A Few GGT/EV Equities Look Attractive, but Will be Cautious

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Summary

• There is no exact bias in terms of largecap vs. small cap, so invest in the best stocks and ETFs, independent of market capitalization.  Largecaps certainly have been losing attractiveness to the favor of smallcaps, but conversely, there is no decisive move away from largecaps to smallcaps.  If we see a market deterioration I would expect the flight to largecaps to become decisive.
• The present trend is for volatility to to continue to increase at a rate which favors short-term declines compared to longer-term declines.  This means that there is a growing expectation within the market that the next 30 days will be more bumpy than the past 30 days, and it could be wise to take some money off the table.
• The GGT Long-Cash Ratio table of slopes of various moving averages is all bearish, from the 5d to the 65d.  This means that the database is contracting, and it also means that your ability to to pick stocks has to improve because the chances of picking stocks that are sub-par is greatly increasing.  We failed to reverse this trend with Friday's action on the primary indexes, which will be a big warning sign if we do not reverse sometime next week with a significant series of up days.
• The GGT Price Change Accumulator is telling us that buying stocks on Monday is a 50/50 proposition and that we must be selective.
• Greek God Trading stocks and Effective Volume stocks are now able to be correlated in one file, allowing faster scanning of stocks that are at levels where they have historically outperformed and are attracting money.  At the present time this file will be posted over the weekend, and if we get a volunteer to step up (Excel 2007 and Windowz XP required), perhaps this could be moved to daily.

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LargeCap Stocks vs. SmallCaps

As many of you know from my presentations, I like to keep track of whether the market is favoring large caps or small caps.  Here's the most recent chart from Stockcharts.com, a free charting service (at least to generate this chart):

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

This chart plots the Russell 1000 Large Caps, represented by the ETF IWB, against the performance of the Russell Micro Caps, represented by the ETF IWC.  I've placed a 34d moving average on the ratio, so your eye can see the turning points.

When the trend line is moving upward, large caps are favored.  This is because the numerator of the fraction is growing faster than the denominator.  Conversely, when the trend line is falling, small caps are favored.  When the trend line is horizontal, there is no discernible favoritism.

You can see that since the middle of January 2011 that we initially saw a flood towards large caps (as evidenced by the gap up), but since then, we've been slowly bleeding back towards a bias to small caps.  The nearly-horizontal trend line, in combination with some of the ratios trading above and below the line show that there is no great bias either way, so you can trade away to your heart's content without fear of leaving money on the table.

This being said, if the markets start heading south, I would expect a rapid move to the safety and dividend-rich area of large caps, and this can be evidenced by the two black bars on Tuesday and Wednesday of this past week.

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Anticipated Market Volatility

This next chart is illustrative about present market conditions, because it ratios the expectation of volatility over the next several months (VXZ) against the short-term volatility over the next 30 days (VXX):

A link to this chart is here.  This is a weekly chart, and I've placed a 7-week MA on the results, which I have found to be a good indicator of when you should be in or out of the market.

As you can see, for this most recent week, we have exclusively traded below the 7w MA, which historically hasn't been a great time to be long.  Most notable was the period of late April/early May, when we simply could not move above the 7w MA and the slope of the EMA turned down.  This being said,   Also note though the lack of the solid red candle -- we did not finish the week on the lows, hence we have an open red candle (finishing lower than we started, but higher than the lows).  This is important, because it indicates that while the present climate is not overly bullish, it's not overly bearish either.

If you look closely at the figure at the week after the 7-week line has been penetrated, if the week after trades completely above the 7w line, this has been a great signal to move back into the market.  Not 100%, but overall, if you use sound money management after the week that trades completely above the 7w line, you'll make money.  We need to keep this in mind going forward.

What gives me pause is the slope of this 7w MA, which I've plotted on the top of the figure.  It is now below 0, and the closure of this value below 0 indicates that the week-over-week change now favors a significant increase in the ETF VXX, or the VIX, which is the volatility index.  

Because of the slope of this ratio falling below 0 it may be prudent to take some money off the table and keep it in areas that appreciate when the market declines.

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The Health of the GGT Database

I've not posted this summary view of the GGT Long-Cash Ratio slopes in a few weeks, so it'll be good to review:

The first thing that most likely draws your eye is the red "Bearish" lines at the bottom of the figure, which correspond to the last 4 days of trading.  This view is of the slopes of various EMAs on the Long-Cash Ratio (LCR), which is exactly what it sounds like -- a ratio between the number of LONG-rated stocks in the database to those that are recommended in CASH.  When you apply various moving averages to this ratio, and then look at the direction (slope) that each moving average is pointing, you get the figure above.

Friday the 25th was an up day as far as the indices were concerned, but nothing budged on the LCR slopes -- not one of them turned green.  This is ominous for a subtle reason:  to move a stock from CASH to LONG, we need both price and volume to appreciate over historical optimized levels where the stock did well, and Friday's action failed to produce a move where stocks reversed.  There was no large inflow of money into stocks across the board, as measured by lower volume.  This resulted in lack of moving from some form of CASH status to a New Long status.

It will be absolutely critical for a follow-through this coming week in terms of price and volume.  If we get it, play it, if we don't, then I'm extremely worried about this present climate.

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The GGT Price Change Accumulator (PCA)

Earlier this month I introduced a new tool, derived from the GGT pricing data, which shows whether we should enter or avoid purchasing stocks on a given day, provided we know the past few days of behavior.  This is an oscillator, and it has been very helpful on whether we should purchase stocks on a day-over-day basis.  Think of this as a final gate to placing the buy order on an equity that you've already screened and are interested in.

Presently, the PCA Oscillator is sitting at a value of 0, and it's been there for 2 days.  This is neither bullish nor bearish -- it's middle ground.  The optimal times to purchase stocks was Wednesday and Thursday mornings, when prices seemed to stabilize on the downside and the oscillator was reading -14 for two consecutive days.

If you choose to purchase stocks on Monday, do so if they show strength -- price and volume appreciation relative to Friday's action.  I would never plan to purchase stocks that are falling to a cheaper level in the present market climate.

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GGT and Effective Volume

Pascal Willain, who is the creator of Effective Volume, has graciously granted me permission to integrate daily EV data in with GGT data, and provided we can keep the calendars in sync (he's in Belgium, I'm in Virginia), I'll include EV data when I post stock data.

In the zip file that is posted to our GGT Yahoo! group, you will find a new file entitled "DashboardEV".  This file contains a listing of GGT stocks which correlate to Pascal's EV stocks, sorted first by GGT recommendation (New Long, Affirmed Long ...) then by Pascal's overall rating on the stock.  Here's an example for stocks:

Again, click on the image to open in a new window or tab.

A few observations:

1. Not all of GGT's New Long rated stocks for Monday, February 28th, are listed above.  This is because Pascal does not include every stock that is included in the GGT system.  He has a universe of about 1000 stocks, GGT has a universe of about 2600 stocks.
2. In general, there is a high correlation of GGT long-recommended stocks (New Long, Affirmed Long, Long) to stocks that have good Total EV recommendations ("Buying surges", "Buying continues").  These stocks should be a focus of your efforts if you are seeking new investment, as they are attracting money AND they have a favorable rating from the GGT system.
3. There are a few instances where GGT data and EV data to not have a confirmed correlation.
   
   Examples above are SNDA, which is a GGT New Long but the Total EV Status indicates that "Selling Continues".  SNDA should be avoided.
   
   Another mixed signal in confirmation is NFX.  NFX has a GGT New Long recommendation but the Total EV Status is "Selling Continues" and the LER Status indicates "Do not buy". 

• GGT is giving the stock a New Long recommendation because it has moved above it's historical levels for appreciation in terms of price and volume action on the day of recommendation.

• Total EV Status is "Selling Continues" because the stock has been in distribution mode for some time, and it continues to reflect poor EV compared to historical EV levels.  

• LER Status reflects "Do not buy" because the Large Effective Ratio value of  -123.1 shows that compared with historical accumulation levels, NFX is doing very poorly.

The best candidates on the joint table are those candidates where:

• GGT Recommendation is New Long or GGT Affirmed Long (not shown in the figure) are confirming a (1) AB Buy signal near 100, (2) Total EV status of "Buying surges", which means it's a new breakout, (3) LER Status of "Acc." or "Str. Acc.", which means the stock is under new accumulation, and (4) Rating on the higher end of the scale for long positions, as this is an equal-weighting of sector strength, AB value, and Extension Tot EV.

Given this criteria, CPWR looks compelling for Monday.

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GGT Recommendations for Review for Monday, February 28th

ETFs:

• BAB -- thinner trade at $7Msh, but huge LEV change on Friday alone.  Has not been in 3-days of LEV accumulation but someone bought a block of 247K shares early Friday @ $25, causing this to move up in terms of price and LEV all day.  It held up nicely during the down draft of Tu/Wed/Th.  Volume was 59% above average
• BND -- nice LEV divergence pattern from SmEV, and price has been walking up steadily.  Did quite well during the downdraft.  Volume was 30% over average on Friday.
• DBO -- solid LEV accumulation the past the days, and Friday saw continued accumulation even under price pressure.  Volume was 66% above average.
• EMB -- large reversal of LEV to the upside on Friday with steady prices, which always is attractive to me.  Fails three days of accumulation though ...
• GSG - rather constant LEV growth over the past 3 days on horizontal price movement.
• IJH -- this is the Midcap 400 from iShares and it sold off in the down draft, only to return with a vengeance on Friday.  It ended the day in the last 5 minutes of trading with a huge, stair-step jumps in LEV, which is not characteristic of expectation of dropping markets.  I see this as bullish.
• JNK -- sold off hard on Tuesday and Wednesday, in terms of price and LEV, but in the last 5 minutes of trading on Friday it jumped in LEV to almost where it was before the selloff.  Note that someone picked up 600K shares @ 11:23, which barely moved the price (stealthy purchase) @ $40, so we had a $24M+ transaction here, and then in the last minute of the trading day LEV volume jumped dramatically.  Volume was 103% of average.  Again, I consider this bullish.
• VCIT -- another bond fund that has been under steady LEV accumulation over the past week.  Thinner to trade, but notable.

Stocks:

• AMAG -- fails a 3-day accumulation test, but Friday saw the volume move to 206% of average, and LEV skyrocket while SmEV sold off.  I always love this type of divergence.
• CBOE -- steady, divergence LEV/SmEV accumulation pattern, with volume up 88% on Friday.
• CBR -- another steady, divergent LEV/SmEV accumulation pattern, with volume up 61% on Friday.
• CIGX --a tabacco company whose LEV pattern held up fairly well under the pressure of last week, and jumped dramatically on Friday.  Volume was 125% of normal, with lots of activity throughout the day on Friday.  LEV has not decreased in any measurable way since midday Tuesday, e.g, this started being accumulated as the market was going down.
• CPWR is the hands-down favorite according to GGT and EV scans, for the reasons noted above.  Volume was up 61% on Friday.
• CRI has a great 3-day LEV accumulation pattern but it sold off LEV in a stealthy manner (no change in price) in the last minutes of Friday.
• DGI -- amazing LEV accumulation in the last 30 minutes on Friday -- one of the largest LEV changes relative to the past 3 days that I've ever seen for a stock, and I look at at least 100 charts per day, every day.  Volume was 128% of average.
• DY -- held up nicely under the decline of Tu-Wed-Th, and saw a nice, divergent LEV/SmEV pattern that started on Tuesday.  It finished the week at a price high as well as LEV high, with volume up 23% on Friday.
• HLX - otherwise unremarkable week except that the last hour on Friday saw significant LEV accumulation in a nice, steady, stair-case/stepwise fashion.  I like it when this happens, because it tells me someone or a network of someones are buying at a steady pace.
• KIM is involved in real-estate, and it's hard to ignore this group right now.  Someone stepped in with a 260K share purchase on Friday @ $18, and LEV didn't budge (because price didn't change).  Now THAT is a stealthy buy.  The day finished a bit weaker in LEV though, as there was some selling in the last 15 minutes, although price finished up 2.83%.
• MAA -- another real-estate stock that was unremarkable except that there was HUGE LEV accumulation in the last 10 minutes of the day, again, that steady, stair-case/step-wise growth of LEV with barely a nudge in price.
• MCO -- something is going on with Moody's.  Instead of furious buying in the last 5 minutes, volume generally increased in the last hour, with 200K shares at $31 being traded in this zone.  The day ended strong for price and LEV on MCO, and it bears watching.
• MHR -- nice, steady accumulation on LEV throughout the day while SmEV remained fairly constant.
• NWSA -- held up nicely in terms of LEV during the downdraft last week, and finished the week strong.
• OHI -- another real-estate stock that absolutely skyrocketed in the last 5 minutes of trading in terms of volume and LEV.
• OMI -- a picture perfect representation of growing LEV while the stock sells off on Tuesday and Wednesday, then rapid acceleration of LEV on Thursday and Friday.
• SWI -- quiet LEV and SmEV changes on Tuesday and Wednesday during the down draft, and on Thursday, a massive amount of LEV accumulation.  Friday saw a steady LEV while SmEV sold off, and it ended the day with large LEV increases.
• TRLG -- WOW.  Price up 19% on Friday on volume that was 345% higher.  Of significance is that LEV was increasing during Tuesday/Wednesday while stock was decreasing in price, and the sell-off on price + LEV would have made all of us run away.  Those who stuck around were rewarded on Friday.
• VIV -- disproportionate LEV accumulation on Friday relative to price change shows just how much attention this stock attracted, and it finished the day at the LEV-high for the week.

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Trading Plan for Monday

• My Top 25 ETF portfolio will remain fully deployed, except I will sell those equities that are newly rated as New Cash.
• I intend to lighten up on my wife's TSP funds by at least 50%, moving at least half to cash.  I am taking this action based upon the VXZ:VXX graph and the LCR slope graphs I presented above, as well as I intend to rebalance at the end of the month due to restrictions in her account (only 2 transaction events per month are allowed).  If we were not at the end of the month I would do nothing with her monies at this time (the trend is up until we have evidence to the contrary).
• I have a number of positions that have only been executed to 25% or 50% positions.  I intend to examine the strength of each and re-evaluate whether I will let the pending orders ride or if I will liquidate and cancel the positions.
• I may purchase some of the stocks / ETFs above if they show convincing strength (LEV, total volume, and price appreciation) throughout the day.  I intend to enter 25% positions only.

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

Regards,

pgd

Position disclaimer:  As of this writing I own or influence positions in the following equities:  BGU, BTI, CVS, DAG, DBA, DBC, DIG, DRN, DWSN, ERX, FTI, FXF, FES, GIS, GLD, HMY, HPQ, IEO, IEZ, IGE, IXC, MTB, NXY, PZA, RDWR, RJA, SSO, SSRI, TIP, UPRO, URE, UWM, VDE, XLE, XOP, VXF, NUS, NVE, EFA

GGT Longs, confirmed with Effective Volume, Appear Interesting

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Summary:

• The GGT price index moved up +0.28% yesterday on volume that was 19% above the 50d average level.  This is within general noise and is unremarkable.
• The bleeding has stopped as far as the GGT price EMA slopes are concerned, meaning that there was no change Thursday compared to Wednesday.  This being stated, the 5d, 8d, and 13d slopes are all pointing downward, which is bearish.  We need these to reverse and resume an upward trend from here for the bull to resume.
• Our new tool, the Price Change Accumulator, has moved from two days of a reading of -14 (buy buy buy) to a value of 0, which is middle ground.  If you feel compelled to buy equities, make sure they are performing strong relative to the market, as you need some form of wind in your sails.
• The LCR Short-Term Change Timer is in CASH.  We are at least two trading days away from a long reading, and today (Friday) and Monday will need to be data-base expanding days in terms of long-rated stocks for this to move long.
• The Elder 13d Force Index timer is in a "MIXED" mode.  This means that either the EMA or the SMA methods of calculating the 13d FI are not in agreement, and this typically happens at pullbacks.  If this moves to "CASH" we will confirm a downside bias, if it remains in cash we will be in limbo.  I would not commit a tremendous amount of cash to equities at this point.
• The GGT Long-Cash Ratio (LCR) has been below 1.0 for two consecutive days.  This means that there are more stocks in the database with a CASH rating than with a LONG rating.  Although nothing can be gleaned from this number alone (e.g., driving at 100 mph does not tell you about the road ahead), the trend is down over the past 3 days (we are slowing), and presently, we have been slowing for 3 consecutive days.  The probability of continuing this trend (7 of 215 total runs with 4 consecutive days being lower, or 3.3%) is much lower than the probability of a reverse (41 of 215 total runs with a reversal occurring after 3 consecutive down days, or 19.1%).  With futures up as I write this, my bet is a reversal day as far as the LCR is concerned.

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GGT New Long Stocks

Here are stocks that I am watching today:

• HES is the highest ranked New Long, and while the large Effective Volume (LEV) level hasn't the characteristic "V" divergence pattern from SmEV that I like, TEV has been steadily increasing and it held up well yesterday on volume that was 45% above average.
• PCS is newly emerging as a LEV candidate under accumulation, and volume was 63% above average yesterday.
• MMI has been under steady LEV accumulation, possibly because of their release of the XOOM, but the price has been steady while LEV has been diverging nicely.  This is up 1.22% in premarket.
• HNZ saw a huge divergence on LEV / SmEV over the past two days, and although it is down -1.27% in premarket, volume yesterday was 83% above average.
• CROX saw huge LEV accumulation late in the day and is noteworthy
• HRB saw an upgrade yesterday, resulting in volume that was huge.  It's worthy of your time to give this a look-see.

GGT New Long ETFs

Here are the ETFs that are popping up on the radar and are worthy of my time:

• TIP is a TIPS Bond fund from Lehman which is showing LEV accumulation.
• VXX is the S&P 500 VIX volatility index ETF, and is showing significant accumulation.
• IEO, which is the DJ US Oil and Gas ETF, continues to show accumulation
• FXF, although an Affirmed Long, is getting close to my buy zone and is continuing to show LEV accumulation despite the price dropping.
• MZZ is the UltraShort MidCap ETF and LEV is holding steady (after increasing for past 3 days) despite the price dropping.
• PZA, which is a insured muni fund, continues to go up in terms of LEV.

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

Regards,

pgd

Top 25 Portfolio Update for Thursday, February 24th

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

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

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

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

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


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

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

Regards,

pgd

Elder Intermediate Timer is Sending Mixed Signals

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Summary

• Macro indicator:  the GGT/Elder Force Index, calculated using a simple moving average, is quite long.  Conversely, the same indicator, calculated using an exponential moving average, which weights the most recent action heavier compared to the oldest information, has moved to CASH.  Successive down days of this indicator (EMA method) has historically been bearish.
• Macro indicator:  the long-cash ratio (LCR) of the database dropped the 4th highest amount in 560 trading days (2.5 years).  This is significant as downward spikes such as this were typically followed by change in sentiment within two-three weeks.
• We are now oversold, as a database.  I determine this by the average of database strength, which I calculate on each stock/ETF.  Given this oversold reading, I am expecting a bounce upward from here, but who knows how long it will last.  Any stock that breaks out above yesterday's high and that meets other selection criteria should be a good candidate for entry.

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The Carnage

There were 17 New Long recommendations in the stock groups yesterday, compared to 399 New Cash recommendations.  Obviously, the bears won the battle.  Of the 17, many of which are of lower $-volume, I can only find three that have been under any form of accumulation:

• GBCI is a thinner stock, trading near $5.6Msh average.  It has seen significant price and volume action the past few days, ending yesterday higher on volume that was 83% above average.  The LEV pattern is one of accumulation by larger groups.
• GIS held up well yesterday, finishing up on the day.  Furthermore, the stock has seen significant buying at the close and open of each day, and I would expect this pattern to continue. LEV is diverging from the small EV lines, showing continued accumulation.  The stock traded at 56% above average volume.
• IVR has been under continued accumulation over the past 4 days, and it held up relatively well under yesterday's pressure.  Volume was lighter yesterday, but this was offset by accumulation as prices dropped, which I consider a positive divergence.

A number of ETFs popped into New Long status yesterday, and while a few of them are contras, most of them are not -- they're in the precious metals and energy complex.  I note with particular interest that almost all of the oil and precious metals ETFs are being unloaded, according to LEV, at these price levels.

• VXX -- the short-term ETF on the VIX, the volatility indicator, moved higher throughout the day on volume that was 89% above normal.  LEV largely ignored this one until the afternoon, then all the price movement was due to institutional or big-lot buying.
• FXP is the contra China ETF, and someone was bold enough to pick up over 300K shares @ $32 just after opening yesterday.  Total volume on the day was very high, exceeding 167% of average.
• BND, the Vanguard bond fund, saw a tremendous amount of buying in the latter part of the day, forcing total volume up over 100% of average.  Contrasting, BSV, which is a short-term bond ETF, actually saw LEV distribution throughout the day on higher prices, so I'd avoid BSV in favor of BND.

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Trading Plan for Wednesday

I picked up positions in GLD, SLV, and SSRI yesterday, and will continue to hold onto them if they don't get crazy and drop in terms of breaking through a floor.  My position in HPQ is severely underwater, so I need to keep an eye on this and see what it's going to do.

One day does not a market make, and today should be a good buying opportunity for stocks that have sponsorship, so this is what I'm looking to focus upon.

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

Regards,

pgd

Precious Metals Need Your Attention

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Summary

• Macro Indicator:  the GGT database is expanding in the number of stocks with a LONG status.  This means that more stocks are appreciating and seeing increased volume than those that are decreasing in price.  This is bullish (a rising tide lifts all boats).
• Macro Indicator:  the Elder 13d Force Index (FI) system, as applied to the GGT universe, is bullish and at the present daily rate of change, is about 6 days away from any form of sell signal.  The probability of a sustained down leg is smaller than the probability of a continued up leg, so we are carefully bullish.
• Due to personal events and subsequent travel, I liquidated a large portion of my short-termed holdings last Wednesday because I was unable to attend to them Wednesday, Thursday, or Friday, and the uncertainty of world events made holding them over the weekend dangerous.  I'll be moving back into selected positions as the week unfolds, provided that the markets do not dive from their lofty levels.
• The GGT Price Accumulator Change tool is mid-scale/neutral at a value of 0, which is neither oversold nor overbought.  Risk/reward is literally a 50/50 coin toss from here, compared to past buying opportunities.  This means that we can buy stocks here with a reasonable expectation of them going either up or down (as opposed to buying when they are oversold).  Of course, we must be selective, and we must watch where the money is flowing.

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GGT New Longs - ETFs

You can download the latest files from our Yahoo group GreekGodTrading -- Joe posts these nightly, with my continued thanks.  Simply join by sending a note about who you are and why you want to join to GreekGodTrading-subscribe@yahoogroups.com.

I want to highlight a GGT New Long, as the timing here is important:

• GLD is the most liquid of the New Longs, and reflects continued buying into the equity over the past week or so.  Note that acquisition volume was large on Friday in GLD, which is important.  I also note that GLD is 0.8% over my buy limit, so I'd like to see it come back a bit.   The question is whether we should be considering precious metals at this point in time.
  

The figure above is a total EV view of GLD, the physical gold ETF, from the Effective Volume site.  Note that the average EV has a positive slope and that TEV is above this level.  The value of -8,000 tells us that while GLD is still being distributed on a day-for-day basis, the sell-off is decreasing day over day, e.g., we are lessening the bleeding, and if the trend continues, we'll wish we bought at these levels.

To answer the question on whether we should buy GLD, we can look at the precious metals sector as a whole in terms of money flow.  Again, the chart is from Effective Volume:

Here, we see a number of key items:

1. the slope of the 20d average of money flow into the PM sector is positive, which means that day-over-day, more money is flowing into the sector as a whole that was yesterday.
2. the 20d average of money flow (MF) just moved above the 0 line -- the bleeding has stopped and the PM MF is a net inflow.  This is good in general for precious metal stocks, and we can conclude that this sector is expanding
3. The percentage of MF into this sector is pointing upward, parallel to the 20d average.  The conclusion is that both are increasing, which is bullish for this sector.

While silver is not on the New Long list, silver has been outperforming gold for a number of months:

 A linkable version of the chart above can be found here.  The figure above is a ratiometric analysis of silver (SLV) compared to gold (GLD).  Because GLD is in the denominator, the fraction is smaller due to the underperformance, relative to SLV.  Furthermore, I've plotted the 5d EMA on the ratio, and we see that any time the ratio drops below the 5d we've had a good opportunity to jump in.  The present value here suggests we should wait to move into SLV or GLD, but that is an individual decision.  Scaling in would most likely be prudent at this point in time.

Given that SLV is outperforming GLD, let's have a look at the TEV:

Here, we see a large diversion of the actual total effective volume away from the moving average, which suggests that SLV could be overbought.  This being stated:

1. the 20d TEV average line is pointing upward -- this is bullish
2. the TEV level is above the 20d TEV average, which is bullish
3. both lines are becoming less negative in volume of shares/day, which is bullish.

World events not withstanding, money flow into GLD and SLV is increasing, as are their prices.

Stocks in this gold/silver space that I like are the following:

• UXG - saw a massive amount of buying on Friday, but has been in a general LEV down trend for the past few days.  The risk/reward ratio, as determined by the active boundary (AB) calculation, is very good.
• AZK - lumpy LEV pattern, but clearly has been experiencing some short-term accumulation.
• GOLD - new LEV accumulation pattern that meets my 3-day criteria.
• HMY - new LEV accumulation pattern that meets my 3-day criteria.  
• GFI -- has a nice lower-left/upper-right short term LEV accumulation pattern, and the AB reward/risk ratio is in my sweet zone.

In the silver stock area, the reward/risk on SSRI, coupled with the newly emerging LEV accumulation pattern, makes this a good risk if this sector continues to move upward.

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Other GGT New Long ETFs that are being considered are:

• EEB -- this is a BRIC ETF, and while not a stellar performer, it certainly is showing accumulation over the last week.  Note that the BRICs have been out of favor in general, so this could be the start of a new up leg.
• MINT -- this is the PIMCO Enhanced Short Maturity Strategy Fund, and has been seeing some solid accumulation over the last few days, as well as the corresponding price performance.  As a fund we have to be careful, as the price is not tied to the movement of volume, but TEV attractiveness is important as it shows the money flow.

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I want to present another chart which shows that market sentiment is tiring as far as this bull is concerned, and we are seeing an increase in expectation of a downtrend:

This chart is another ratiometric chart that places the mid-term futures (VXZ) against the short-term futures (VXX).  The short-term futures value is located in the denominator, so as it grows larger, we see that the ratio gets smaller, creating the toppiness.  What is important to me is the diving of the slope of the 34d EMA of this ratio -- you can see this on the bottom of the panel.

What should be evident to you is that short-termed expectations are becoming more bearish at a rate faster than longer-termed expectations, and this indicator alone shows that we are below the levels that we experienced in late August.  This is noteworthy, and is indicative of what we are seeing in the options market (as well as the equity market).  Play this accordingly.

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Given the turmoil in the Mediterranean, I'll hold off on my review of attractive stocks, as this all could change in the next few days if the markets oversell.

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

Regards,

pgd

Position disclaimer:  I own or influence positions in the following equities:  EFA, SPY, VXF, SSO. 

Updates to Top 24 ETF Portfolio for 2/17

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

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

Sell
DAG
DBA
IEZ
ITB
IYE
RJA
SOXL
VDE
XLE

Buy
DDM
DRN
MWJ
ROM
RSU
UDOW
USD
XSD

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

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

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

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

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

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

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

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

Regards,

pgd

Bullish and Toppy ...

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Summary

• Even though yesterday didn't appear to be a great day, the Long-Cash Ratio (LCR) of the GGT universe barely nudged down.  This is bullish.
• Confirming the strength of the LCR barely budging is our new indicator, the GGT Price Accumulator Change Oscillator.  This tool moved upward from -8 to 0, indicating that we're neutral in our signal to buy securities.  Put another way, buying securities today is more risky than it was yesterday.  So, the indices were down but the database was strong.  If you didn't buy yesterday, you best be selective today.
• The GGT price index fell -0.51% on volume that was only +6% above the 50d MA.  Yawn.

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GGT New Long ETFs

There is only one worth considering, which shows just how toppy we are in the markets.  IBB, the NASDAQ Biotech, has flashed a New Long signal.  Unfortunately, there are mixed signals with this one, as someone sold 500K shares at 16:01 last Thursday @ $93, which obviously is a $40M+ transaction.  Buying/selling yesterday was somewhat neutral, but at 12:32 pm someone wanted out and they unloaded 173K shares, with no regard to hiding the transaction (no purchases in the same minute to dither the bid/ask).  I'm watching this one only.

GGT New Long Stocks

• KR, Kroger, has a terrible Large Effective Volume (LEV) pattern and is unremarkable.  This being said, someone picked up 1M shares at 11:58 a.m. @ $22, then turned around and did it again at 12:25 p.m.  At the end of the day LEV and TEV skyrocked while price barely budged during heavy purchasing.
• NUE is a new LEV breakout and is in an industry that is moving upwards.
• FDO is up 26% in the premarket, so this squawks of a buyout.  Of interest is the periodicity of the buying pattern yesterday -- almost every 75 minutes someone picked up 50K shares at $43, and I count 8 such events, so $16M in transactions and someone will make 25% on this this morning.  Nice coin.
• BPZ is seeing a considerable amount of LEV accumulation over the last week.
• GENZ saw huge LEV accumulation mid-day, and the price skyrocked and stayed there.  Something is going on here.
• CMCSA is a prime example of news leakage going into earnings.
• SCHN is another steel play like NUE that is seeing solid LEV accumulation but price was steady.  The steel industry moved upward to position #8 out of #152 in the GGT universe, so the industry group is strong  Metals industry, which is where SCHN lies, is now #29.
• QSFT is a new LEV breakout on higher prices.
• CMC is ANOTHER steel/metals play that signaled New Long, and is also experiencing significant LEV accumulation.
• BMRN is a biotech (look at the only ETF that triggered today worthy of our screens), and someone bought over 700K shares last Wednesday, before the close, at $26.  LEV took off in the last 5 minutes last night...
• LOW has a nice lower-left/upper right LEV pattern, with significant volume that was above average for yesterday.
• X is ANOTHER steel company that just fired New Long.  Get it folks?  Steel is hot.  LEV is a beautiful lower-left/upper right pattern.

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Trading Plan for Wednesday

I deployed a considerable amount of capital yesterday, so today will be spent locking in gains (if there are any) and pruning the weakest stocks from my holdings.  Today should be an interesting day.

My 1% TSLs on SI and HSY are still active, as these stocks are holding on despite their "New Cash" recommendation yesterday.

A new purchase yesterday, URRE, moved to New Cash from New Long, so we'll most likely do the 1% TSL thing there too, although it will be painful.

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Remember, you are responsible for your own trading decisions, and I am not.  Please read the disclaimer found on the left side of this blog when you first started reading, and continued following of my ramblings implies your consent to the terms listed in that disclaimer.

Regards,

pgd

Position disclosure: as of this writing, I own/influence positions in the following equities:  AAPL, AF, AGCO, BGU, BTI, COST, CTSH, CTXS, DAG, DBA, DIG, ERX, ESV, EWM, EWS, EWT, FAS, HLX, HPQ, HSY, IEO, IEZ, ILMN, ITB, IYE, JASO, KCG, LULU, MVV, OIL, PCLN, QLD, RFMD, RIMM, RHA, SI, SOXL, SRX, SSO, SWI, SWY, TIN, TNA, TQQQ, TYH, UCO, UPRO, URRE, UYG, UYM, VDE, WAT, WLT, XLE, XME, XOP, EFA, SPY, VXF