Short Term Signal Confirms LONG; Elder still LONG

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Summary

• Review http://ggt-tsp.blogspot.com/ if you have a TSP account or are following that account.
• The Short-Term LCR Change Timer has signaled LONG; VTI was purchased on Wednesday
• The Elder Intermediate-Term Timer is LONG
• Yesterday's action was up, but the internals are not sounding a "raging bull" horn.  Some caution is advised until we get final confirmation (all slopes of the LCR EMAs are pointing upward).

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Dashboard

Here's the dashboard going into Thursday's action:

As expected, the GGT Price Index moved upward with the markets, but note it only increased +0.3% to end the day at $26.91, an increase of $0.08.  Volume was up +14% but within 1 standard deviation of the 50d MA, so I would consider Wednesday's action a ho-hum sort of day with respect to final price and volume numbers.

The Long-Cash Ratio (LCR) moved up +13%, ending the day at 1.774.  Of significance here is that the GGT Strength Oscillator barely increased from 0.779 to 0.791, which gives me something to pause upon.  The movement in the LCR is due specifically to a jump in prices AND volume; the Strength Oscillator considers several parameters of rate of change (ROC) also, so while we jumped up in LCR, we didn't knock the skin off the ball in terms of the strength index.  Both are moving upward so I suppose I'll close my eyes and look the other way for now...

Of significance is the following graph:

While we are still inverted as far as the LCR EMAs are concerned (5d < 8d, 8d < 13d, 13d < 21d, 21d < 34d), the slopes of the 5d and 8d EMAs have turned up, as shown by the new green indicators on the right half of the figure.  This is a necessary condition for the inversion to be reversed, but at this point we are still very fragile in this bull leg upward.  I do think that caution is warranted.

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Short-Term LCR Change Timer

This timer has officially fired LONG.  Correspondingly, and because the VTI signal went long one day in advance, a position in VTI was purchased.  If you are considering following I would not wait for a pullback, as this is a fast moving/short-duration timer.

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Elder Intermediate-Term Force Index Timer

The timer is long, as it has been for some time.  My list of possible entries for today is as follows:

TAM
RHT
WYNN
LFL
CBI
SAN
JSDA
HUM
CIG
UXG
SUI
GMCR
TDG
MTD
CP
XME
MMP
CAR
INT
ICA
SKYW
ABX
BRNC
PKG
TX
CDY
MAT
PTY
TNC
PDM
ATK
PSA
WB
GAP
SSS
GTIV
HYT
MYI
NIO
EOI
JFR
IAG
HGT
QGEN
KCG
DHY
USG
AMED

A long list.  Note that these have not been balanced against the latest GGT Longs, as the update was seriously delayed due to external internet problems last evening.  Please check your candidates carefully.

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As always, you are responsible for your own investment decisions, not me.  Please check your work carefully and take ownership for your decisions.

Regards,

pgd

ST Timer (VTI) Signals LONG

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Summary

• The Short Term LCR Change Timer on the VTI has moved LONG.
• The Price Index jumped, but volume was ho-hum, which is acceptable but not ideal.
• The slope of the 5d EMA on the LCR has turned up after 12 days of pointing downward (bullish); all the other longer slopes are still pointing downward (bearish)
• Strength Index has moved upward off support lines, which is bullish
• The Short Term LCR Change Timer system may transition to long if today is an up day as far as FinViz ADV/DEC indicators

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Details

The VTI, which is the Vanguard Total Index ETF, has signaled "LONG" with the move yesterday.  This is the actionable part of the GGT Short Term LCR Change Timer, and it has been in cash for the past 28 trading days.  A move long is not a guarantee that it will work going forward, but it does indicate that conditions are such that failure to participate means that I could be leaving money on the table.

The equity curve value on this timer is $1.556, meaning that a $1 invested on 7/28/08 would be worth this amount today.

I plan to place a trade today in the VTI after the market settles out at 9:45-ish or so, buying any dip that I can find.

Let's take a look at the Dashboard:

The GGT Price Index jumped +1.32% on volume that was -2% lower volume than the 50d MA.  A major move in prices on average volume is okay, but it certainly is not a resounding "I'm a bull and I'm not ready to climb in my coffin."  I would have preferred to see volume up significantly with such an increase, so color this as the glass is half full.

The Long-Cash Ratio jumped +18%, ending the day at 1.567.  While I do not provide the daily details, this was enough for a fixed, 4d SMA line on the LCR to move to long (e.g., the LCR is now above the 4d SMA),  and this is the first time this situation has occurred in 12 trading days.  The equity curve on this simple timer is less than the VTI equity curve at $1.4022, but this is still a 17.1% internal rate of return.  Note that the Maximum Draw Down using this method is a bit higher as this is not an adaptive signal, with the MDD clocking in at 13.4%.

Yesterday's action did cause a crack in the bear-ice that has been plaguing us in terms of the LCR EMA slopes.  Here's the chart:

Of significance here is that the slope of the 5d EMA on the LCR has turned upward ("Bullish", green) and this certainly is a necessary but not sufficient requirement for any form of sustained bull leg.  We absolutely need this trend to continue as far as the slopes of the EMAs on the LCR are concerned, AND, we need the overall crossings of the 5d, 8d, 13d, and 21d LCRs to reverse.  Right now investing on these time frames is very, very risky -- the trend is clearly pointing us down, not up.

Database strength is shown in Column 6 of the Dashboard; we've jumped up a significant amount, so we're not in any perceived danger of violating the support line I've been discussing the past few days.  Here's the chart, and it shows that we've got room to move up from here:

From the perspective of the markets, we need a follow-through day to have any confidence of this bull leg.  Today's action, and some of tomorrow's, will be crucial.

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Short-Term LCR Change Timer

Of particular interest now will be whether the system short-term timer on the GGT value will transition to long today.  We need to watch http://www.finviz.com near the end of the day, and if we see the ADV/DEC line showing a significant favoritism to the ADV side of the equation we can have confidence that the LCR has moved to the LONG side.  Conversely, if it's only within a couple 100 stocks of the DEC value, then we should not act and wait until we get confirmation from the GGT system.  Here's the indicator on their page:

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Intermediate-Term Elder Force Index

The 13d Elder Force Index was hanging by a thread on the long status and has now a comfortable margin in terms of staying long.  While I'm not saying the bear influence is dead, some of the trends we saw in the breakdown of the FI(13) and Elder/GGT Universe have reversed, which gives me hope.

A number of the Elder candidates from yesterday did very well, storm clouds not withstanding.  Given this, the candidates for today are few and far between, because the FI(2) < 0 requirement is blocking entry on most:

CEDC
GSIT

Note that CEDC is coming out with earnings this week so is not a good candidate unless you have good risk management capabilities.

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GGT New and Affirmed Longs

This is a new selection list that is purely all-things-GGT.  It is NOT screened for Elder criteria, it simply is my pickings of equities that we should be watching.  The list is not all-inclusive -- you can download the latest ETF listing from our Yahoo! group, and the weekend stock listing is also provided.

Here are stock candidates that hit the top of my list for today:

SKH
LF
CGNX
SNCR
ININ
VMC
AKRK
SMP
DRWI
AMSC
HRL
MUI
APT
ASCA
AUTH
CAR
CCMP
COHR
IRR
MGAM
GXG
FDM
DBA
BND
CIU

Happy Hunting!

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Remember, you are responsible for your own actions, and I am not.  Please think before you pull the trading trigger.

Regards,

pgd

Another Storm Cloud on the Horizon, Divergences Galore

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I've been writing the past few entries about the Long-Cash Ratio (LCR), specifically looking at EMAs (exponential moving averages) on the LCR and their respective slopes.  Yesterday's action hammered another nail in the bull coffin, so we're going to need some strong market action to overcome what I'm seeing. 

Note that the 13d EMA on the LCR has now crossed the 21d EMA from above.  We now have another bearish situation building, because:

• 5d < 8d EMA
• 8d < 13d EMA
• 13d < 21d EMA

Further note that there has been no change in the LCR EMA slopes (right portion of figure), so nothing is leading us out of this situation at the present time.

We need to see the LCR EMA slopes (right side) start to move green (bullish) to pull the nose up on what is occuring in the broad markets.  Failure to see green here is screaming "caution caution caution".

I'm almost completely in cash at the present moment.

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The Dashboard:

The GGT price index increased on Monday by +0.27% on normal volume that was only -1% below the 50d MA.  This is normal market noise and by itself is unremarkable.

The LCR FELL on Monday by -5%, landing the day at 1.328.  Here again we have a divergence -- average price action increasing yet the underlying database telling us that stocks in general are weakening in terms of price.  This should cause you to pause -- how can the price index increase yet the LCR drop?

The LCR value is derived from the number of stocks that historically are above their optimized values for maximizing an equity curve over the last year.  When the LCR value drops, it is telling us that stocks are falling in price with respect to where they have been over the past year.  We can still have a price increase in the database, but because the LCR value is a sliding window of a lookback period, the threshold for remaining a LONG stock could actually be increasing faster than the price is rising, causing us to move into CASH for a given equity.  This is what is happening at the present time.  An equivalent analogy is that the relative strength of the database is falling, which obviously is problematic overall.

The short of this is that price action and LCR must align.  We cannot sustain increasing price movement but decreasing LCR -- eventually the prices will have to start dropping to align with the falling LCR, or the LCR will have to reverse and move upward.  I still maintain that this divergence has us at a crossroads and until we get significant movement either way, caution is advised.

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Strength Index

Column 6 contains our strength index.  I discussed derivation of the strength index yesterday; our artificial support line is intact so we can interpret this as somewhat bullish.  Of some concern is that the price index moved upward but the strength index moved down -- this divergence is like the LCR divergence and again, the two must align.

Crossroads indeed.

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Short-Term LCR Change Timer

With the LCR falling 12 of the last 13 trading days, it is no wonder that the LCR Change Timer has remained in CASH since 10/15.  The GGT price index on 10/15 was $26.07, and yesterday's close has it at $26.48, or an increase of +1.6%.  While it would be nice having this gain over 13 trading days, we've been all over the place ($25.67 on 10/19, a loss of -1.53% and $26.48 on 11/1) so I'm not overly concerned about the efficacy of this timer.

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Intermediate-Term Elder Force Index Timer

Columns 12-16 highlight the intermediate timer that I follow.  Bottom line is that Elder is still positive, so is indicating that we can purchase stocks long.

Cross-correlating GGT and my home-spun tools with the HGSI package should give us some additional insight:

The view above is my Elder screen, this time applied to all of the stocks in my GGT universe, as of the close last night.  You can click on the image (as you can with all my images) to see a larger view.

In this graphical view I calculate the Elder Force Index using two methods:  the top ribbon bar is via the EMA method (more weight to what happened yesterday than what happened 13 days ago), and the ribbon bar under it is via the SMA method (what happened 13 days ago is just as important as what happened yesterday).  Both methods have their merrits and detractors.

What we see is that the 13d SMA method has moved to CASH with yesterday's action, which is not a good sign.  Look at the numerical window in the lower portion of the figure -- the SMA method is clearly negative, and by a good amount.  Contrasting, the EMA method is clearly positive, so this indicates yet a further divergence and should have us pausing at any new long investments.

In the MACD window, we see that the MACD histogram is clearly negative, and you can see this raw value in the numerical window.  The MACD and MACD Signal Lines are clearly downtrending, and this too tells us to be prudent and to lock our profits.

Under the MACD window is my favorite slope window -- I watch the 13d and 34d EMA price slopes like a hawk.  While these are both clearly positive in value (look at the numerical window, the 13d is gaining price at $0.4299/day and the 34d @ $0.5527/day), the fact that the 13d is under the 34d slope is not a good sign (loss of momentum), and the fact that they are both pointing downward is further indication of loss of momentum ("the car is driving forward but is slowing"). 

Finally, I've added the artificial red box around the pricing series.  We see that we simply are not moving anywhere, and have not been for a number of days.

So while the GGT Elder system is telling us that we can buy stocks long, a further graphical analysis of the GGT Elder system says "Yes, but ...."  I certainly would not move anything more than a 20% position in anything that was looking attractive, especially given that the day is Election Day and that we have FOMC clouds looming.

For the daring:

GBG
ARUN
JBL
AVGO
FTE
CNW
TMK
ITC
CME
TWTC
GSI
ATVI
FCF
SXCI
WBSN
FLIR
CPA
VLTR
AMCC
DGIT

Ensure that you are entering on strength and appropriate volume for the time of day.

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

Today is voting day.  I gave 8 years active duty, 21 years total in the U.S. Navy so that you have the right to choose your leaders.  It is your obligation to vote, so please take the time an exercise your right and demonstrate to the world that a free nation is the strongest form of government.

Regards,

pgd

LCR is Bearish but Has Upside Room, as does Strength Index ...

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GGT Price went up Friday, ending the week at $26.41.  This isn't much of a week-over-week increase; Friday the 22nd saw a price of $26.23 and the week before that a close of $26.07.  We're obviously in a horizontal trend with fairly well-behaved excursions, so price simply isn't going to tell us much.

Volume continues to hold a steady-state, trading within a very tight range since the 50d MA Volume bottomed around 10/8.  Only two of the last 14 trading days have seen a volume below the 50d MA, and the volatility has been quite tame.

Given the mid-term elections and the FOMC meeting this Tuesday/Wednesday, I'm expecting more of the same at least through Tuesday.  What happens beyond Tuesday is pure guesswork for obvious reasons.  Let's see if we can present both sides of an argument:

LCR

The Long-Cash Ratio (LCR) continues to drop, and has done so on 11 of the 12 past trading days.  Even the February 2009 bearish collapse didn't see such a run, so this streak is remarkable.  In terms of raw numbers 1638 stocks have some form of LONG status and 1169 have some form of CASH status, resulting in a value of 1.401, down -1% from Thursday.  Those are the facts.

On the bullish side, there are a large number of stocks available from the CASH pool to provide a movement that could take the LCR upward.  We are below "midpoint" if you take a view of "where have we been prior to this?"; here's the graph:

The solid black line is a 4d SMA on the LCR values, since we started publishing values back in September 2008.  We've recently fallen from dramatically high all-time levels, and certainly, we could power upward from here.  Indeed, I can see at least two or three reversals that have occurred from this zone in the past, so there is a non-zero probability of this occurring and we must always be open to such behavior.

Another good sign is the left-most section of the graph below:

The data starting in column 5 above is simply the status of the LCR EMAs, e.g., are they aligned "properly" to sustain a bull.  The short answer is "somewhat".  Note that although the 5d EMA < 8d EMA, and the 8d EMA < 13d EMA, all the longer ones (columns 7-9) are still properly aligned.  While the markets have not been rocketing upward, they certainly have not been losing much ground.  Hence, if we do reverse from our present levels on Tuesday/Wednesday and beyond, looking for confirmation in the 5d > 8d and 8d > 13d would certainly add to the bullish argument.

There's always a converse.

The data in right-most columns shows the slopes of the LCR EMAs.  The slopes are REALLY important -- if they point down, then the data on the left side (LCR EMA crossings) will start to bleed more than it is.  Conversely, if these slopes turn up, they will LEAD THE BULLISH CROSSINGs -- they have to (make sure you understand why).  

I went back over the last two years+ of data to see if we had any other occurances like we are experiencing at the present moment with respect to the LCR EMA crossings and the slope, and the only other period that I have data is below, which is the 2nd quarter of 2009:

MAKE SURE THAT YOU REVIEW THE DATES ON THE LEFT IN THE FIGURE ABOVE -- THIS IS LAST YEAR'S DATA.  What we have here is somewhat of the same situation, and what followed was periods of peaks but also of dips.  We made money if we played the markets when the slopes were "green" and we moved to cash when they turned "red", which is the same situation as present.

To put this into another view, observe the following:

This view is constructed by taking the LCR RMAs and plotting the slope values.  Note how we're in the pink zone, which means that on these three time scales (13d, 21d, 34d) that we are losing LCR value at about -0.1 of full-scale per day.  Since there are 2807 stocks in the database right now, we're losing about 280 stocks per day on these time scales to the CASH side of the equation -- e.g., the database of available LONGS is shrinking this amount each day.

So, for the present moment, until the traces on the right side of the chart above move to the white zone (positive), you're better served by taking profits and sitting on the sidelines.  The pool of appreciating stocks is getting less day over day, hence you need to have IMPROVING skills to pick winning stocks.  

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GGT Strength Oscillator

When I take an individual stock and evaluate it in terms of price, volume, and rate of change, I get a value describing what I call the strength of the stock.  When cast between 0 and 1, we have a 0 being completely "avoid" and 1 being "buy me buy me buy me".  It's easy then to average the database and see where we are presently sitting.

Last week I wrote about the artificial trend line that was forming from the lows of the strength index.  Believe it or not, we bounced off the lower support, and as you can see in the figure above, this suggests that there is plenty of upside room available for a continued bull leg.  Hence, guess what, since we haven't yet penetrated the support line, my bull-meter has to lean more in favor of an upside bias than downward.

Correspondingly, I'm looking for the LCR ROCs and the LCR slope graphs to indicate bullish tendencies.  Failure to have the Strength Index, the LCR ROCs, and the LCR slopes (the latter two which are more or less the same thing) show us that conditions are improving would be a serious case of "Katie, bar the doors ..."

Stay tuned...

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I have parent-teacher conferences this morning and will continue my entry mid-morning after the markets open.  Check back before noon Monday for further thoughts ...

Churning, Elder is Long by a Thread, & How to Prune Your Holdings ...

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I had a nice dinner and conversation last evening with Bob Wilson here in Ft. Worth.  One of the topics was how to monitor/manage holdings.  I've no clue on whether this is the "right" approach, but it's what I do on (almost) a daily basis.

Many of you know that I moved my wife's Thrift Savings Plan (TSP) funds to cash last week.  This is a restricted account, meaning that I can only invest in what amounts to 3 funds that are closely matched in price by the following ETFs:  EFA, SPY, and VXF.

HGSI makes it relatively easy to make a snapshot of equal-weighting a portfolio of these equities.  Right now, if we review this TSP "Index", we have:

While we can debate whether I pulled the trigger too soon I moved to cash on 10/20, based on the signals seen in this composite view on 10/19 it looks like a good decision.  Specifically, the Elder 13d Force Index -- FI(13) -- moved negative, as did the MACD histogram.  Furthermore, even though the 13d and 34d slopes of these EMAs were positive in absolute value, they had a downward slope themselves (loss of momentum -- "the car is driving forward but slowing down"), and the index closure below the 8d EMA of price told me to throw in the towell.

Hence, given a fixed basket of equities, it is possible to create a fixed basket of equal-weighted items that can give you a good view of the "health" of the selections.  As you can see from the above presentation, the FI(13) flashed another down day on Wednesday, and the FI(13) using the SMA method moved to cash on Wednesday and has remained there.   Bottom line:  time to remain on the sidelines in the TSP funds.

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The next thing that I do is create a list in HGSI that contains all of my holdings across all accounts.  This is another equal-weighted basket of equities, and gives me a state of the overall health of my selections.  Here is a graph of my present holdings:

Here's how I evaluate my portfolio, and the process is the same for the constiuent stocks:

• Bull Power:  Positive, which is bullish
• FI(13) - EMA method:  green, which means it's positive, which is bullish
• FI(13) - SMA method:  green, which is bullish
• MACD Histogram: positive and growing, which is bullish
• slope of 13d and 34d price EMAs:  positive, which means we are in an uptrend in the portfolio
• "slope of the slope" of each 13d and 34d price EMAs:  pointing upward, so we are accelerating upward (car is moving forward and is accelerating)
• Price series trading above the 8d EMA (green line):  bullish
• Volume increasing over the last couple of weeks (blue line):  bullish

You may be surprised to learn that here are my holdings:

SKS, +3.03%
VVC, +1.03%
TMV, +1.25%
TBT, +0.94%
SKS, +0.31%
WEC, +0.25%
VXX, -1.85%
GLL, -2.43%
ZSL, -3.61%

The point here is that I can scan through these holdings on a daily basis, and can prune whichever one that I desire that isn't passing muster.

As I indicated yesterday, I dumped FXI and my 1% TSL triggered at the open.  Here's the chart as of last evening:

The process for individual evaluation is the same as the composite.  Here's my read of FXI:

• Bull power moved negative which is bearish
• FI(13) EMA method is red which means it's negative and this is bearish
• MACD histogram is negative and growing more negative, which is bearish
• The slope of the 13d EMA is below the slope of the 34d EMA, which is bearish
• Both slope lines are pointing downward, so this is a loss of momentum.
• The slope of the 13d EMA is almost crossing the zero line, so on this time scale, we are close to starting to lose significant money on a day-over-day basis.
• The price series closed below both the 8d and 13d EMA lines

Hence, I think my exit of FXI yesterday morning was done at the appropriate time.

I suggest that each of you folks who are using HGSI evaluate your portfolio the same way, and for those of you who do not HGSI, you consider getting a 60-day trial.  It's a powerful charting program.

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The dashboard:

The GGT price index dropped slightly yesterday on normal volume, so more of the same.  We're in a holding pattern until mid-terms and the FOMC meetings are concluded.

The LCR continues to drop, indicating that we have further weakness in the database.  The value of 1.419 indicates that we have 1656 stocks with some form of LONG status and 1167 stocks with some form of CASH status.  I note with interest that we have not been this low in LCR since 9/10, and we were in an up-trend at that time.  The ability to pick stocks in an uptrend is definitely more difficult now, so caution is advised while the LCR is trending downward.  Note that the LCR has fallen 10 of the last 11 trading days.

GGT strength fell again, and is now against the artificial supprt line that I discussed yesterday.  If today is weak we will penetrate this support line, which I will consider another bearish nail in the bull coffin.

Overall, caution is advised.

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Short-Term LCR Change Timer

The LCR fell, hence this timer is solidly in CASH.  We are at least two days from a long call so there is no need to do anything here.

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Intermediate-Term Elder Force Index Timer

The bottom line is that Elder is still indicating that this is a good time to buy stocks.  The FI(13) is positive, the 13 and 34d EMAs are trending upward, so this works well for the present moment.

What you don't see but I can see because I calculate the real numbers is that we are within a day or two of the FI(13) moving negative.  If today bleeds any significant amount, either in price or volume, we could see a signal to move out of long positions in general.  Stay tuned.

Given that Elder is still indicating long, here are some candidates to watch:

SPN
CAR
FPO
FCZ
WB
CVC
STT
SF
AYR
PST
NLS

Obviously, a short list.  Take this as a warning shot.

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Today is a travel day, so I'm content to do nothing.

Make it a great weekend.  Please remember that you are responsible for your own investment decisions, and that I am NOT.  Take responsibility for your actions.

Regards,

pgd

Sideways Markets, Some Ideas to Watch, Elder still Long

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I note with interest that China is getting hammered right now.  As I indicated yesterday, I unloaded my position in FXI with a 1% TSL, and good or bad, it fired as soon as the market opened, resulting in a 4.5% gain in about 20 trading days. I should have sold back on October 19th when the price closed below the 8d EMA, but c'est la vie.

The contra position to FXI is FXP, and there are a number of indicators which say we need to look closely at this equity:

On the bullish side of the arguement:

• Of note is that Bull Power has moved positive.  Bull Power is the 13d EMA of price subtracted from the high price, and we want this positive.
• Elder's Force Index using a 13d EMA -- FI(13) -- has just moved positive. 
• The MACD Histogram is now positive for the third consecutive day, and it is growing in magnitude.
• The slope of the slope of the 13d and 34d EMAs is pointing upward.  This takes some time to think about -- because the slopes of the 13d and 34d EMAs are NEGATIVE, but they are pointing upward, we are slowing in price depreciation day-over-day.  This is a necessary requirement for price appreciation.
• Price gapped up yesterday above the 13d EMA, and it closed above the 13d EMA.

On the bearish side of the argument:

• The FI(13), as calculated using a simple moving average (SMA), is still negative.  We like to see both the EMA and SMA methods move positive on the same day for a solid signal -- this one is wishy-washy.
• The absolute value of the slopes of the 13d and 34d EMAs on price are negative, so on these time frames, we are losing in price appreciation.  Note though that because these are pointing upward, we are losing less slow (the car is driving backwards but is slowing down).
• Volume has been decreasing for some time, so demand is not as high as I'd like to see.

While not shown, FXI still has a GGT LONG recommendation and FXP flashed a Affirmed Cash recommendation, so any entry right now would be quite risky.

Despite GGT, I will continue to watch the FXI/FXP pair, as I think there is some merrit to placing a partial position order in the event any positive action occurs.

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Brazil is another country that is experiencing some difficulties right now.   Here is what GGT has to say about Brazil's ETFs:

EWZ, the largest ETF by volume, signaled a move to cash on October 19th.  Additionally, the two other holdouts (BRF, BZF) finally moved to cash with yesterday's market, hence we're at a crossroads.  BZQ, which is the leveraged contra ETF for Brazil has not yet signaled new long because of the lack of volume.  Despite this, we may want to look at what is going on here

First, here is EWZ, the "normal" Brazillian ETF:

I've placed the cursor on 10/19, as this is when GGT indicated a move to cash.

As you can see above, GGT and Elder are in good agreement that October 19th was the signal date.  This was also the first date the MACD Histogram moved negative, which told us that this run was in trouble.  Bull Power was barely positive on this date, but Bear Power (the low of the day is subtracted from the 13d EMA) was very negative, showing us that the bears were in control.  2 days later the slope of the 13d EMA moved negative, confirming that we should not be in this equity any longer.

BZQ is the leveraged inverse of EWZ.  Here's the chart:

Here, BZQ is showing some preliminary strength.  Here's the bull case:

• Bear Power is positive, and has been since 10/19
• Both FI(13) methods were positive as of 10/21, allowing us to enter this ETF
• MACD Histogram is positive since 10/19
• The slope of the 13d EMA is positive in absolute value

Here's the bear case for BZQ:

• The slope of the 34d EMA on price is still negative
• The momentum indicator -- the "slope of the slope" of the EMAs, is downward for both the 13d and 34d slopes.  We're losing some steam right now in this ETF
• The 13d EMA is still below the 34d EMA -- we are not in a confirmed uptrend on this ETF.
• The range of BZQ is bumping against the 8d EMA, and sometimes opening/closing below this level, which is not necessarily a raging bull.  We need to see further opens/closures above the 8d EMA to get a positive buy signal

Like FXP, I think BZQ warrants further watching. 

I think that there is a strong argument that the floor is in on the dollar trade, as measured by the UUP/UDN pair.  Here's UUP's chart:

Yesterday's action was solidly bullish, and had I been watching two days ago, we would have had a good entry point.  Now we need to wait for a FI(2) pullback, which may actually be occuring today (Thursday).  Here's the bullish arguement for UUP:

• Bull Power is positive (as is Bear Power).
• The MACD Histogram is positive and growing in magnitude since the negative-positive transition day
• The slope of the 13d EMA has just closed in positive territory.  This means that on a 13d basis we are appreciating in price at the rate of $0.0025/day (not much, but it's a start)
• The acceleration of the equity is positive, as measured by the "slope of the slopes". 
• We have traded 2 days now above the 8d EMA
• Volume has been increasing since mid-October

The bearish arguement for UUP is weakening but still exists:

• The slope of the 34d EMA of price is negative.  This means that we are losing value on this time scale at a rate of -$0.0197/day.  Ideally, we want this to be a positive value.
• The 13d EMA is still below the 34d EMA of price.  We are not yet any where near confirming that this equity is in an uptrend, hence it is risky.

Keep watching, and enter a limited position (I will chose 20%) if the Elder FI(2) moves negative then transitions positive.  Right now it is positive, so purchasing is extended on a short-term basis. 

Patience.

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Here's the dashboard:

Our price index fell yesterday by -0.34% on volume that was 8% above the 50d MA, so this was a normal, ho-hum day.

The LCR fell -14%, landing the day at 1.614.  It has now fallen 8 of the 9 past trading days and indicates that a number of stocks have fallen in value.  As a point of reference, out of these 9 trading days the GGT index has only netted +0.3%, so we are going nowhere at the present moment.

Database strength continues to weaken, and is now at 0.594, indicating that we're in no-man's land in terms of whether we'll go up or down from here.  We are nearing an artificial support line so if we penetrate this, I think we'll move down further from that penetration level of the price index.  Here's the chart I'm referring to:

The next few days should be interesting.

There is no change with respect to the LCR EMA slopes -- they are all pointing downward, which is decisively bearish.  Here's the chart since I did not post it yesterday:

As you can see, the 5d EMA is below the 8d EMA, and the 8d EMA is below the 13d EMA with respect to the LCR.  On these time frames we are losing stocks rapidly to the CASH side of the recommendation list. 

Further, as you can see from the right-hand side of the figure, all of the LCR EMA slopes are pointing downward.  This suggests that on all time frames (5d to 65d) that you had better be pretty darned good at picking winning stocks, because the database is shrinking rapidly on all time scales in terms of available candidates.

Dangerous waters indeed.

====================

Short-Term LCR Change Timer

The LCR fell on Wednesday, resulting in this timer moving solidly back to CASH.  We are at least 2 days from a long signal, and obviously, both of those days have to be up days with respect to the broad market.  We'll see.

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Intermediate-Term Elder Force Index Timer

The FI(13) is still positive, as indicated by column 12 of the primary GGT dashboard.  This is telling us that we can purchase stocks on the long side.

The slope of the FI(13) is downward, but only for 1 day, so we are not in any trouble here.

The pricing 13 and 34d EMAs of the database price are pointing upward, so we are in a definite uptrend.

Based on all of these conditions, this timer says that it is okay to purchase stocks long and that this is an ideal pull-back situation.  Correspondingly, here is the list of candidates:

URG
GAME
MITI
DECK
GSIC
FBCM
SCHS
AMMD
CLS
MFC
ISLE
C
SHLM
AFFX
ENH
DHF
MYI
ADLR
TROW
CACI
QGEN
RA
KRG
VLNC
GIM
FCJ
STRI
PPDI
PM
EWT
FDO
ONXX
PETM
HRS
IGT
PWRD
LO
CDNS
AVAV
XTXI
TSLA

Ensure that you are moving on these only if they have the prorated volume (discussed in other blogs on this site) and if they are higher than yesterday's high by at least a few pennies.

====================

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

Regards,

pgd

Elder still long, LCR continues to fall, so caution is advised

.
A number of my holdings are rolling over, and because of this, I've been slowly moving what positions remained into cash. 

I sold EWO yesterday, having bought it back at the end of September.  Here's the chart:

Althought the FI(13) is still positive for EWO, you can see that the MACD histogram is negative, and has been for several days.  I didn't see any reversal occurring in the short-term future so this was the most convincing indicator for me.  Further, you can see that the slopes of the 13d EMA and 34d EMA on price are both trending down, with the 13d slope < 34d slope.  Although both are positive, there isn't any real movement upward, hence this confirmed that it was time to sell.

Overall gain was about 9%; Hsin is tracking in real time and he can weigh in as to what the actual gain was.

I purchased SNDA a few days ago but it has gone nowhere.  Further, my position is down -2.06% and the Elder FI(13) just moved negative, hence I'll put a 1% TSL on the position and cast it to fate.

FXI is another position that I'm cutting lose today.  I purchased back in September and have a gain of 7.6%, but the MACD Histogram just moved negative with yesterday's action and with the interest rate increase in China last week, I don't see this one continuing upward from here.  We also have dropping slopes on the 13d and 34d EMAs, which is not good and indicates a complete loss of momentum.

My have 11 open positions at the present time.  Due to a order-entry error on my part, I have two positions in SKS in two different accounts.  SKS is doing the best, up +5.73%, and VXX is doing the worse, down -4.15%.    Here's the scorecard:

SKS, +5.73%
FXI, +7.60%
SKS, +2.95%
VVC, +0.86%
TBT, +0.72%
TMV, +0.97%
PLXS, +0.4%
WEC, +0.09%
SNDA, -2.06%
AGCO, -3.32%
VXX, -4.15%

VXX has been my hedge and I anticipate that it will move northward as the market consolidates.  I've only a small position in it and will add another 20% position on strength today.

=====================

Here's the dashboard:




Our price index dropped from $26.38 to $26.35, so it is barely worth noting.  Volume was constant relative to Monday as well as the 50d MA, so once again, we could state that we're churning.  Either this is a new base or it is going to drop from here.

Voltatility continues to drop, and I generally like to see this occuring when prices are actively moving higher.  I would not be surprised of a retest of support levels from here if volatility continues to drop, as more people will begin to acquire protection in the form of options since the prices will be so low.  We'll see.

The Long-Cash Ratio (LCR) dropped a slight amount on Tuesday, and our strength index dropped also.  Hence, we have a slight weakening across the board on normal volume, so we are seeing a bit of consolidation occuring in general.

I've been presenting the "slope of the LCR EMAs" over the past few days; no changes there.  We are continuing to see negative slopes in the LCR EMAs, and this means that we are decreasing the size of the pool of stocks to choose from that are moving up.  Your stock picking skills must improve when this occurs, so venture forth as your risk profile dictates.  I'm watching the contra ETF world carefully.

Early candidates that are showing price and volume accumulation in the leveraged contra world are:

DTO
DZZ
GLL
BZQ
DUG
ZSL

Disclaimer:  I purchased 20% positions in ZSL and GLL in premarket trading.

====================

Short-Term LCR Change Timer

Because the LCR did not advance higher, we are sitting at CASH-LONG (0).  If the LCR drops today (watch http://www.finviz.com/, the ADV/DEC ratio) then this will reset to CASH (-1).  If the LCR moves upward today then this will transition to LONG (+1).

====================

Elder Force Index Intermediate Timer

Elder continues to indicate that we can purchase stocks long, the continued weakening in the LCR notwithstanding.  Here's my list:

APKT
AIXG
AWF
LNT
ALY
ARBA
AWI
APL
FRA
BKT
CSL
CI
CLWR
RNP
DIOD
ENS
ERES
ERIC
EXPE
HITT
MU
NSM
POWI
SANM
SWI
STM
SNCR
SVR
TRGT
TITN
UTEK
V
XRX

Ensure that you have volume and price entry above yesterday's high before moving on anything in this list.

=======================

Remember, you are responsible for your own trading decisions.  Please take ownership for your actions.

Regards,

pgd