Intermediate-term timer now MIXED; raising more cash as of Mar 4 close

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NOTE:  Please subscribe to this using the "Follow by Email" link to the left.  Nobody gets your email except me, and I promise that I won't email you.  It helps me see the number of folks reading this as well as ensuring you get the signals on a timely basis.  If you miss a signal this system will most likely produce sub-par results, which isn't my fault.

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Summary:  Today's action (close of Wednesday, March 4) shows a continuation of the downward trend I've been discussing.  The INTERMEDIATE-term timer has transitioned to "MIXED", which means internally, indicators are not in alignment to whether we are going up from here or continuing downward.  This occurs when there is not a consensus of trend.  

With the INTERMEDIATE-term trend timer now in MIXED, and not far from CASH, my new target cash level is 50%-67%, or 33%-50% invested.

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Timer Status:

Short-term timer:  CASH

Intermediate-term timer:  MIXED (weak)

Long-term timer:  LONG

Slope Table:

Click on the image to open in a new tab or window.

Discussion:  The Long-Cash Ratio (LCR) fell to 1.300, a drop of -14% from yesterday.  This is within normal daily range for down days and is relatively unremarkable.  More importantly is that all time frames from the 2d through the 34d range are now negative in slope, meaning that stocks are moving to some form of CASH on many significant time frames.  Another day of 34d slopes being negative will most likely cause the intermediate-term timer to move fully to CASH, forcing me to drop to 25%-33% invested and the remainder in cash.

Thursday's action will be important in context of the timers; even if the broad indexes are stable the LCR will provide internal views to the overall market behavior -- to some extent ignore the main indices.

Cumulative Tick:

Click on the image to open in a new tab or window.

Discussion:  The Cumulative Tick is the only reason I'm not dropping my equity levels to 25%.  We are still in a buying market -- the solid red line indicates that net-net, people are buying stocks more than they are selling.  The solid white line, being above ALL of the moving averages, tells me that despite the major index action today (which was poor), everybody ended the day buying.  This is a fine-looking chart, actually.

Strategy:

As indicated above, my new target is 33-50% invested, and for my own personal circumstances, probably closer to 50 than 33.  The weakness of the intermediate-termed timer forces me down from just the short-term timer level, and the LCR 34d slope value being negative gives me pause.  Again, another day where the 34d and all the shorter EMAs remain negative will not be good.

The "tell" is the cumulative tick.  If the white trace were below the red I'd be heading for the doors, but it's the exact opposite.  People are stepping into this market.

I am NOT a buyer on Thursday, under any circumstances.

I have placed a 1% TSL, GTC, active after 9:45 a.m., on my weakest positions and am looking to get down to 50% cash.  NONE of my TSL's triggered today -- THAT is what good stocks do on a otherwise bad-index day.

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

Regards,

pgd

No-change in Status, Close of Tuesday, March 3rd

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Summary:  The Long-Cash Ratio fell another -8% to 1.510 on Tuesday, meaning that 1191 stocks are in some form of "CASH" status and 1799 are in some form of "LONG" status.  The indicator has fallen the past 5 of 7 days, hence the trend is down.

In general the LCR table is confirming bearishness on a short-term time frame.  Stating the obvious, the trend downward will continue until it stops.  For now there is nothing to do on Wednesday except continue to raise cash.

Consequently, I'm driving towards a 34% cash position.  The leaders are doing well, so this is harder than it sounds.

On the intermediate- and long-term time frames, we are still trending upwards.  I plan to keep 50%-66% invested in the market until the intermediate timer triggers to CASH.  This could occur as early as the close of business Wednesday if the day is down hard.

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Regards,

pgd

No Change to Status, Monday, March 2nd Close

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Summary:  Despite the positive action today (Monday) systems are relatively unchanged.  The Long-Cash Ratio moved up +3% to 1.646, which is barely notable.

The short-term timer remains in CASH status.  The intermediate and long-termed timers are unchanged in LONG status.

Monday's action was positive -- not many of my TSL, GTC selling orders filled.  This means that when they do execute I'll most likely get a higher price than if I had simply pulled the trigger at 9:45 am or 10:00.

I'm still raising cash to a level of 66%-75% invested (25%-33% in cash).  I am expecting a short-term drop in the next week or two.

Of course, the short-term timer could reverse here and we could move higher -- your crystal ball is as good as mine.  If this occurs I will

1) cancel all pending TSL orders
2) move aggressively to get 100% back in the markets

Your actual mileage may vary.  Do your own diligence.

Dropbox files are updated.

Regards,

pgd

Short-term Timer Transitions to CASH - Feb 27 Close

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NOTE:  Please subscribe to this using the "Follow by Email" link to the left.  Nobody gets your email except me, and I promise that I won't email you.  It helps me see the number of folks reading this as well as ensuring you get the signals on a timely basis.  If you miss a signal this system will most likely produce sub-par results, which isn't my fault.

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Summary:  the short-term timer has moved to a CASH status, requiring that exposure to equities be reduced.  Cash target levels are 25% - 33% (66% - 75% invested).

Timer Status:

Short-term Timer:  New Cash
Intermediate-termed Timer:  Long
Long-termed Timer:  Long
Long-Cash Ratio:  1.602, falling for 4 of past 5 days

Here's the Timer Table:

Commentary:  As stated above in the Summary, the transition to "New Cash" in the short-term timer suggests a short-term defensive stand.  The transition is from 100% invested to no more than 66% (if conservative) or 75% invested (if more aggressive).   If you are really conservative there is no reason that you couldn't raise 50% cash, but until the other longer-termed timers transition, I wouldn't go any lower than 50%.  The "Long" status of the intermediate and long-term timers suggests that we are still in a rising market, but this could easily change if the short-term trend downward continues.

The falling LCR is normal once we have achieved a local top and is indicative of digesting recent gains.

Long-Cash Ratio Slopes:

Right-click on the image to open in a new tab or window.

Commentary:  The -10% drop in the LCR on Friday, February 27th is notable in that it's the largest one-day drop since 1/30.  I have no idea if we will continue lower from here -- your crystal ball is as good as mine -- but the drop is notable in that it caused the 2d-13d LCR slopes to all transition to negative.  This is what triggered the short-term timer to a CASH status and should not be ignored.

You can see that the right side of the table has a good level of red -- we've been decelerating for a number of days, and the action last week simply confirmed what was going on.

Cumulative Tick:

Right-click on the image to open in a new tab or window:

Commentary:  For all intensive purposes we're still in a buying market.  I base this statement on the solid red line that goes from lower left to upper right -- this is a day-over-day buying on the NYSE.  If you're not familiar with what a "tick" is you can read about it here and about the cumulative tick here.  This red line is a simple moving average of the cumulative tick and it shows that more stocks are being bought than are being sold.  The solid white line is (generally) above all the other moving averages, so they are being pulled upward.

Until the cumulative tick indicator reverses there will not be a clear confirmation of the downside.

With the LCR pullback, and the cumulative tick lower-left/upper-right, we have a weak pull-back and this suggests that we should remain in the markets, at least for Monday, March 2nd (and probably longer).

Strategy:

As I indicated in my webinar that I conducted today (Sunday, March 1), I intend to sell positions that are 1) underwater, from the weakest to the strongest, until I have raised at least 33% cash, and if I exhaust those prior to reaching 33% cash, then 2) the weakest positive-performing holdings.  Whether you choose 25%, 33%, or 50% is up to you, but my rules suggest that raising some cash would be prudent.

My underwater positions only total 9.2% of my portfolio.  Hence, I need to cut into my winning positions.

Selling positions is tricky, so here's what I have done to take the emotion out:

1) It does not make sense to sell portions of positions -- the bookkeeping becomes a royal PITA.  Hence, sell the full positions, which makes basis calculations a bit easier.
2) For the positions that are underwater, I have placed a 1% trailing stop loss (TSL), good-'til-canceled (GTC), effective after 9:45 a.m. ET on Monday, March 2nd.
3) For the positions that are above the water line I have placed orders for a 1% TSL, GTC.

If all orders execute Monday then I'll be almost to 34% in cash.

We'll look at Monday's action and determine what to do on Tuesday.  As I write futures are up slightly but the Nikkei is down -0.4%, so don't try to guess the markets.

I have no intention of buying any stocks on Monday, period.

Orders are placed, so there is nothing to do for Monday.  I doubt that I'll check the markets except for curiosity ...

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Thanks to those who attended the webinar today.  The recorded video is in the Dropbox folder.

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

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Regards,

pgd

New Long Signal for All Timers, 1-22-2015

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Summary:  The strong action on 1/22/2015 has turned all timers long -- short-term, medium-term, and long-term.  Targeting 100% equity investment.

Timers:

Short-term timer:  LONG
Intermediate-term timer:  NEW LONG
Long-term timer:  NEW LONG

Long-Cash Ratio:  0.774, jumped 25% on Thursday, a very strong day.  The 2d, 3d, 5d, 8d, and 13d slopes of the LCR are all pointing upward, with the 8d and 13d newly positive.  This is a buy signal.

The table above indicates that again, we dipped a shallow dip over the last trading month and now conditions are favorable for entry into the markets.

LCR Slopes:

Click on the image to open in a new tab or window.

The Long-Cash Ratio jumped +25% on Thursday, which is a significant move.  In ranking it is the 157th strongest move since 2008.  Note that the LCR slopes for the 2d, 3d, 5d had been positive, and now the 8d and 13d turning is to be considered a follow-through.

This is my trigger to get back in the markets.

Cumulative Tick:

There was strong buying on Thursday on the NYSE:

Click on the image to open in a new tab or window.

With the close on Wednesday, the cumulative tick just barely crossed the longest moving average from below, indicating a positive tone to the markets.  As you can see to the right of the "+" symbol, yesterday was strong and now all the slopes are upward.

This is a necessary condition for me to purchase stocks.  This is a (temporary?) rising market.

Strategy:

The obvious question is "which stocks should be considered?

The GGT Stock file, located in the shared Dropbox folder for subscribers, has the latest updates.  Here are the stocks that are quality stocks that are rated "Long":

To save you the time of typing the list, here it is:

AGIO

AMBA

BFR

CARB

CAVM

CORE

DXCM

EVLV

FPRX

HDB

HNI

HPP

ICLR

JNS

LTS

LXFT

PACB

PEB

PLKI

PPC

RCL

SAVE

SMCI

SWKS

TASR

UA

UAL

UVE

VIPS

ZUMZ

If any of these stocks take out yesterday's high plus 0.1% I'm seriously considering making a purchase.

From a momentum / Effective Volume point of view (see www.effectivevolume.com), these are quality stocks that are worthy of entry:

BFR
CORE
VIPS
AAPL *
HDB
SKX *
EVLV
HPP
LXFT
PEB
UEIC *
ZUMZ
SAVE
UA

Note that any stock listed above with a " * " means that it is not a GGT long but is a serious candidate.  Also note that AAPL reports earnings in 4 days and there is a significant movement into the stock occurring.

These stocks are beaten down but again, have great fundamentals.  Unfortunately, they are not rated GGT "Long" except for RENT, which has been moving upward for the past 2 days and is a relatively new entry to my list (it is rated "Affirmed Long").  All the others are in a CASH status but are improving rapidly.  They also are quite strong in terms of EV.

LEAF

RENT

SAIA

EPAM

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Any stock that breaks out today from the lists above and that are GGT "Long" of some sort will most likely be purchased.

I typically purchase if the price goes over 0.1% of the previous day's high.  I also like to see volume above the 10-day volume of the greatest drop in price, e.g., the buying today is stronger than the selling over the past 10 days.

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As always, these are not recommendations.  You are responsible for your own decisions, and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

Paul

Still on a 33% Equity Signal, Close of Friday, January 9

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Timer Status:

Short-term timer:  CASH
Intermediate-term timer:  MIXED and WEAKER
Long-term timer:  LONG
Long-Cash Ratio (LCR):  0.687, falling

As you can see above, the short-term timer is in cash and has been so since the beginning of the year.

The intermediate-termed timer is in "mixed" status, which means that internally things are not confirming.  This occurs in a weak and/or uncertain market, and basically, on an intermediate term basis (2-6 weeks or so), we're really choppy and if this is your typical holding time frame, you're probably better off in cash.

The long-term timer is still long, so on a 1-4 month time frame, we're still in positive territory.  It's important though to understand DELTAs, and this is what the next table does:

Long-Cash Ratio (LCR) table, aka the "slope table"

From the left:

The long-cash ratio (LCR) is at 0.687, which means that for every 1000 stocks that are recommended to be in CASH, only 687 are recommended as potential candidates (subject to further screening).  The key here is that the trend is downward, except for 1/7 and 1/8, so the market trends are not with us.

This is not a buying climate, at least not yet.

The left side of the table, which is red, simply tells me that on multiple time frames that the LCR slopes are negative, e.g., more stocks are moving to CASH recommendation on a day-over-day basis relative to stocks that are moving LONG.  If you believe that a "rising tide lifts all boats" then the ebbing tide is lowering all boats -- this is what we're seeing now.

More importantly is the right side of the table -- we had two solid days upward BUT you can see that the slope of the slope, or the change in slope on a day-over-day basis, was mixed to negative.  This isn't good, and it certainly is NOT buying time.

Cash is king, at least in my portfolio.  You do what you want.

Just to stir it up a bit is the following:

Cumulative Tick Chart:

Despite recent performance in the markets to the downside, this set of indicators tells me that the markets are buying, at least in an underlying sense.  From the upper right:

1) the green line over the red line tells me that the 52 week New Highs is greater than the 52 week New Lows on a daily basis.  This is necessary for me to buy stocks.
2) in the middle graph, you see the reversal in algorithmic buying, which ended up with a positive slope for the day.  This too is a good sign

In the lower pane, note that

a)  note that all the slopes are positive.
b) note that white is over red, e.g., the short-term instantaneous cumulative tick is above the moving averages.

Both of these indicators are good.  Hence, the "gates" are enabled, but we are still weak in the markets.

Strategy

I'm targeting 25%-50% equity with the rest in cash.

With the Cumulative Tick setup above, we're a go for buying, BUT, I need to see the LCR stabilize and start moving upward.  It's not doing that, so as far as Monday is concerned, I'm not buying.

Take the day off and enjoy something else.  If we see positive action Monday then we'll probably get a buy signal.  I'll post if that occurs.

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Regards,

pgd

Signal Change, Close of Monday, Jan 5

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Short entry here since I'm traveling.

With the close of markets today the intermediate-termed timer transitioned to "Mixed" mode.  This is an early warning sign, and continued dropping in the markets will most likely cause this to move to "Cash".  We're not there yet, but it's close:

The table indicates that the short-term timer also transitioned this past Friday, so clearly, it's time to raise cash.  I'm dropping back to 66% invested with the signals indicated above.

The LCR table is still strong, despite the intensity of the sell off from today:

Noteable is that out of nearly 1000 down days recorded, today was the 57th strongest down day in terms of LCR (Long-Cash-Ratio) change.  This is significant.

Strategy:

Simply put, the short-term signal combined with the "mixed" intermediate-termed timer indicates that we should be 33-66% invested.  I'll get there by selling my weakest positions, and I'll use a 1% trailing stop loss, GTC, effective after 9:45 a.m.

Regards,

pgd