index AND the GGT LCR lower, causing the present warnings.  Watch here throughout the day, specifically the ADV/DEC values in the upper left corner, to get a view of what the broad market is doing.

Although I've posted a recommendation for GS, this is a risky trade at this point in the game.  Certainly enter on strength, and if GS continues to pull back, we'll monitor daily to determine whether we should enter or not.

Historically, watching the ADV/DEC level mid-day and closing longs (if transitioning from longs to cash) has been prudent.  Today will be different though because of the FOMC meeting and release of the statement around 2 pm.  I suggest waiting until after 2 pm EDT before making big decisions on anticipating what the GGT LCR Change Timer will do.

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Remember, you are responsible for your own trading decisions, not me.  Please do your own diligence.

Regards,

pgd

Price / LCR Divergence -- Pay Attention!

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Summary:  Read the content for yourself, but the yellow colorings are no mistake.  Caution is advised.

GGT Price Index:  New Highs on solid volume --> Bullish
GGT Price Rates of Change:  Deceleration all week, but still positive in magnitude.  Possible topping indicator.
GGT Long-Cash Ratio: Decreased on Friday, which is a warning sign.  Possible pausing or topping indicator.
GGT LCR Change Timer (fast):  Transitioned from Long (+1) to Long-Cash (0) on Friday; if the market drops on Monday this timer will transition to Cash (-1).
GGT LCR Change Timer (confirmation):  Still indicating Long (+1) status.
GGT Strength: @ 0.82 (bullish), but down 18% from last Friday's peak of 1.0

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GGT Price Index

The GGT Price index moved higher Friday, reaching an all-time high of $24.73, a change of +$0.02 over Thursday's value and about 1.38% higher than last Friday's value of $24.39.  Volume continues to beat the 50d MA volume, with 2.1M shares indicated on Friday, 12% higher than the 50d MA of 1.9M.  Note that we have had 46 consecutive days of volume beating average volume, which is unprecedented in GGT history since September 2008.  If we look purely at price and volume these are bullish, and we certainly should be long in the market as viewed solely by these two indicators.  Here is the chart; as with all my charts, right-mouse-click on the image to open in an adjacent window and ENSURE you can see the right-most side of the graph, as this is where the relevant data resides.

I've drawn an artificial channel on the GGT pricing data; you can see that we are well-extended above this upper channel line.  You can also see that we are experiencing more average volume than we were compared to any time in the past since January 2009.

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GGT Price EMA ROCs

The Price EMA rates of change (ROCs) are a telling indicator because as they decrease, even while being positive, they can give us a good idea of topping or bottoming formations.

The graph above is the ROCs plotted against GGT Price and date.  You can see for yourself that this week was one of DECREASE in acceleration, a.k.a. deceleration.  This is a warning sign and we need to pay heed.  Next, the ROC values are still above $0.00, so GGT prices are still moving upward, but are doing so at a slower clip.  Until the ROC values drop below $0.00 (into the pink zone) we are still in an intermediate-term up leg, but it is being threatened.  Hence, because of the deceleration but positive value, we need to be cautious here.  Entering a zillion long positions at this stage in the market is not advised.

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GGT Long-Cash Ratio

The LCR, which is a direct measure of the number of stocks in the database with a Long recommendation compared to those with a Cash recommendation, DECREASED on Friday.  Presently it is indicating that 2495 stocks are long and 696 stocks are in cash status.  This indicator has risen day-over-day since 2/24, which is an amazing run.  Take a look at the following graph:

I posted this graph last week; this week it is updated and I've added the red circles so that you can see some correlation with the past.  The yellow sections are the number of stocks with JUST the LONG recommendation -- Affirmed Longs and New Longs are not included in the yellow data.  What is important to realize is that we are nearing (or have hit) historical levels where we have reversed.  Also note the area that I ovaled -- we have history that shows that we can remain at these lofty levels for some time, so a reversal duration is not necessarily indicated.  While there are 696 stocks that can move into a long status of some sort, history does not favor the entire database being all long and no cash, so we need to be careful here.

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GGT LCR Change Timers

I've created a confirmation signal for the GGT LCR Change Timer, which is a slower EMA than the fast EMA used on the LCR Changes.  WE ARE IN A TRANSITORY PERIOD.  The fast LCR Change Timer has indicated a move to LONG-CASH (0), which means that IF MONDAY IS DOWN, this timer will flip to CASH (-1).   Watch the FinViz home page here and pay attention to the area in the upper left corner, which will tell you ADV/DEC for all markets:

Note the specific area just above this text that states 3089 issues Advancing and 2992 issues Declining, or a ratio of 47%/45.5%.  If you see more declining than advancing, typically a ratio of 1:2 (ADV:DEC) throughout the day then you can have assurance that the fast LCR Change Timer is moving to cash.

No matter what happens Monday, we will NOT see confirmation of the LCR Change Timer until Tuesday's market, simply because the slower LCR Change Timer signal is still Long @ +1.  Whether you wait for the confirmation signal or not is entirely up to you.  If you got in to the market when we signaled long back in early February then you probably can afford to wait; if your trades are more recent and gains are lower then it would be prudent to protect profits on the newer positions.

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GGT Strength

GGT Strength peaked a week ago at a value of 1.0 -- this was an all-time high, and I suggested that you protect profits and consider contra positions that were showing strength.  Since last Friday's peak, GGT strength has fallen 18% on the long side.  Had you followed my advice on Monday you're probably pissed at me, but hang in there, I think you'll be rewarded:

If you moved into -1x contras (not that showed strength mind you, just the primary market contras), you're down about -1% to -2% for the week in those positions.  The good news is that if you've held onto your long positions you're in a great hedge position, and if the market does reverse, you've got a great foundation.  This is the situation that I am presently in, and I'm quite content to be here.  I've done this with 2x leveraged contras, and here is their 1-week performance graph (which obviously is worse ...):

Seriously folks, don't worry about the -4% loss over the week ... simply ensure you have your stop losses set in case the market rallies from here.

Note, the market can certainly hang around at these strength levels.  Historically, when we have peaked at a new high, we've ALWAYS corrected.  Always.  It's not necessarily immediate, but it has always occurred.  Here's another graph showing the strength with the GGT Price Index:

Because of the falling-below the less-than-scientific level of ~0.9 I'm going to put us in a cautionary yellow zone on this indicator.

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Strength of Various Indexes

When we take the constituent stocks of the major indexes and calculate the individual GGT strengths of each, then average these per index and scale to 0-1, with 0 being completely oversold and 1 being completely overbought, we get the following:

The figure above shows the indicated indices and the GGT LCR Change Timer, as a reference.  Note that this is the CONFIRMED LCR Change Timer, to make it clearer (some folks have difficulty interpreting the 0-state of the faster timer, as it transitions from +1 -> 0 -> -1 -> 0 -> +1.  The confirmed timer only moves between 0 and 1).  This graph is showing us that we are in historically overbought areas , and while there is no guarantee that we will reverse, historically, when we have reversed, everything moves with generally tight correlation.  This is good  :o).

Get your contra shopping lists ready.  I have this list next to my PC:

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GGT Trading Performance for the week of March 8 - March 12, 2010:

For the past week the entire GGT Portfolio is up 3.3%. The largest realized gain was in BEE, which was closed early when it hit a 8% profit target.  This stock was found in the Turtle strategy, which purchases new 20-day highs, with the list sorted (1000 / (Range * Closing Price)) Descending.  Under the Turtle rules this should not have been sold until it closed below the trailing 10-day low, but I misclassified the stock so it got channeled into a different money management strategy.  Too many pokers in the fire.

I'm presently holding 3.81% in total unrealized gains in 23 equities, most of which are on the long side since 2/12 or so.  The largest unrealized gain is MPG @ 32.79%, and the worse performing unrealized loss is QID, which is underwater by -6.85%.  I've been protecting gains which generally takes 75% of the position off the table, leaving the 25% riding for a confirmation signal, profit target, or stop loss.  72% of my portfolio is in cash, and I see this decreasing significantly if we get a move downward.
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Remember, YOU are responsible for your own trading decisions, not me.  Do your diligence.

Regards,

pgd

Indicators are showing that we are topping/pausing, so advise to tighen stops/protect profits

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There haven't been any significant changes this past week to the GGT system.  We have been showing very strong strength on good volume, contrary to the talking heads on CNBC and Bloomberg.  Yes, they are on the floors of the respective exchanges so you think they would know, but data doesn't lie -- pricing and volume have continued higher, with just a few chinks in the armor.

GGT Pricing

GGT Pricing Index has hit a new high every day since 2/26, and is now at $24.71 on above average volume of 2.1M shares (average = 1.9M).  While the rate of change on a daily basis is slowing, it is still very positive, and this is bullish.

New Longs

The daily number of New Long recommendations, 61, is the lowest since 2/10, and indicates that we are either pausing or topping. 

Long-Cash Ratio

The Long-Cash Ratio (LCR) has hit new local highs every day since 2/23, and is now at 3.625, indicating that there are 2501 stocks that have a LONG recommendation and 690 that have a CASH recommendation.  This is the 3rd highest LCR value recorded since September 2008, and a reversal has always been imminent at these levels.  I would advise to tighten stops and protect profits at this level -- there isn't much you can leave on the table at this point.  Remember, you can always re-enter the positions AFTER a slight pullback.

LCR Change Timer

The LCR Change Timer is still LONG (+1), and has been so for 19 consecutive trading days.  20 is certainly possible, but this timer is telling us to remain long.

GGT Strength

There is a divergence in GGT Strength with GGT Price.  GGT Strength fell Thursday to 0.85 from 0.92 by the largest amount since peaking at 1.0 on 3/5.  There are two ways to interpret:  either the market is taking a breather and will continue higher, or this is the start of a slight pullback.  Your crystal ball is as good as mine so again, I would protect profits and tighten stops so that you can re-enter with new cash if the market continues higher.

Index Strength

With the exception of the DJ30, every single index that I track is showing new weakness:

DJ30, up 0.42% in price, up 8% in strength
NDX-100, up 0.4% in price, down -9% in strength
SP500, up 0.4% in price, down -6% in strength
SP400, up 0.48% in price, down -8% in strength
SP600, up 0.3% in price, down -9% in strength
Russell 2000, up 0.34% in price, down -8% in strength

This should give us great pause and suggests that either the market is topping or taking a breather.  I personally do not see that there are enough stocks in a CASH status to move to LONG to power the next leg, so I think that there is better than a 50/50 chance that we will not continue upward from here but will consolidate over the next week. 

Your crystal ball is as good as mine.  Comments are welcomed.

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Remember, you are responsible for your own trading decisions, not me.  Please do your diligence.

Regards,

pgd

GGT Weekend Summary for March 6th

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Summary

GGT Price:  Bullish New High
GGT Price EMAs: Positive in absolute value (bullish), trending horizontal or upward (bullish).  Nearing peak values.
GGT Volume:  42 consecutive days of positive increases in volume is hard to argue with -- the market is accumulating stocks, and this is bullish.
# of Long-recommended Stocks:  Approaching historical peak levels -- caution is advised.
GGT Long-Cash Ratio - Completely bullish.
GGT Long-Cash Ratio EMAs:  Very positive which is bullish, but very steep in slope, which is unsustainable.
GGT Strength:  Hit an all-time high value of 1.0 -- Overbought.  Has been in overbought territory since this past Tuesday.  Protect profits, consider contra ETFs which show strength.

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GGT Price

The GGT Price index continues to move higher, hitting a 18-month high of $24.39 with Friday's close.  This was a 2% jump in price from Thursday's value of $23.91, and for the week we have watched the GGT Price Index move upward from $23.65, or a change of 3.1%.  Bull leg indeed.

I have to be candid ...  I've been taking profits off the table, having sold 50-75% of my longs earlier/mid  week.  I've also been moving ever-so-lightly into hedge positions using contra ETFs, so while many of you may have had a great bump on Friday, I actually was mostly neutral in gains, which on one hand bums me out but on another makes me thankful that my risk right now is about neutral.

Here's the graph of the GGT Price Index, together with average volume:

As with all my graphs, right-mouse click on the graph to open it in a new window or new tab.  Since relevant data is contained on the right side of the graph, make sure you can see the entire graph, not just the left side.

That is an amazing pricing graph, and the corresponding average volume graph is no slouch either.  I've layed a less-than-precise trend line on the peaks of the pricing curve since this bull started a year ago -- what you see is simply that we are now overextended above this trend line.  It's hard for me to imagine that this trend line will not continue to be tested -- we've all see prices weave in and out of lines like this but this bull trend, from the basis of this graph only, is certainly intact.  There is no arguing that you should be long in the present market.

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GGT Pricing EMAs/ROCs

More important than the absolute value of the GGT Price is the relative trend of the change in price.  If this change is upward we can expect prices to continue upward.  The converse is true too.  Look at the next graph:

There is a considerable amount of info in this graph. Most relevant to us is that:

1. All of the rates of change (ROCs) are in the positive portion of the graph. This is bullish. 
2. The individual ROCs are moving higher on a day-for-day basis.  This it indicates that the market is moving to higher prices faster than the previous day.  This is great, but it cannot be sustained.  I'll color this bullish but understand that this cannot continue without reversal.
3. We are nearing an all-time high of ROC values.  We saw this on 2/22 when we hit $0.16/day.  We are presently at $0.151/day.  The "so what" here is that when we have had this type of acceleration in the past we ALWAYS corrected, and did so just around the corner from hitting those values.  Whether this is Monday, Tuesday, Wednesday -- who knows -- but we cannot continue this advance day-over-day.  The good news is that as long as the ROC remains positive (+) then prices will continue to advance; if it goes negative, like it did on 1/22, then we know we're in for a correction.  Correspondingly, the all-time high ROC values are bullish, but every time we have been here we slowed down.

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GGT Volume

I've heard the taking heads on CNBC state that "volume is lacking" and that "no conviction in the market".  I think they are wrong.

The Price/Volume graph I showed previously shows that average volume has been increasing day-over-day since January 11th, 2010.  On Friday the GGT Volume Index showed 2.04M shares traded, with a 50d MA level of 1.79M shares.  We have had 42 consecutive days of rising volume -- not rising average -- but day-for-day rising volume compared to the average of that day.  The money is flowing in from the sidelines/institutionals, driving demand, which drives prices.  GGT volume is certainly bullish due to the rise-over-rise in values.
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Ratios

I rarely show the following chart because it takes some time to look at and understand what it is you're viewing:

GGT separates stocks into 6 classifications:

1. New Longs (#NL - dark green)
2. Affirmed Longs (#AL - light green)
3. Longs (#L - yellow)
4. Cash (#C - blue)
5. Affirmed Cash (#AC - purple)
6. New Cash (#NC - red)

This chart plots the absolute number of these ratings, relative to each other.  When you see the yellows (# of Longs) peaking in value (and blues getting thin - # of Cashs) we're nearing historical levels where prices have reversed.  We're not there yet, but we're getting there.  Color this cautionary.

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GGT Long-Cash Ratio (LCR)

One of the most powerful aspects of GGT is the classification of the stocks into 6 categories.  If we take a broad brush and simply group them as longs and cash, then take the ratio of the two, we get the LCR.

The LCR jumped from 1.923 on Thursday to 2.561 with Friday's close.  Out of nearly 400 trading days this is the 25th largest jump to date.  I note with interest and surprise that in the majority of cases where the jump was greater, that stocks continued upward in the near future.  There are 2295 "Long" recommended stocks in the database, and 896 "Cash" recommended stocks.  Here's a graph of the GGT Price and LCR:

I've colored regions of "up" and "down" periods, according to the direction of the LCR.  Take a close look at the above -- you can see areas where the LCR was falling but prices were horizontal or weakly ticking upward.  I'm convinced that the LCR can be an early-warning indicator for us.

Probably more telling is that there is NOTHING indicating a divergence between the LCR and the Price index -- they are both pointing upward with Friday's action, and as you can see, both have been lock-step for some time (since 2/8/10).  Correspondingly, the LCR is bullish.

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LCR Rate of Change EMAs

Just as we can plot ROCs on price EMAs, we can plot ROCs on LCR EMAs.  The data is instructive:

Just as in the Price ROC graph, we have some interesting take-aways:

1. The ROC EMAs are all positive.  This means that the rate of change of the LCR is positive, e.g., that it is increasing within the length of the EMAs.  This is another way of saying that the trend is LONG for each of the ROC EMAs.
2. By the time that the GGT Price was moving upward, the LCR ROCs had been already moving upward.  In fact, 2/9 was the "reversal" day in GGT Price, but the ROCs had been gaining ground as early as 2/2.  I missed this divergence, but certainly will not the next time it happens...  Presently, there is NO divergence, and the trend is upward.
3. The ROCs are VERY STEEP.  Too steep to be sustained if you ask me, so I think we'll see some form of a relaxation in the slope of the ROCs.  THEY CAN STILL REMAIN POSITIVE, which means that the LCR continues to go up.  IF the ROCs move into the pink zone I would expect that LCR and Price has already started to move agressively downward.  I think this steepness is a warning shot across our bow. 

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GGT Strength Index

Another unique feature of GGT is the ability to calculate the "strength" of a stock.  Think of it as an overbought/oversold indicator.  Values close to 0 are "oversold" and values close to 1 are "overbought".

The GGT Strength index hit an all-time high of 1.0 on Friday, indicating that as a database, it is very, very overbought.  Here's a chart of GGT Price and Strength:

Price is shown in dark blue and purple indicates strength, between 0 and 1.  Red areas are where the GGT Strength has moved above ~ 0.9 (it is not an exact science).  When this occurs long trades are risky because the database as a whole is overbought.  The yellow regions are where strength was red but then dropped below ~0.4.  At this point the database is showing weaker strength and is entering oversold.  Once we resume upward above ~0.4, we move into a green zone.  Note that these values of 0.9 and 0.4 move around as market conditions change.

If you go by these rules, we see that we're presently in a red zone.  This means that the market is overbought and that profits should be protected, which is what I've been doing this week.  I also enter contra ETFs as they show strength during this period.

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As always, you are responsible for your own trading decisions, not me.  Do your diligence.

Regards,

pgd

LCR Change Timer Transitioning to Long-Cash with Thurs' Action

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It's 5 a.m. in Vegas, Friday morning, and the futures are higher in advance of the jobs report.  Everything is pointing upward according to the talking heads, partially because it seems that the jobs report is being discounted and that Greece is going to be safe, but I see another side.

I purchased hedge positions in DRV, FAZ, SRS, QID, and SDS near the close yesterday.  I have orders pending in MZZ and DXD, which may execute today if the market even appears to reverse and move lower.

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GGT Price inched up to close at $23.91, changing from $23.86.  If you believe in channel lines, we are 1% away from a top channel line and 7.6% away from the lower channel line.  This GGT Price is an all-time high, relative to when we started back in September 2008.  Rising prices is bullish.

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Volume continues to be strong, with Thursday's value at 1.96M shares on 50d MA volume of 1.78M shares.  This volume is 7% over Wednesday's value and this is within the daily "noise" of volume change.  Rising prices on steady volume typically indicates broad participation so the big boys are playing on a daily basis.  I take this volume ad price action to be bullish.


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Bull Strength is something that I don't write about every day, but it can give us insight.  It's a simple indicator -- the number of (New Longs + Affirmed Longs / New Cash + Affirmed Cash), e.g., the number of stocks that are strong to the number of stocks that are weak, relative to past optimized level.s  I'm seeing the bull strength indicator drop over the last two days, having peaked on Tuesday.  A dropping value means that the numerator (bulls) are weakening relative to a growing denominator (bears strengthening).  This value is not averaged so it is a very fast, raw indicator.  It is impossible to sustain a short-term rise in the markets with this indicator falling, so I see clouds on the horizon.

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The GGT Long-Cash Ratio, or LCR, barely increased on Thursday, from Wednesday's value of 1.914 to 1.923.  This increase in LCR continues to be bullish, but note that the rate of change of the 13d EMA on this is slowing (decelerating), as is the 21d and 34d.  While not cause for panic, slowing rises are a precursor to reversal, so I will continue to watch.  The take away here is that I would not be surprised at a reversal in the LCR absolute value within the next few days.

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Despite the LCR moving up, the amount of change was not enough to sustain a LONG call, and the LCR Change Timer has transitioned from "LONG" to "LONG CASH".  This means that if we see the advance/decline lines show 1:1 or 1:2 (more DEC than ADV), this timer will transition to CASH.  Conversely, if today is up with more ADV than DEC, the timer will revert back to LONG status.  The way I typically treat this indicator is to watch the markets between 10 am. and 11 am, and see what direction things are moving.   If the ADV/DEC line looks like it will fall today I will move my stops to yesterday's lows and protect my profits in my long positions.  If you hold contras, if you see them gain, you'll have another indicator of what the underlying markets are doing.

Despite this guidance, the LCR Change Timer is still LONG. It has been long for 16 trading days.   If the markets finish down near 4 pm, it would not be a bad move to protect yourself with hedge positions just before the close.

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GGT database strength continues to weaken, having hit a high of 0.947 (overbought) on 3/2/10.  It is now at 0.791 and is sinking.  We cannot sustain rising prices with a falling strength, so either:

1) prices will reverse to the down side
2) database strength will reverse and move up with rising prices.

Unfortunately, my crystal ball is as good as yours, and I have no idea what is going to happen today or Monday.  Given present strength levels and the upper channel of pricing, I'm inclined to say that we will reverse, but nobody knows for sure.

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The DJ30 index strength moved upward on Thursday by 9% to 0.68.  This is wishy-washy -- I like solid numbers near 0.8 or above or below 0.2 and we've not seen this in the DJ30 for some time.

The NDX100 fell another 8% on Thursday to 0.67, even though the index proper (IXIC) moved up 11 points.  This is a divergence -- prices moving up but strength dropping, so caution is advised in Technology.  QID could be a good play here.

The SP500 was virtually unchanged on Thursday and sits at 0.811, up barely from 0.810.  SDS could be a good play here.

The SP400 fell 6% on Thursday to 0.85.  MZZ could be a good play here.

The SP600 fell 5% on Thursday to 0.75.  SDD could be a good play here.

The Russell 2000 fell 6% on Thursday to 0.73.  TWM could be a good play here; it fell 0.76%.

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Enter on strength if so inclined, but like always, remember that you are responsible for your own trading decisions, not me.  Do your diligence.

Regards,

pgd

Update on GGT Strengths, Hedge Positions in Contra ETFs should be Evaluated

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MZZ never cleared the previous day entry point yesterday, precluding entry.  Correspondingly, I have reset the entry levels for MZZ:

• Enter above $19.87
• 1st target ~ $20.50 or use above 5d MA
• TSL @ ATR(20) = $0.64

Note that the GGT strengths for each of the indexes is very high, so hedge positions with our long positions would not be unwise.  The following are all strengths on a scale of 0-1, where 1 is completely overbought and 0 is completely oversold:

DJ30:  0.62, down -4% from Tuesday's value.  This value peaked at 0.67 on Monday, which is not appreciably strong.

NDX100:  0.73, down -13% from Tues' peak of 0.85.  QID may be attractive here.

SP400:  0.91, down 9% from Tues' peak of 1.0 (all time high).  MZZ is certainly attractive.

SP500:  0.80, down 9% from Tues' peak of 0.89.  SDS may be attractive here.

SP600:  0.80, down 11% from Tues' peak of 0.9. SDD may be attractive here.

Russell 2000:  0.78, down 9% from Tues' peak of 0.86.  TWM may be attractive here.

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The GGT LCR, which is the long-cash ratio value, is at 1.914 and has been climbing day-over-day since 2/24.  This gives us a long-call on stocks and says that we should be LONG in the present market.

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The GGT LCR change timer, which looks at a EMA of the day-to-day change in the LCR, continues to reflect a long call.  It is presently LONG and has been since it transitioned to this state on 2/10.  Since 2/10 the GGT index is up nearly 11%, so you decide whether you should more closely watch this indicator.  Since inception the GGT index is up 81% using this timer, both on the long side as well as contra side (theoretical, but you get the idea).

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Remember, you are responsible for your own trading decisions, not me.  Do your diligence.

I return from Vegas late Friday so postings may be sporadic this week.

Regards,

pgd

The corresponding strength of the entire GGT da

MZZ above $20.08, 1st target above 5d EMA, TSL @ $0.59

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GGT calculates the strength of the major indexes, including the stocks that comprise the S&P MidCap 400 Index.  With Tuesday's action the GGT strength of the S&P400 MidCap Index hit an all-time high, which indicates incredible overbought conditions of the underlying stocks.  While there is always room to continue upward, placing a hedge position in MYY (-1x contra ETF) and MZZ (-2x contra ETF) is an action that I am taking this morning.

This is NOT a long-term play.  We are in a confirmed up leg and this is clearly swimming against the currents.

I intend to grab gains quickly, e.g., if the ETF moves quickly above the 5d MA, I will place a SL at the 5d MA level.  The ATR on this is $0.59, so if we move outside of this level to the upside, history proves that it will reverse and erode the gains.

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Remember, you are responsible for your own trading decisions, not me.  Do your own diligence.

Regards,

pgd