Possible Transition to LONG on short-term timer;

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Thank you to everybody who came to the meeting this past Saturday.  The meeting presentation has been posted to the TSFI forum, and will be posted to the GGT forum this morning.

I'm traveling this week, first to Spokane, WA Mon-Wed and then to Muskegon, MI on Wed-Fri.  I return to NoVA late Friday night, and detailed blogging may be tough.

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Our familiar dashboard:

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

Friday was a banner day with the markets.  The GGT price index moved upward 1.82% to $25.78 on volume that was only -2% less than the 50d MA of volume.  Rising prices on normal volume is bullish.

Our internal barometer of the market, the GGT Long-Cash Ratio (LCR), moved up nicely too from 2.995 to 3.466, a change of +16%.  Internally, stocks appreciated nicely in terms of price and volume.  This too is bullish.

The GGT strength index, which is scaled between 0 and 1, marched upward from 0.741 to 0.881.  This means that the database of stocks improved in price, volume, AND rate of change compared to historical levels.  This is bullish, but at this level, it is also lofty.

From a pricing and LCR point of view, the markets had a good day, are certainly up in price, but are a bit overbought.  We must be selective in our entry to long positions.

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Short-Term LCR Change Timer

Because the markets moved upward on Friday, the GGT short-term LCR change timer transitioned from CASH (-1) to CASH-LONG (0).  This is telling us to get your entry list ready.

If the markets are up today as far as the ADV/DEC line at http://www.finviz.com/ is concerned, this timer will transition to LONG with the close.  To anticipate this, it could be prudent to enter VTI, UWM, QLD, etc. between 3:30 and 4:00 p.m. EDT if we have a solid advance as determined by the ADV line.  Conversely, if this is not the case, then remain in cash.

I will attempt to publish my moves if practical.

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Intermediate-Term Elder Force Index Timer

The Elder 13d EMA on the Force Index -- FI(13) -- is positive by a significant amount, telling us that we can consider long positions (column 12).  Furthermore, the 13d slope and 34d slope on the price of stocks contained in the GGT universe (columns 14 and 15) are also both pointing upward, telling us that it is safe to move into long positions (column 16).

My list of possible entry candidates today is:

JASO
PZG
HF
PALL
ACGY
AZPN
STD
CHINA
CTRN
NTWK
VTR
OKS
LGCY
FLO
RGNC
JMBA
MYN
DCT
BND
BSV
NBG
CTRN
PLXT
APA
COG
CNX
DVN
HP
MRO
BTU
SUN
AES
AEE
CMS
DTE

I plan to use my standard requirements of price and volume to enter.

With respect to my present holdings, here's the scorecard:

EWO, up +6.51%
EWH, +5.92%
BKF, +5.03%
IDCC, +4.56
PID, +3.49%
FXI, +3.47%
GXC, +2.55%
XLB, +0.11%
IAU, -0.03%
XME, -0.13%
KOL, -0.58%
IGE, -0.59%
FDO, -0.87%
GMO, -4.16%

According to Wikinvest, which tracks my trades at Fidelity, here is my 1 month performance:

Note that I am presently 48% in cash.

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Trading Plan for Monday

With respect to the short-term timer, I intend to enter the standard VTI, UWM, QLD positions if they are up by 3:30-ish and if the ADV/DEC line at http://www.finviz.com/ is up.

One of my holdings, IDCC, is problematic:

The MACD is rolling over, the 13d slope has crossed the 34d slope from above, and all week we've failed to make new highs.  I will sell this position with a 1% TSL on Monday.

With respect to the Elder Intermediate Timer, I'll enter the positions above if they meet my price and volume criteria.

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Remember, you are responsible for your trading decisions, not me.  Please take ownership for your work.

Regards,

pgd

Intermediate Timer Long by a Whisker ...; Meeting Tomorrow 10/9

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The dashboard:

The GGT Price Index fell only -0.16% on Thursday, ending the day at $25.32.  Volume was down -7% from the 50d MA, which is well within the noise distribution.  Overall this was a "normal" day in terms of price and volume action.

The GGT Long-Cash Ratio fell again from 3.239 to 2.995, and now indicates that 2234 stocks have some form of long recommendation and 746 stocks have some form of cash recommendation.  Put another way, we added a net 43 more stocks to the cash side of the recommendation list.  74.9% of the database is long, and as a snapshot, this is a very bullish stance.  Falling for two consecutive days can be considered normal, as the run-up on Tuesday certainly has given people reasons to protect profits.

The GGT strength index continues to weaken as price, volume, and rate of change all come off the highs established this past Tuesday.  We are now at 0.741, down from 0.839 yesterday, so we continue to relax the overbought position of the market.

Overall, the market is protecting gains established on Tuesday.  We've not seen a sharp sell-off, nor have we seen a seriously down-day this week.  From price and volume action alone we appear to be in a normal pattern of profit-protection and relaxation of extremes, so nothing is demanding our immediate attention.

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Short-Term LCR Change Timer

Because the LCR dropped on Thursday, this timer moved from CASH-LONG (0) to CASH (-1), reaffirming our signal flashed on 10/4.

The GGT Equity Curve is locked in at $1.597 and is in cash, and the VTI Equity Curve, which has been in cash since 9/23, is locked in at $1.556. 

It does not matter concerning today's action; we are at least two full days from any type of long call.  With futures down significantly as I write this, I do not see how we can expect anything before Monday.

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Intermediate-Term Elder Force Index Timer

The Elder 13d Force Index timer is LONG, but only by a whisker.  A down day today of anything greater than -1.2% in price on average volume or higher will most likely cause this timer to move to cash. 

Watch http://www.finviz.com/, specifically the Relative Volume numbers to the right of each of the Dow, NASDAQ, and SP500 graphs.  If you see this significantly above 1.0 after 3:30 pm EDT, and if these three indexes are down more than 1%, protecting profits could be prudent, especially if you have any close to break-even.

I provided a LONG list of potential Elder candidates yesterday; not ONE met volume and price action requirements for entry.  This is a warning sign that we are at a local top and further relaxation of the overbought perception is required.

98 ETFs meet the initial Elder screen this morning -- that's a huge number.  Here is a list of those ETFs that have up-trending 13d EMA and 34d EMA slope lines:

FXE
TMF
MWJ
TNA
FCG
OIH
DJP
IAU
IHI
EWK
EWC
EWM
EPP
EWL
IWF
IWO
IWN
IWR
IVW
IXC
IJJ
IGE
IJR
SLV
KOL
GDXJ
SLX
DGP
PIZ
PSP
UGL
MVV
PALL
SGOL
XLP
RWR
GLD
XLB
XME
MDY
XES
VUG
VO
VOE
VB
VBK
VBR
DEM

Of this long list, note that there are several gold ETFs.  Gold has been topping, and the pull-back that we saw yesterday may be profit taking.  If the trend resumes you'll know it because the price of these ETFs will break yesterday's highs.  This could be a good entry point if you missed gold's run up, but certainly be very patient.

The list of potential stock candidates is long too -- 70 initial candidates using the HGSI Elder screen.  Here are the ones where the 13d EMA and 34d EMA slopes are in an uptrend:

AEM
AGP
ANO
AXTI
ABX
BW
EXK
GMO
HAS
HL
IPG
LAD
NKTR
ROC
SMG
SVM

Again, wait for the prices AND volume to be up before entry.

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Trading plan for Friday

My short-term timer is in cash and those funds will remain in cash.

I intend to protect my Elder trades, e.g., if they move against me and look like they will dive underwater I will sell them.  Correspondingly, I have placed the appropriate TSL on each position -- e.g., if they are up 1.9% I have placed a 1% TSL, if they are up 5.3% I have placed a 5% TSL, etc.  It is important as the markets shake out that we not lose any monies on these weaker candidates.

All TSLs are day-only; let's see what the markets do and make a determination over the weekend.

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We have a meeting on Saturday (tomorrow) at the Herndon Fortnightly Library, Meeting Rooms 1/2, starting at 10 am and going to 1 pm.  The address is 768 Center St, Herndon, VA 20170-4640.

I hope to see you there!

Regards,

pgd

We're Losing Steam and Need More Coal

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First, the dashboard:

The GGT Price Index fell -0.5% on normal 50d MA volume.  I consider this normal market noise and mostly unremarkable.

The LCR fell -4% to end the day at 3.239, with 2277 stocks LONG and 703 stocks in CASH.  76% of the database is LONG right now, and this is a very bullish stance.  On a day-over-day basis the bulls are still very much in control, although I am expecting weakening as profits are taken.  I also expect that this will be somewhat mitigated because earnings season is here.

The GGT strength index fell from 0.984 to 0.839, so we're seeing a gradual weakening of the overbought condition established by Tuesday's action.  I still consider this overbought, so right now is not a prime time to jump into the market if you've been sitting in cash.

This next chart is important to understand where we are in the present bull cycle, relative to the past:

The chart shows that we are certainly in an up trend, and that the 13d EMA of the LCR is > the 21d, which is > the 34d, which is > 55d.  This is bullish, and the fact that they are all pointing upward is a very good sign.  We probably have some steam left in this bull.  But also note the relative peak of where we are right now to the past -- we are at these same levels, if not higher.  While I don't want to throw water on this market I think that we must be vigilant for a rapid breakdown in the market, as we simply cannot sustain these lofty levels indefinately.

This next graph should give you pause too:

This is the GGT Price and the GGT Smoothed Rate of Change, and it shows that we have topped locally in the GGT SROC and are now starting to decrease.  While we certainly can go higher, this is telling us that on a day-for-day basis we are having difficulty moving upward at the same rate that we were at the beginning of this run -- we are definately losing speed and momentum.

Personally, I am increasing my cash position and taking profits.  I'm not exiting, as you will see below, but I certainly am going to take profits off the table.

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Short-Term LCR Change Timer

The timer is remaining in limbo-land at a CASH-LONG (0) state because the market fell in terms of the LCR yesterday.  Given this, I did not move into any new positions in the VTI, UWM, or QLD areas.

Watch again around 3:30-4:00 today for the ADV/DEC line at http://www.finviz.com/ to be far more on the ADV side than DEC side.  If this is the case, I most likely will open a position in VTI, UWM, or QLD.  If not the case, then the timer will reset to CASH (-1) and we'll be at least two days from a long call.

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Intermediate-Term Elder Force Index Timer

The Elder FI(13) timer continues to indicate LONG so in the big picture, it is okay to purchase stocks on the long side.

Here's my watch list for today:

BIDU
TKR
OPLK
XXIA
CIB
DISCA
AMZN
CBT
ORLY
PPG
PPO
PTEN

TYH
IYZ
EWD
IWP
IJR
BRF
PIZ
PIE
PDP
QQQQ
MVV
QLD
TQQQ
RWR
XBI
MDY
XLU
VO
VOE
VBK

As always, look for entries ABOVE yesterday's high AND volume above the pro-rated values according to the time of day.  I like the following schedule and use it daily:

By 10:00, volume over 12.5% of 10d MA
10:30, 25%
11:15, 33%
12:15, 50%
1:15, 60%
2:15, 70%
3:15, 90%

Yesterday I sold EGHT for a slight gain (it dropped like a rock), IGN for a slight gain, and VHC for about a 16% gain.  I purchased HTHT and FDO.  My positions are as follows:

EWO, +5.8%
IDCC, +4.7%
BKF, +4.67%
EWH, +4.4%
PID, +3.21%
FXI, +3.10%
GXC, +2.26%
EWN, +1.98%
PFM, +1.31%
FDO, -0.22%
HTHT, -7.06% OUCH!

Note that HTHT signaled a move to cash with the close of the markets so I will lick my wounds and sell this stock, even though I purchased it yesterday.  Bad timing on my part, although it looked good at my point of entry.

I still have my 1% TSLs on EWN and PFM, good-til-cancelled.

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Trading Plan for Thursday

With respect to the Short Term Timer, I will watch market action around 3:30 and decide on VTI, UWM, and QLD at that time.

With respect to the Elder FI(13) Timer, I have a busy business day today so I will not be at the PC except sporatically.  I have set my watch to alert me at the appropriate times as indicated above and will check the price/volume of stocks on the list.  I will purchase any stock that meets volume and price action as laid out above.

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

Regards,

pgd

Strength Index Near All-Time High, ST Timer may move LONG, Elder Whipsawed LONG

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I'm not sure how many of you are downloading the nightly ETF postings by my colleague Joe (jumpinjoe), and all I can say is that if you're not downloading, then you should be.  There are some interesting tidbits going on the the ETF world.

Contained within that nightly posting are the status of 81 different flavors of Contra ETFs.  Something happened within those Contras last evening that I've never seen in over two years of watching the list:  we have only 3 Contras, out of 81 total, that are in a LONG status.  All the rest are in some form of CASH status.  This is incredibly bullish.  The three that are in LONG status are AGA (low volume, ignore), SMB (low volume, ignore) and SKF (6.8M shares volume).  SKF is the leveraged Contra of the Financials, and the fact that we don't see it's sister here (SEF, -1x Financials), nor it's bigger brother FAZ (-3x Financials), suggests that this is an outlier.  Indeed, here's the GGT timing chart for the last year:

As you can see, it's getting the heck beat out of it since signalling long, but overall, it has kept us on the right side of the trade for the larger moves.

Something that may escape you if you review the "By Recommendation" page is this:  One of the New Cash recommendations is QID.  This went to New Long with Monday's action, and with Tuesday's banner day, it whipsawed to New Cash.  In fact, three other ETFs followed the same path.  All systems whipsaw -- all I can hope for is that GGT keeps me on the right side of the trade the majority of the time.

This one whipsaws, and shows that investing in Contras during bull markets can be hazardous to your financial health:

To wrap this up, 3.7% of the Contra ETFs that I track are LONG.  The rest are in some form of CASH.  I think we can watch this ratio and see when the market begins to roll over.

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The dashboard:

Our price index jumped +2.29% on Tuesday's action, on volume that was +12% higher than the 50d MA.  Rising prices on higher volume is a good sign.

The LCR jumped 47% to 3.357, and now indicates that 2296 stocks have some form of LONG status and 684 stocks have some form of CASH status.  77% of the database is LONG, and we've not been here since early April.  With history as our teacher we all know what happened near the end of April.

The 6th column from the left is the GGT strength index.  It is now at 0.984, the highest level recorded since 9/13, and in terms of 1-day change, jumped from 0.573 to its present level.  WOW.  The problem is, there isn't much we can do in terms of moving up from here ... another jump in this strength simply is not achievable. 

While we may play around here a bit there is only one way to go when you're at the top, so be in tune folks.  I wouldn't consider this market (today, Wednesday) a wonderful buying opportunity if you're sitting on the sidelines...

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Short-Term LCR Change Timer

Poor ole change timer.  Just when it thinks the world is disintegrating it gets slapped with another jump upward.  My loss in VTI is evidence that this timer is playing catchup.  With the move yesterday the Short Term Change Timer has transitioned from CASH (-1) to CASH-LONG (0), and if today is an up day as far as the LCR is concerned, it will move back to the long side.

By now you should know how to play this.  If http://www.finviz.com/ is UP at 3:30-3:45 as far as the ADV/DEC bar is concerned, we have fairly good confidence that the LCR will be up too when I upate later this evening.  This means that movement into VTI, UWM, QLD, etc. could be prudent.  Again, your crystal ball is as good as mine.  I'm not fretting that I missed this move with the ST Change Timer, nor should you.  It happens and in the course of history of this timer, it works far more often than it fails.  I intend to stay the course.

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Intermediate-Term Elder Force Index Timer

Elder has whipsawed with Tuesday's action ... the timer continues to provide a positive 13d Force Index, and the slopes of the 13d and 34d EMAs are positive on the GGT universe.  This tells me it is okay to enter stocks long, if I can find any.

I trimmed CSUN from the portfolio yesterday, as it looked weak.  I placed 1% TSLs on EWN (up 3.28% for the day), IGN (up 2.48%), and PFM (up 2.06%), and the TSLs never fired. 

I will leave the 1% TSL on EWN, as it is only up +1.59% in my portfolio and I do not want to incur loss.  IGN is up +2.97% in my portfolio so I will open it up to a 2% TSL.  PFM is up +1.31% so again, I will leave the 1% TSL intact.  These were the weakest of my holdings going into yesterday's action and I am not confident that they will keep their momentum.

Here are my holdings and performance:

VHC, +43.31%
EGHT, +11.92%
IDCC, +6.27%
BKF, +5.10%
EWO, +4.27%
EWH, +4.23%
FXI, +3.17%
IGN, +2.97%
PID, +2.67%
GXC, +2.42%
EWN, +1.59%
PFM, +1.31%

Note that NO Elder-Filtered ETFs are returned by HGSI.  This is because the 2d Force Index of the entire ETF database (screened for > $1, >100K shares) is positive. I do not buy unless the 2d Force Index is NEGATIVE AND REVERSING ON THE DAY OF PURCHASE.  There are no ETF candidates for today.

Only 4 stocks are returned in the Elder-Filtered stocks (see my past blog for the setup):  SMTX, PAY, CNU, and KFN. 

• CNU is losing momentum and the 13d EMA slope is now below the 34d EMA slope, with both pointing down.
• KFN looks interesting and is a good candidate for entry IF it moves higher than yesterday's high of $9.08 on above-average volume.
• SMTX is losing momentum in a big way and not only are the 13d/34d EMA slope lines inverted, they are almost below $0/day.  Bad news.  Avoid.
• PAY is disqualified because the 13d/34d EMA slope lines are inverted AND the 13d slope line is NEGATIVE at about -$0.02/day.  Yuck.

Patience.  Wait for a 2d Force Index pullback -- it's coming.

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Trading Plan for Wednesday.

Short-Term Timer:  if the markets are higher with respect to the ADV/DEC line at http://www.finviz.com/ by 3:30-ish I will move long in VTI, UWM, and/or QLD (my choice).

Intermediate Timer:  I will keep an eye on KFN, and will move on it if it continues to move higher on higher volume.  I will keep my TSLs in place on my present weakest holdings as discussed above.

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Remember, you are responsible for your trading decisions, not me.  Please take ownership for these decisions.

Regards,

pgd

Ouch! Short Term Timer --> CASH, Elder --> CASH

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Well, Monday's action hurt.  Let's start with the dashboard:

GGT Price fell -0.88% on Monday on volume that was -12% below the 50-day moving average.  The standard deviation for volume movement is +/- 14% so we are within the daily noise.  Generally, falling prices on "normal" volume isn't cause for concern, but other "red" in the figure makes me pause.

The Long-Cash Ratio (LCR) fell to 2.284, nearly -30%, and now indicates that 2074 stocks have some form of LONG status (down from 2285) and 705 stocks have some form of CASH status (up from 705).  This is a significant jump but again, we've been here before so no cause for exits.  Out of nearly 475 trading days this absolute change ranks at 88, so nothing too remarkable.

Of particular note is that the data base strength, which looks at the strength of individual stocks on a scale of -5 to 5, then sums those values and scales it between 0 and 1, dropped from 0.809 to 0.573.  This is a very large change and indicates that yesterday's action was broad -- strengths dropped, and strength is tied to price (which we saw drop in the GGT price index), volume (which was lighter than normal),and price rate of change (which isn't presented above).  If we drop much more than this we could have issues.

So, from where I am sitting, today's action is very important.  We need to move upward today on volume as well as price.  Failure to do so will be problematic for long positions.

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Short Term LCR Change Timer

If you were watching http://www.finviz.com/ yesterday around 3:30 p.m. EDT you would have seen that the number of declining stocks far outweighed the number of advancing stocks, on nearly normal volume.  The LCR confirmed this last evening, and as a result, the Short Term LCR Change Timer has moved to CASH.  In accordance with my rules I have closed my position in VTI (at a loss).

As my indicators would have it, the VTI timer, which is wholly-derived from the ST LCR Change Timer, also confirmed the move to CASH.  There is no ambiguity.

Correspondingly, the GGT Equity Curve dropped to $1.5971 from a peak of $1.63333 which occurred on 9/20, and the VTI Equity Curve has remained constant since 9/23 @ $1.5564, which is when it transitioned to CASH.

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Intermediate Elder Force Index Timer

The Elder 13d Force Index Timer has transitioned to CASH, with the 13d EMA on the GGT Force Index sitting at 38K, barely above 0 but the 13d pricing slope now negative.  This is the first time the 13d pricing slope has been negative since 8/31 and tells us that the bears have their hammers out and are starting to nail the bull coffin shut.  Because of this downtrend the Elder timer indicates we should move to the sidelines.

Adding to this is the crossing of the 8d EMA of price and the 13d EMA from above.  If you look far to the right in the figure above you'll also see that both the 8d EMA and 13d EMA of price both have negative-pointing slopes, and this a warning shot.

What you cannot see, simply because I cannot fit it in the screen shot is that the slopes of the 5d, 8d, and 13d EMAs on the LCR have all started to point downward, again, another warning shot.

Because of this, I am placing the weakest of my Intermediate Elder holdings with a 1% TSL (trailing stop loss).  If they move up today, so be it, but I will exit my holdings in accordance with the Elder FI timer rules.  See below for the list.

Note that there is precidence for a whipsaw with this timer.  This timer signaled CASH on 3/20/09, then moved LONG on 3/23/09.  If you didn't believe it then you would have been chasing one of the largest bulls in a decade, so we must pay attention.  We certainly can whipsaw, as we can with ALL trend-following timers.  Nothing is perfect.

My Elder Portfolio looks as follows:

VHC, +29.79%
EGHT, +5.39%
IDCC, +5.09%
EWH, 3.55%
BKF, 3.29%
EWO, 1.42%
FXI, 1.03%
IGN, 0.47%
PID, 0.41%
GXC, 0.36%
PFM, -0.73%
EWN, -1.63%
CSUN, -4.09%

Unrealized gains are 2.64% with most of these being purchased around 9/22 or after.  This is a bit more than 106% annualized over the 10 trading days.

ENTR was sold yesterday for a loss, as was INAP.

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Trading Plan for Tuesday

My short-term timer is in cash, as are my holdings.  No change there.

My Elder timer is weak-weak-weak, but I am holding strong stocks.  I will sell the weakest:

• PFM has a 13d slope line that has crossed the 34d slope from above, with both sitting at less than $0.02/day. This is a weak ETF and will be marked for selling.
• IGN has the same situation as PFM, and is in the $0.07/day range. A bit stronger, but the crossing is ominous. Mark for selling.
• EWN is in danger of the 13d x 34d slope from above if today is down. Mark for selling.
• CSUN is struggling at just barely above $0.01/day on both lines. Mark for selling.

If ANY of the other positions give up significant gains they will be sold with a limit order. I have the luxury of sitting at my PC for about 1/2 the day so I can do this.

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Remember, you are responsible for your own trading decisions.  Please do your diligence.

Regards,

pgd

LCR Change Timer --> LONG-CASH; Elder Timer = LONG

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Spent the weekend taking my entire family on a 12.3m hiking/overnight camping trip in the Shenandoahs.  While my older son Greg (age 11) and I just completed climbing Mt. Whitney a month ago and this weekend adventure is dwarfed in so may ways by that achievement, my younger son Sam (age 9) and wife have never done anything even remotely close to this and the bonds we reinforced as a family are that much stronger.  After 3,300' of climbing and descending I'm happy to say that we're sore, happy, and I think that they'll want to do this again sooner than later.  Here's the map; Google "shenandoah jeremy's run knob mountain" if you want to read up on what others have said about the adventure.  All I can say is that with the 5+" of rain that our area received last week, crossing Jeremy's Run 14 times was an interesting and wet experience.

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Let's begin with the dashboard:

As with all my images, right-click on the picture to view in another window or tab.

The GGT price index dropped an ever-so-slight amount on Friday, ending the week at $25.14, down -$0.02 from Thursday but still up when compared to the 1-week-ago price of $25.06 and the 2-week-ago price of $24.77.  We have had 2 days of "normal" volume, relative to the declining 50d MA on volume, with Thursday just 1% lower than the average, well within the noise.   Since Monday, 9/27, we have churned between $24.99 and Wednesday's peak of $25.20 on increasing volume, so my radar is peaked.

The GGT Long-Cash Ratio (LCR) fell slightly Friday, dropping -1.0% to 3.241.  This level indicates that there are 2285 stocks with some form of long recommendation and 705 stocks with some form of cash recommendation.  If you move across the figure you'll see that the LCR EMAs are all intact, with the 8d EMA > 13d, 13d > 21d, 21d > 34d, and the 34d > 55d.  We are clearly in an up trend and as far as this set of indicators are concerned, we have been since 9/13/10.

Although you can't see it in your figure above, I can also add that the SLOPES of these LCR EMAs are all pointing upward, from the 5d through the 65d, so again, we are clearly in an up trend and there is nothing indicating from the LCR sphere that we are losing ground. 

This being said, please ensure you read the Elder section below.

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Short Term LCR Change Timer

The short-term LCR Change Timer has transition to LONG-CASH (0).  What this means is that if today is a down day as far as the LCR is concerned, we will transition to CASH (-1) at the close of the markets, and that any short-term positions (e.g., VTI, QLD, UWM, etc.) should be exited.

I use the ADV/DEC line at http://www.finviz.com/ to make this determination around 3:30 pm, as I cannot update the LCR until Yahoo! gets their world updated after 10:00 pm.  If we are decisively in favor of DEC at this time (or later) I have found that it is prudent to protect profits on short-term holdings.

I am presently holding VTI, and unfortunately my position is underwater by -0.19% going into the market open Monday morning.  I will try to close even on this, as I think the likelihood of going up a significant amount is less than it moving down.  I note with interest that the VTI timer, which is derived completely from the LCR Change Timer, has been in CASH since 9/23.  $58.92 is my break-even bogey.

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Intermediate-Term Elder Force Index Timer

Overall, I am holding a number of equities because this timer is indicating long, as determined by the absolute value of the 13d Force Index of the GGT stock database.  I note the following:

• the Elder 13d Force Index EMA is positive (column 12).  While you can't see the value, it is 79K.  The maximum value ever attained (since 1/2/09) is 632K.
• the Elder 13d FI EMA SLOPE is pointing downward, and this is bearish (column 13).  It has been doing so for three consecutive days.  When this has occurred in the past, and when it moves to 4+ days, you can hear the coffin being nailed shut.
• the 13d pricing slope is positive (column 14), as is the 34d pricing slope (column 15).  This is bullish in general.  What you cannot see in the figure, but I can, is that the "slope of the slope" is pointing downward, e.g., the "car is moving forward but it is slowing".  We are losing momentum.

Given these warning signs, and the fact that futures are down while I write this, we need to pay attention.

Time to Prune:

• Unrealized gains in the Elder portfolio are +1.45%.
• ENTR has moved to a negative 13d EMA on the FI and will be sold with a 1% TSL
• INAP is in danger of the slope of the 13d EMA crossing the slope of the 34d EMA from above, as well as both of these moving negative, so I will watch this one carefully.
• As goes INAP, so it is for EFA, SPY, EWN, IGN, PFM, and the VTI.  Any weakness in these today could be a cause for me to dump ... we'll see.

Stock & ETF Candidates for Monday:  None

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Trading Plan for Monday

I will close my VTI position if it hits my break even level, or if by 3:30 the ADV/DEC line is decidedly in favor of the bears.

I do not intend to purchase any intermediate-term stocks today.  I will watch for weakness in the list as provided above, and will remove these from the portfolio if they begin to break down in a rapid manner.

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Remember, you are responsible for your own trading decisions, not me.  Please take ownership for your trading decisions.

Regards,

pgd

Still a divergence within the Short Term LCR Change Timer, but Elder is Long

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I had a nice dinner last evening here in Ft. Worth with Bob Wilson and David Steckler; looking forward to the next time we can get together.  If you're not familiar with David's blog, you should be, as his insights are valuable.

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Let's start with the dashboard:

The bottom line represents yesterday's data.

Volume was up +6% over the 50d MA, which by ittself is largely unremarkable, as the standard deviation is much wider than this level.  What I take as a point to note is that price held steady, only falling -0.16%.  This is the classic definition of "churning" -- horizontal price action on average or higher volume.  Churning is due to the bulls and the bears fighting an equal war with no clear winners.  My tea leaves indicate that if we continue to see this that we'll be at a major top; conversely, if we fall back to our old ways in moving higher but on lower volume we'll most likely resume this bull leg.

Of particular interest is that the LCR moved upward again, increasing from 3.0 to nearly 3.3.  This means that of the 2900+ stocks in the GGT database many of them increased in price (not reflected in the GGT price, so not so much here), that volume was higher and they already had prices higher than historical optimized levels (very possible), and/or the rate of change of price was larger than historical optimized levels (again, not reflected in the GGT price index).  Whether this was due to window-dressing because of the end-of-quarter or not is largely moot; the key now will be to follow through.

Many market technicians are stating that we are at the top of the range and that we will pull back.  Before you jump on that train remember that they said the same thing when we were flirting with 1033; now it has become the floor and support.  It is very possible that we could move upward.  Note that it is equally possible that we could move downward too.

While we may be at the top, we may not be.  There is nothing in my book of indicators that say sell, so I'm staying the course.

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Short Term LCR Change Timer

The LCR Change Timer continues on the LONG side (columns 7-9), although the GGT equity curve has flattened right now to $1.613 and has remained at this level since 9/28.  This is a time-tested indicator (2 years +), so I watch what it is doing.  The LCR moved upward, so for now, this timer is at least two days away from moving into cash.  With futures up right now we may continue on the long side.  Again, your crystal ball is as good as mine.

Because I cannot trade the GGT index, I selected the VTI.  I've developed a timer for the VTI which is a derivative of the GGT Change Timer, and right now, the VTI timer is in CASH.  Over the last three days the VTI has decreased in closing price from $58.60 to $58.37, so perhaps the VTI timer knows more than I do (likely).  Nevertheless, I will maintain my position in VTI although it is underwater by -0.64%, including commissions.

While I do not recommend chasing this timer, the flattening of the equity curve suggests that if we take off that entry could be prudent.  Use your own discretion.

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Elder Intermediate-Term Timer

The Elder 13d Force Index on the database continues to be positive, which tells us that it prudent to hold stocks on the long side.  This is reflected in column 12 of the dashboard.  The slope of the 13d Force Index had its second consecutive day DOWN, and this is reflected in column 13.  This means that we are losing momentum, but this is exactly the place where purchasing stocks could make sense IF THE INDIVIDUAL STOCK PRICE MOVES UPWARD.  The slopes of the 13d and 34d EMA on the GGT universe price are positive (meaning that they are still appreciating), so we have confirmation that stocks are still in an up trend.  While there is a wall of worry about the lofty prices in the market, aside from the loss of momentum in the Elder FI, there is nothing on my radar that says we are in danger.  I intend to hold all my intermediate positions unless their individual 13d EMA on the Force Index moves negative.

To this latter point, one of the first things that I look at after HGSI updates is whether any of my holdings are negative in the Elder 13d Force Index.  None of my present holdings meets this criteria.

Next, I look to see if the slope of either the 13d or 34d EMA is negative.  If this is the case, the stock is losing ground, and more importantly, it's only a matter of days before the Force Index becomes negative.  I will typically sell any position that has either a negative slope on the 13d or 34d price EMA.  My present holdings in JJG meet this criteria, so I will place a 1% trailing stop loss on the position prior to the open of the market Friday.  I note that this is the worse-performing equity in my holdings, with a loss of -2.96%.

No other holdings meet this negative-value criteria.

Going into Friday, I'm watching the following stocks for entry:

AIMC
CCE
HCKT

TLT
PALL

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Trading Plan for Friday

Today is a travel day back home for me, so I'll only be able to participate the first half of the day.

With respect to the short-term timer, I'm long VTI and will remain so.

With respect to the Elder timer, I'm long in all my positions, and will remain so except in JJG, which I have placed a 1% TSL, GTC.  I will enter the 5 equities above if they move higher in price than yesterday's high and if they do so on higher volume.

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

Regards,

pgd