Market Models are Confirming Move to Cash, but not Contra ETFs (yet).

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Summary

• Investor's Business Daily Market Pulse has moved to "Market in Correction".
• Effective Volume has confirmed a 20d Money Flow "short signal" which has been confirmed by 4 high-liquidity contra (inverse) ETFs.
• Elder's 13d Force Index, using the simple moving average (SMA) method, has confirmed a move to cash within the GGT system.  The exponential moving average (EMA) method is within 0.15% of a daily move of confirming the move to cash, and is within the noise of calculations.  Color Elder in CASH for the GGT universe given other indicators.

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Contra (Inverse) ETFs

Market tops never occur on a sole day, or even a sole week for that matter.  I remember October of 2007, when the market peaked around the 12th, dipped, then went to a higher high around the 21st, dipped, and then the wheels came off the cart starting November 1st.  We had plenty of warning, but it was over a 3 week period.    Only on November 2nd or so could we confirm that "Yes, we should have moved to cash in mid October."

This was not unlike what we are seeing right now.

Of course, your crystal ball is as good as mine, and we could certainly rally from here.  Many stocks have pulled back to their 17d average, 50d average, and 200d average, and these are historically programmatic support levels.  The question is whether they will hold.  If they do, we'll see a nice move upward to previous levels.  If they do not, we'll have a nice opportunity to make money on the down side using contra vehicles.

Note that my observations are whether the supports will hold, not whether the resistance levels of new highs will be penetrated.  This is key, as it points to the risk model (actual and perceived) as being defensive.  Given this, my attention naturally moves to the status of the Contra ETF universe.

I like to start with the 3x Direxion Bear ETFs, as these are hyper-sensitive to moves.  These trade -3x to the underlying, which means that if the Russell 2000 Small Cap Index moves upward +1.0%, then the tracking ETF (symbol TZA) will drop -3.0% on the same day.  The converse is true too, which is why these are attractive vehicles.

When you combine all of the Direxion Bears into an index (I use HGSI software), we get the following presentation:

The presentation above contains a considerable amount of content, so let me go line by line.  As with all my images in my blog, right-click on the image to open in a new window or tab in your browser.

The image includes a data window, so you can see the numeric values.  Please follow along:

1. Two Elder creations, bull and bear power, are at the top of the figure.  Bull power is the height of the day's high (in this case the average high of the 16 Direxion contra ETFs) compared to the 13d moving average.  This value is positive, which is good.  Bear power is the day's low compared to the same 13d moving average.  When this number is positive (it's not), we have confirmation of a significant uptrend.  Right now, it's negative, and until we see this move positive, it should give us some pause about the legs under the present trend.
2. The next three ribbon bars are also Elder creations, each having to do with Force Index.  Force Index is a measure of the daily change in whatever multiplied by the change in volume.  The top two ribbon bars apply a 13d MA, and the bottom ribbon bar applies a 2d MA.  I've inverted the colors on the 2d MA compared to the 13d MA because you want to consider buying when the FI(2) < 0, which is green, and is transitioning to FI(2) > 0, which is the first day of red after a FI(2) < 0 green.  We see in the presentation that we have just encountered our first day of both FI(13) methods moving green, which means they are positive.  This is bullish for contra ETFs.  We also see that the FI(2) value is red, which means that it is above 0.  This means that the reward/risk ratio of entering any of these contras is worse than it was yesterday.  Hence, a move into contra ETFs today could be risky under Elder's FI system (more on this later).
3. Under the ribbons I have the MACD.  We see that we are early, as evidenced by the negative histogram value, as well s the blue MACD line being below the red MACD signal line.  Ideally, we want the histogram to be positive, and ideally, we want the MACD to be above the signal line.  Neither case is true, so we are early as far as this indicator is concerned.
4. Under this is the pricing window, and you can see I've plotted a number of moving averages.  Note that every single moving average is inverted, e.g., the 8d < 13d < 34d < 40d < 160d.  This is BEARISH for the contra ETFs, meaning that again, we are early for any consideration of moving into these on an intermediate-termed basis.

If you've followed along this far you can draw the conclusion that while the markets certainly are under pressure as far as the bull is concerned, the bears have not won convincingly (at least as of the close of markets on Monday, March 7th).  One day does not make a market change, and although we've been drifting up and down over the past few weeks, not really making progress on the bullish side, we've also not skidded off the road either on the bearish side.  We're in balance.

Furthermore, these ETFs that I have shown above amplify moves 3x.  They are incredibly sensitive -- far more sensitive than 2x or 1x ETFs.  If a trend change were present, either way, we'd see clear, compelling evidence of the change.  What I am seeing right now is a bull that is still very much present, albeit weak, and an equally weak bear.  In fact, I'd give the balance to the bulls as of today's date, simply because the prevailing trend always remains until we have compelling evidence of change in the other direction.

Given this state of affairs, and contrary to recommendations on other sites/blogs, I do not think that it is a prudent move to jump into contras today.  What I do think is prudent is to transition to cash and get ready to move either way depending upon market trends and conditions.

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GGT - EV Candidates for Tuesday, March 8th

Knowing that the markets could reverse and resume their upward march, the following are candidates making my watchlist for today.  All of these stocks have some form of GGT long (New Long, Affirmed Long, Long) recommendation:

1. TXT isn't moving on a short-term Large Effective Volume (LEV) scale, but it has seen significant accumulation over the longer term and someone picked up 668K shares at $26 on Friday (follow the whales)
2. SYT looks good on both the 8d LEV and 40d LEV time scales.  Small Effective Volume (SmEV) has been decreasing while LEV has been diverging on the 8d scale, which is a great setup.
3. CE was on my list yesterday and it has repeated today.  I note that LEV increased yesterday while price made new lows on the day and SmEV sold off.  
4. LFT continues the divergent LEV/SmEV pattern on the 8d chart, and the 40d LEV pattern is showing solid accumulation.  Further, the action last Thursday saw significant buying as the price fell, which is a great pattern.
5. NFX is newly emergent in terms of short-term and long-term LEV /SmEV pattern, but even with the selloff in price yesterday, LEV remained solid, e.g., no institutional selling.
6. SUN saw significant LEV accumulation yesterday at the end of the day, while price remained constant.    The stock has a wonderful 40d LEV pattern.
7. WXS sold off yesterday but LEV ended the day where it started.  Again, this stock has a wonderful LEV pattern over the last 40d.
8. JNJ has a solid 40d accumulation pattern and saw significant buying yesterday while price dropped.  @ $60 a share, $-volume in the last 15 minutes of the day was notable.
9. CVH has a constant LEV pattern over the last 8d while the 40d shows solid accumulation.  FUrthermore, price has dropped significant in the short-term in step with SmEV, showing smart money is sitting pat and the retail investor is fleeing.  This is a great setup.
10. COV is a newly diveregent LEV/SmEV pattern on both a long-term and short term basis.  Volume picked up yesterday in the last hour.
11. PLL has a great 40d LEV pattern but rather weak 8d LEV pattern.  Despite this, the last hour of buying yesterday saw LEV move upward dramatically while price remained constant.  Volume was 30% above average yesterday.
12. AGCO saw constant LEV accumulation yesterday while it sold off.  This is a great pattern to watch
13. VMED continues to experience great LEV accumulation, but someone dumped nearly $100M on Friday
14. ITW continues to show accumulation faster than price, which is a great sign.
15. AVY saw increased LEV accumulation while price dropped yesterday.  LEV/SmEV divergent pattern is strong here.
16. SBUX was on my list yesterday and made the list again today.  LEV continues to move up on the 8d scale, and the 40d is cosntant.

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Trading Plan for Tuesday, March 8th

1. I'm not making in progress in the TSP funds, which invest in the equivalent of the ETFs SPY, EFA, and VXF.  Total gains over the last 30 days are less than 1.5%, and the last few days of markets have put these gains in jeopardy.  Because of this I am transferring my wife's TSP funds to cash, effective with the market close today.
2. My position in BTI is even, and short-term large effective volume (LEV) is waining.  If I had a large gain in this stock I'd be inclined to hold onto it, as the long-term LEV is still very bullish in terms of accumulation, but any selling by institutionals will most likely result in a price drop, causing me to fall under water.  I intend to exit this position today.
3. NXY is more or less the same as BTI in terms of position in the portfolio, so I'll exit on strength today for a slight gain.
4. TPLM dropped 5% yesterday, but effective volume remained constant compared to Friday's levels.  This stock saw considerable accumulation on Friday, having attempted to close above it's 50d MA but failing.  We are only 7% into a full position here, so the hit to the account is minor, and if I see any uptick in effective volume I'll continue to enter the position and complete a full 25% level.

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

Regards,

pgd

Possible trades for Monday -- you should review

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Here are some candidate stocks that have better-than-average GGT specs and have been filtered for Effective Volume as well as favorable active boundaries:

• JNJ has been meandering the past few days, but overall, has held up well the past few days.  Long-term accumulation is strong; ATR20 is only 1%, and it is slightly less volatile than the SP500.
• SBUX is nearly 2x more volatile than JNJ and it too has good long term as well as short-term accumulation.  Although not shown in the Large Effective Volume, there were some large down blocks of significant $-volume throughout the day.
• SYT saw steady accumulation over the past week while prices fell, and the diverging LEV from Small Effective volume is a setup that I like
• DIOD also has a nice divergence between LEV and SmEV, and Tuesday was the start of this move.  Accumulation has been getting better over the longer term, so perhaps this one is turning the corner.  Volume was 104% above average on Friday.
• NYT surprised me, but while price tanked Friday LEV skyrocketed all day.  Volume ended the day nearly 70% above average.  This one is very interesting.
• JNPR generally fails on short term accumulation, but over the longer haul, LEV is steady and strong.  Why I mention this is that while Friday was a wild day in terms of volatility and price, the end of the day saw a skyrocketing LEV, all in the last 15 minutes.  JNPR has a 45 AB rating from Pascal, so it is less than favorable.
• Give ITW a look.  It too ended the day on a ski-jump of LEV accumulation, AND, it's been under steady accumulation for awhile.
• AVY traded above average volume and is experiencing the divergent LEV/SmEV pattern over the last few days, which I like.  
• DSW reports in 7 days or so but LEV is diverging nicely, and there have been some big-block purchases over the past week that are notable.
• HAS has an amazing short-term LEV pattern and is noteworthy of your time.
• LFT is another stock with a serious divergent LEV/SmEV pattern, especially when prices dropped last week and LEV continued higher.

The following stocks are either GGT LONG or GGT CASH rated, and have everything going for them except volume.  I find that there are early stocks in this bunch, simply waiting for a blast in volume to push them higher.  

• FTI has been bumping around and is largely unremarkable, except for the HUGE LEV accumulation on Friday.  We had this in the GGT, LLC account until last week, and I may re-enter.
• APC has been under good, short-term accumulation as of late, and the long-term is solid.
• EZPW looks terrible on the long-term, but the last few days have meen quite remarkable.  This looks like a stock that is basing nicely, with new accumulation.
• I have no idea what caused COV to skyrocket in LEV last Monday late, but LEV has never looked back, and neither has price.  This one is moving out.
• AGCO saw buying volume at the end of Friday which was amazing, as well as duplicating the action with Thursday's close.
• SMTC looks very nice in terms of LEV behavior.
• CAVM, a competitor to SMTC, is also experiencing good LEV as the days roll on.
• AAPL, over the past two days, is just coming back into the GGT picture.  Volume remains low, but LEV is remarkable enough that it meets my scan.  Give a good look at the end of Friday's LEV action -- this is not the signature of a stock that is expected to drop significantly.
• GFA is an infrastructure play that is impressive -- the LEV is newly emergent and looks very compelling.
• MSM has my characteristic divergent LEV/SmEV pattern, with growing accumulation during Tuesday of last week when price was dropping.  Very nice.
• Russia has been doing better lately, and MTL shows it.   Definitely worthy of your review.
• MPEL is showing steady accumulation in both time frames, and this could give you some diversification.

If you downloaded the Stock and ETF zip file from the Yahoo! group, you found that the stock dashboard had a number of industries that were at the top:

1. Utilities - Gas (20 stocks in group)
2. Energy - Coal (11)
3. Energy - Oil and Gas International Explo. & Production (12)
4. Health - HMO (13)
5. Comm - Fiber Optic (6)
6. Energy - Oil and Gas Services (26)
7. Energy - Oil and Gas International Integrated (15)
8. Apparel - Footware (8)
9. Machine - Farm (4)
10. Energy - Oil & Gas Drilling (15)

Me thinks you should be looking within the Energy complex for a play or two, and diversify in the other groups as capital and risk allow.

A listing of the stocks in each group can be found in the "By Industry" file that is included in the zip.

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

Regards,

pgd

March 5th Weekend Update, Part 1 ...

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I plan to make multiple entries this weekend, hence the Part 1, Part 2 titles...  These will be separate entries so check back or better yet ...

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

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

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Summary

• Despite the primary markets falling yesterday on average volume (Dow down -0.72%, NASDAQ down -0.50%, and S&P500 down -0.74%), the GGT price index rose +0.15% on volume +9% above the 50d MA.  I take this as more bullish than bearish for the markets.
  
  I attribute the difference between the GGT price index and the major indexes to the fact that GGT stocks are more encompassing than the three primary indexes, giving us a broader view than a few industrials (DJ30), technology (NASDAQ), and financials (S&P500).
  
  I also attribute the difference to the fact that the GGT index is equal-weighted, whereas the primary indexes are market-cap weighted (the bigger their market cap, the more influence they exert).  This gives the smaller-cap stocks as much say as the larger caps, and smaller-capped stocks have been outperforming the market since late January / early February.
• The GGT Price Accumulator Change tool, which is an oscillator that measures the short-term overbought/oversold basis of the GGT database of stocks, is back down to -14, it's lowest possible value, and is telling us that on a reward/risk level, it is okay to consider entering stocks on Monday.   Correspondingly, I'll perform an EV analysis on Long GGT candidates sometime this weekend.
• The GGT Short-Term Change Timer, which typically holds for only a few days, has indicated a move LONG for Monday.  To play this timer, one should enter the stock early in the morning after the timer signals a move long.  The timer, when applied to the GGT index, is at 16.3% ARR since inception in September 2008.
• The VTI timer, which is the actual trade (Vanguard Total Index ETF) that can be performed that closely resembles the performance of the GGT price index, is confirming the GGT Short-Term Change Timer move to the long side.  This timer, when applied to the VTI, is at 18.4% ARR since inception in September 2008.  Consider entering your position by 9:45 a.m if it is moving upward.  If it is moving downward, use intraday pivot analysis to determine the support levels and enter at the intraday support.
• The Intermediate-length Elder Force Index timer is still in mixed mode, and this results because the two methods used to calculate the output are not confirming.  This is cautionary for the intermediate term.
• Of significance is that the Elder Force Index timer, using a simple moving average (SMA) method in the calculations, has been in CASH since the close of Thursday's markets. This is significant because this timer last entered two-consecutive days of being in cash on 11/16/10, and emerged from this state on 12/2/10.  This is cautionary for the intermediate term.
• The bears that arose on 2/22 are under increased pressure according to the GGT Long-Cash ratio.  This means that on a short-term basis (5d, 8d), the database is expanding in terms of stocks entering "New Long" status, which is bullish.  The fact that the slopes of longer-duration moving averages are pointing down is not to be ignored and hence, I'm cautionary over the intermediate term, but with a bullish bias.

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GGT Price Accumulator Change Tool

This is a metric that I developed over the past few months and released in February.  Here's the chart:

As with all my charts, right-click to expand in a new window or tab.

The chart shows an oscillator that moves between -14 and +14.  When it is in the green zone, below -5, this typically has presented a good buying opportunity on a short-term basis.  When it is above +5, this typically has been a poor buying period, as we've typically pulled back within a day or two.  Correspondingly, when we move into the green zone, it's been a good time to pick up stocks, as measured by the solid red line, which is the GGT price index.  Note that purchases in the red area typically are followed by a drop in the GGT price index, but purchases in the green area typically precede rises in the price index.

My recommendation is to buy good stocks in the green zone.

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Short Term Timer

Here's the latest dashboard of the short term timer that I follow:

As you can see, the VTI has just signaled long, enabling entry on Monday.  This is a short-term timer -- on the order of a few days (as you can see), and as such, you need to be nimble.  As you can see, the VTI timer equity curve hasn't moved either way in nearly three months, but overall, since inception in September 2008, it has appreciated 52%, or 18.4% per year.  Here's the actual equity chart:

The chart above presents 4 traces:

• Equity w/ No EMA filter is simply buying/selling the VTI according to the short-term timer signal.  When we don't apply the 150d EMA filter to this method you can see that we can seriously draw down our equity, and further, it takes longer to get back.
• Equity w/ 150d EMA filter is exactly that -- we can only buy when the price is above the 150d EMA of price.  This results in large improvements to our equity, hence, we'll be more inclined to go with a method like this if we don't see that our equity balance is under the starting level.  Where the red line is flat is where we were in cash.  You may miss some moves upward with this rule, but you're trading with the long-term trend which I've proven is more lucrative.
• The VTI price is shown in green -- you can see what the price has done since inception in September 2008.
• The VTI 150d EMA line is shown, and you can see that we are significantly above the line.

The largest drawdown with the 150d EMA filter added to the timer is from 4/15/10 to 4/27/10 where the VTI equity curve moved from $1.4342/dollar to $1.386/dollar, or a drop of 3.36%.  This gives us a reward/risk level over 2.5 years (also known as the Calmar Ratio) of CR = 18.4%/3.36% ~ 5.5, which is a very, very good statistic.

The rules for this timer are simple:

1. The VTI (or equity) must be above it's 150d EMA
2. An adaptive EMA is calculated on the change in the GGT Long-Cash Ratio.  If the change in value of this adaptive EMA is positive, then it's okay to purchase the VTI.
3. If the change in value of this adaptive EMA is negative, then it is time to sell the VTI.

You can trade other stocks/ETFs with this timer, although I've only tested a handful.  Send me a note if you want the list and the details of performance.  I generally announce the changing status of this timer in this blog.

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Elder Force Index Timer

Here's the table for the Elder Intermediate Timer:

We're right on the fence with this timer.  As you can see, the output right now is one of a "Mixed" recommendation.  This means that if you are long, stay long.  It also means that if you are in cash, don't go 100% long in equity on Monday -- be very selective about your entries.  

If we get a "Cash" signal then all long positions should be sold.

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The Long-Cash Ratio ... are the Bears Going Away?

I use this next table to keep track of the slopes of various EMAs on the Long-Cash Ratio.  The LCR is a measure of the number of stocks in the database with a recommendation of LONG -- they are above their historical threshholds for doing well -- to those that are recommended as CASH -- those that are below their historical threshholds.  When I plot various lengths of EMAs of the LCR, we get an idea of the ebb and flow of stocks in terms of the trend.  Here's the table:

Of significance here is the recent "thawing" of the bearish areas, melting into green "Bullish" indicators.  These are the shortest EMAs on the LCR, and they need to generally move first to the long side before everything else (not a 100% requirement, but when we see this, we need to pay attention).  As an example of this look back to the 2/1 timeframe, which was the start of the most recent up leg.  Hence, it can be worthwhile to start moving long when we see this type of behavior (with other indicators confirming, of course).

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Based on the above, we need to be cautious, but there are indications that the long side of the market is still very much alive and active.  I'll discuss some stock and ETF ideas in my next entry, most likely tomorrow (Sunday).

Regards,

pgd

Top 25 ETF Portfolio at Collective2

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I'm pressed for time today so this will be abbreviated.

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Summary

• The tool I use to determine whether I should be buying stocks is telling me that entering stocks today has a terrible reward/risk ratio, so in general, no buying for me today.  Correspondingly, I'm not providing guidance on opportunities today.  Check back over the weekend for a detailed analysis.
• Many of you have complained that Marketocracy does not allow you to see the trades or performance, only the equity graphs.  Given this, I've created a Top 25 ETF portfolio at Collective2, which will allow you to see the trades, statistics, and equity graphs.  The URL is http://ggt-top-etf.collective2.com/.  If you want to see the trades in real time, with real time notification, you'll have to subscribe, else you can see the trades on the page 1 day after they are performed.  I expect that the portfolio will take a hit here within the next couple of weeks, simply because we're near all-time highs, so be forewarned.  The original Marketocracy portfolio was created the week of Thanksgiving 2010, and we had a nice leg up from 12/3 onward.  I do NOT anticipate the same performance over the next three months for the Top 25 ETF portfolio at C2.  The Marketocracy portfolio, as well as my own personal account, will continue to run, so we'll have 3 data points to review as we go forward.

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Happy investing.  

Regards,

pgd

Top 25 Portfolio Update for Thursday, March 3rd

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

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


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Summary

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

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Top 25 ETF Updates

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

Buy:

EFV

FCG

IGN

IJJ

JJG

RJI

Sell:

DAG

IEZ

IVE

IYE

MVV

RJA

UYM

Hold:

BGU

DBA

DBC

DIG

DRN

ERX

IEO

IGE

IXC

OIH

SSO

UPRO

URE

VDE

XLE

XOP

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

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

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

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

Here are the color codes:

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

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

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

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

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Trading Plan for Thursday

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

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

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

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

Regards,

pgd

This bull is not dead - yet (but it's not overly healthy either)...

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


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Summary

• The GGT price index sold off -1.66% on volume that was 20% higher than the 50d MA.  This is the 3rd such sell-off in 6 trading days and it meets the criteria for O'Neil's "distribution days".  Oil is making it difficult to get any form of traction (pun intended...)
• The GGT Price Accumulator Change tool is back to a -14 -- which means that it's OK to enter stocks today if you can find good ones.  Note that you're almost swimming against a changing tide if you go long; see the next comment.
• The Elder 13d Force Index timer is sitting right on threshold between LONG and CASH.  It's less than a day away from moving back to ALL-CASH, so keep this in the back of your mind.  This is an intermediate-termed timer and we're either at a great buying point for the next leg upward or at the point where cash and contra ETFs make the most sense.  More on contras below.
• Industry groups that were up according to GGT strength (price and volume) yesterday were:
  
  Mining-Gold-Silver-Gems                        
  Tobacco                                        
  Bev-Soft Drinks                                
  Fin-Frgn Funds                                  
  Trvl&Leisr-Movies                              
  Auto-Mfg U.S. & Frgn                                      
  
  There are 41 stocks in the Mining-Gold-Silver-Gems group so many to choose from.  Download the combined stock/ETF zip files from the GGT Yahoo! group for a listing, or search your Quotes Plus/HGSI database for those industry groups.
  
  I am liking GG, SLW, and CDE here, but all have seen significant appreciation in the past few weeks.  PM and MO are worthy of further consideration too.  FMX and KO look good in the Bev-Soft Drinks group.  DISCA is continuing to be bought, and TM just flashed a new long signal.  Note that I've not screened any of these for my Effective Volume setup, so do your own legwork.
• A number of GGT stocks and ETFs have moved to CASH status with yesterday's action.  Yes, these will be sold today, and given the present market climate, I think it prudent not to hold onto weaker stocks.  ETFs are posted; if you want the most recent stock file listing posted send me a note or post a comment below and if I get ONE request I'll do it (takes time to prepare and upload).  I sold HPQ at a major loss yesterday in two accounts (held across earnings - ouch!), and while taking the loss hurts, all the major leaders are headed down so it simply doesn't make sense to continue to acquire losses.
• Contra ETFs are too early early as a group.  Don't start shorting anything yet.

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Contra ETFs

Contra ETFs are those Exchange Traded Funds that move opposite to the market.  If the market goes down 1%, some of these ETFs will move up +1%, +2%, or even +3%.  This is a way to play both sides of the market, and playing the -1x contra ETFs is no more risky than playing a +1x ETF, provided the ETF has sufficient liquidity (volume).  Obviously, playing a -2x or -3x contra ETF has increased risks, as these use leverage-behind-the-scenes to get the gains (or losses) they experience.

Here is a chart of my Contra ETF universe index.  As with all my charts, right-click on it top open in a new tab or window:

WE ARE EARLY FOR CONTRA ETFs, in general.  I state this based upon the following observations:

1. Bull Power, which is an Elder creation, is sitting at a negative value.  We want this to be positive, as it reflects the difference between the high of the day (for the index, which is why I LOVE HGSI -- you can create any index that you can think of) and the 13d moving average.  This says that the 13d MA is ABOVE the high of the day, which is BEARISH for contras, NOT bullish.
2. The Elder 13d Force Index (EMA and SMA methods), are both still very negative.  We want these values to confirm and both be positive -- they are not.  This is BEARISH for contras.
3. The slopes of the 13d and 34d EMAs are negative, and they are both pointing down.  This is BEARISH for contras.
4. All the EMAs are inverted, e.g., the 8d < 13d < 34d < 40d < 160d.  Until we start seeing some crossing from below (obviously, the 8d will cross the 13 from below first), we cannot sell our long positions and move into contras.

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GGT Long ETFs, screened with EV

• DAG, the 2x leveraged agriculture ETF, has seen significant accumulation over the past three days, although it gave some up yesterday.
• DBC, the commodity index tracking ETF, is under steady accumulation although price was moving higher yesterday while Total Effective Volume remained more or less constant.  Could be topping in accumulation.
• GSG, another commodity-tracking ETF, is down in premarket but has been steadily accumulating for 3 days, with a HUGE purchase just prior to the close on Monday.
• UGL, the 2x leveraged gold ETF, is obviously on a tear.  The accumulation pattern isn't as strong here, but what is significant is the action just prior to close yesterday, where someone bought a large block, driving Large Effective Volume (LEV) upwards.
• SIVR is the silver trust ETF, and it's had a rocky road in accumulation over the past 3 days.  
• AGQ is the 2x leveraged silver ETF, and of all the ETFs I've presented here, this is the most liquid.  It's had a nice accumulation pattern over the last 3 days and ended the day strong, but Total Effective volume (TEV) ran up more due to the retail buying than LEV.  

GGT Long Stocks, in GGT-Appreciating Industries, Screened with EV

• BVN is a Gold & Silver play that has seen good accumulation over the past several days.  I do note that LEV started to taper downward at the closing hours, while SmEV moved up, which is opposite of the divergence I like to see.
• RGLD has a nice, LEV-divergent pattern over the last three days, showing that it's attracting money.  
• ABX is another stock that has been moving upward in accumulation, but again, like BVN, saw some LEV distribution at the end of the day which makes me pause.
• AUY is showing a new accumulation pattern while SmEV remains constant.
• NGD is seeing lots of activity in accumulation, especially at the end of the day on Tuesday, where LEV jumped in a major burst of buying.
• PAAS is showing a nice accumulation over the last three days, and is seeing the price movement corresponding to this.
• GG looks very good, and volume was 99% above average.
• SLW is trading on average volume and is moving upward over the last 3 days in terms of accumulation.
• UXG has a nice, lower-left/upper-right accumulation pattern over the last several days, but is overpriced
• CDE has rocketed the past 2 days on price, driving it to be 12% over my ideal buy point.  Volume is 98% above the average, and the accumulation Monday/Tuesday dwarfed all previous days.  Too expensive to get into this one for me, but it may appeal to some of you.
• BTI continues to see favorable accumulation after selling off last week.
• EOD, which is a Wells-Fargo Global Dividend stock, is holding up well right now on fairly good accumulation
• EDD, an emerging market debt fund which is yielding 7.52%, is worthy of review.
• IMAX is experiencing significant accumulation while the price remains fairly steady and SmEV sells off.  I consider this an ideal setup.

On a side note, EXPE, which is a GGT Affirmed Cash (avoid) stock, is one that is seeing HUGE, STEADY LEV accumulation while the price continues to drop.  It'll be a good stock to watch.

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Trading Plan for Wednesday

• The Top 25 Stock portfolio held up very, very nicely yesterday in terms of not issuing a number of New Cash recommendations, but fell -2.07% on the day.  I'll unload Dean Foods (DF) today, as it is a New Cash.
• The Top 25 ETF portfolio saw UYM move to New Cash, so it will be unloaded today.  The portfolio took a beating in price, falling -2.6%.
• The Market Cap Favoritism stock portfolio got nailed yesterday, dropping -2.23%.  GLW and CS fail the Elder Force Index (13) test, using both the EMA and SMA methods, and will be sold today.
• CPWR, a GGT, LLC holding, has moved to New Cash and will be sold.
• I intend to move into equities listed above provided that they show strength, volume, and accumulation.

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

Regards,

pgd

Watching the Markets Today -- No New Purchases for Moi

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Summary

• The GGT Price Accumulator Change tool indicates a reading of +12, which is in the red zone and thus, we should not purchase equities today, as the chance of decline beyond today is high.
• The LCR Change Timer signaled LONG with the close of markets on Monday, February 28th.  This occurred because we had two relatively strong days in terms of long-cash ratio movement to the upside.  The first bullet notwithstanding, this timer indicates that we can move long on a very short-term basis into broad-based ETFs.
• The Elder 13d Force Index timer has moved solidly long, confirming Friday's move.  This is telling us that the up-trend is intact and that we can purchase stocks long (1st bullet not withstanding).
• The slopes of the EMAs on the Long-Cash Ratio are all still pointing down, and have been since the close of 2/22.  This is worrisome, as it shows a lack of strength in this present up leg.  This means that the "tide is NOT lifting all boats", and that you need to be pretty good at stock selection in order to pick the winners.

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I'm not posting GGT New Longs (stocks or ETFs) that have solid Effective Value patterns today -- the GGT Price Accumulator Change tool is indicating a very poor reward/risk ratio for the next couple of days so if you're not in your positions, then it's too late for this present wave (in my opinion).

I have posted a full set of files, in zip format, within the Files section of the GreekGodTrading Yahoo! group.  If you are a member, you can download the file and poke around.  If you are not a member, send a note to:

GreekGodTrading-subscribe@yahoogroups.com

and indicate in the message who you are and why you want to join the group, and one of the moderators will let you in.

If you want to take your trading to the next level, then get a subscription to Effective Value, and tell Pascal that you heard about him from GGT.

Note that the "DashboardEV" file in the Yahoo! group is a joint file that links GGT stocks with Effective Value stocks -- you'll need to educate yourself at the EV site to understand the significance of the correlations.

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Trading Plan for Tuesday

My Elder Market Capitalization Favoritism portfolio at Marketocracy is only 80% invested and I'm adding to the winning positions to become 100% invested.  This should take place before 10 a.m.  A view of the equity curve for this portfolio is here, and while underperforming the reference indexes since inception, has been steadily improving with the addition of an Effective Volume requirement on the day of purchase.  This is the primary strategy of the GGT, LLC group and I'm constantly looking at how to improve the performance.

My personal account will sell CNXT and SOLR in the Top25 Stock group, as these have moved to GGT New Cash recommendations as of the close of Monday's data.  Of course I will update the Marketocracy portfolio, and a view of the equity curve is here.  This has been underperforming the reference indexes, but it is improving as I filter on Effective Volume on the day of purchase.

There are no changes to the Top25 ETF group, which is presently holding 21 ETFs.  A link to the equity curve at Marketocracy can be found here, and this portfolio continues to outperform all reference indexes.  This is also real in that I have committed about $30K to this.

If today is a good, solid, day up on volume, I'll most likely unload any position that does not participate, as this indicates weakness in the underlying stock.

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

Regards,

pgd