Signal Change as of Close of June 3

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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.

The problem with having multiple jobs is that investing often takes a backseat, so I'm always playing catch up.  This is my reality this morning.

I looked at the leaders yesterday and they did so-so, meaning, I wasn't too concerned about updating my internal timers, other spreadsheets, etc.  Hence, I missed this change of signal last night.

Despite the markets being very weak this morning last night's signal change is for "all in" -- 0% cash target, 100% equity target.  It's going to take some work to get there from here.

Within the Dropbox folder you'll see a bunch of text files:

Greenfield_Dividends

Greenfield_DividendChampions

Greenfield_LowBeta

Greenfield_Bargains

Greenfield_Leaders

All of these stocks have good, solid fundamentals in terms of EPS and revenues.  All are performing well, but be advised, the "_Bargains" are down in price, and the "_DividendChampions" stocks don't screen on price data, so they could be very low (but they pay steady to increasing dividends over many, many years of data).

If you are not a member of the Dropbox folder then you need to send an email to pduncan { at ] v t {dot ] e d  u (fixing the address of course) with DROPBOX in the subject line and I'll add you.  Note that you'll also get an invite from Yahoo Groups so that I can communicate with you -- Dropbox has no communication facility so we have a group to manage this.  If you join the Dropbox but refuse to join the Yahoo group I'll kick you out -- I don't want people who I can't communicate with.  Sorry to be blunt but it is what it is.

I'll be updating these lists as my time permits but these lists, despite them being created this past Friday, are still very solid lists.  

If you are so inclined, ensure that the stock is rated in some form of GGT "long" status before you invest.  If you don't know what this means then you need to read the files in the Dropbox folder.  There's a presentation there to get you oriented.

Buy strength.  Multiply the previous day's high by 1.001 and set your BUY STOP at this level.  If it's not hit today, lower it tonight and try again tomorrow.

For those of you on the alert list, NEON has already triggered for the day and I'm entering at or below VWAP.

The Cumulative Tick pattern is telling me that this signal is prone to failure:

The fact that everything has a negative slope means that you should be careful about entering.  Buy strength, not weakness.  Review past blog entries to have a better understanding at what you are looking at.

Nevertheless, the LCR table shows strength in the underlying database of 3000 stocks:

  

People are picking up stocks as the tool indicates, so unless it's all short covering (quite possible), we could be seeing the start of the next leg upward.  Again, take a look at past blog entries to understand this table.

Remember, do your own diligence.  Your crystal ball is as good as mine.  You are responsible for your own decisions and I am not.

Raising Cash, as of close of Tues, May 26

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Short note here -- I'll elaborate more this week.

With the close of markets today we're back to raising 67% cash.  The short-term timer as well as the intermediate-termed timer have both transitioned to CASH.  The long-term timer is long, but certainly weaker.

My strategy is simple:

1% trailing stop losses, GTC, effective after 9:45 ET
Sell weakest positions first -- the further underwater they are, the faster they will be on my sell list.

66% is my equity target.  Right now I'm about 77% invested, so I'm looking to unwind about 43% of my holdings.

Standard disclaimers apply.

Regards,

pgd

Signal Transition - Short-term timer fires LONG; Close of Markets May 14

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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.


Summary:  The short-term timer has transitioned to a LONG status.  This reduces the cash target from 66% to 33%.  Time to deploy capital.

Timer Status

With Thursday's action, we were pushed over the top and now the short-term timer is LONG.  The combination of both the short-term and long-term timers being LONG indicates that we should be buying the markets at the time, with a cash target of 33% / equity target of 67%.

LCR Table

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

The transition of the 5d and 8d to "green" kicked the short-term timer into gear.  The green on the right side of the table gave me confidence to start buying.

Cumulative Tick

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

The cumulative tick chart above is as of 11:49 a.m ET on Friday.

The trend since the 5/12 low has to come off the bottom in a controlled manner.  Overall, the transition of the "white" above "red" in the cumulative tick pattern shows me that buying is continuing today although the indexes are not showing the gains.  I like this setup, and I'm working hard right now to identify positions and place appropriate orders.

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Strategy

As always, I am placing BUY STOP orders on all candidates.  The level for the buy stop is 1.001% above the previous high.  The order is active after 9:45 a.m. ET.  If the order does not fill then I reduce the buy stop to the next level, provided that the stock or ETF still has a GGT long recommendation.

Pickings are thin right now, so I'm having to double up on size of positions in the transition from 33% equity to 66% equity.  This is okay, but it's not ideal.

All watchlists are updated and are in the shared Dropbox folder.  Stock and ETF transactions are also in the shared Dropbox folder.  If you are not a member, send a note to me at pduncan [ at } v % t } dot [ e d u   (fix the address as necessary - I messed it up because of the web bots who crawl for email addresses).  Use "DROPBOX" in the subject field.  Also expect to be added to my Yahoo! group, as it's the only way I can communicate with you.

Most of you know I attended Virginia Tech many years ago so the vt.edu after my name should be obvious.

Regards,

pgd

Quick Update, as of May 5 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.

Summary:  Tuesday's action was strongly down in terms of sustained selling.  While the talking heads will point to a number of reasons, it mostly is irrelevant.  Trade the markets presented and don't try to anticipate the action.

Timer Status:

Both the short-term and intermediate-term timers are in CASH, indicating that I should be 66% in cash.  Note that the long-term timer is close to transitioning to CASH, so we may be oversold and could bounce here OR we're going to continue lower.  There is plenty of room to go lower.

Percent Longs

I've been harping that we needed to "reset" to the green zone as shown above in order to have a valid buy signal (when it occurs).  With today's action we've moved to 40% long-rated stocks in the database, so we're entering a good area.  I'd like to see it lower from here, with a good hook upward when the buying starts.   We're not there right now.

Long-Cash Ratio Table

The left side of the table -- the slopes -- indicates that we're moving lower on a day-over-day basis.  This is not a buying market at the present time.  The row of reds on the right side of the table shows that today's action caused an acceleration downward in the number of stocks moving from LONG to CASH, and again, this is not a buying market.  'Nuff said.

Cumulative Tick

This chart tells us that we should be defensive, not offensive.

Aside from the top plot, which shows that the number of 52-week New Highs is BELOW the number of 52-week New Lows, the lower plot is telling us to stay away from new positions.

The lower trace has a downward-sloping red trace, which is the cumulative tick trace averaged over about 10 days.  This negative slope means that on a day-over-day basis there is far more selling than buying, and hence, not a good entry point.

I'm waiting for the white trace, which is the real-time cumulative tick, to rise above the red cumulative tick trace.  Once this happens we'll start pulling the longer (red) trace upward, and finally, it will have a positive slope.  Until this occurs it's not worth buying this market.

Strategy:

66% cash position is my target.  What's yours?


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Standard disclaimers apply.

Regards,

pgd

Back to 66 Percent Cash, 4-29 Close

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No graphics here - moving the family this week and it's a bit of work.  This will be short.

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With the close of markets on 4-29, the GGT timer system is indicating a move back to 66% cash target.

The short-term and medium-term timers are in CASH.

The long-term timer is LONG, so as of now, the long-term timer is intact.

This is a rudderless market -- we've not made any real progress in either direction in a couple of weeks.  We are at 51% Long-rated stocks in the database -- we need to drop to 43 to have any comfort about going long with abandon.  See my warnings about Percent Longs from earlier posts.

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Strategy:

Same as usual when we hit this state.  Cash target is 66% -- I'll get there by selling the weakest positions first.

Sell-side money management is to place a 1% trailing stop loss, good til canceled, to execute after 9:45 a.m. ET.   Let it go until either the stock breaks out OR we get a master timer reset where the short-term timer moves higher.

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Standard disclaimers apply.

Regards,

pgd

Fully Long Signal, Close of April 23rd Markets

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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.

Summary:  With the close of markets on the 23rd, my indicators are showing that it's time to be fully invested in the market.  As always, there are warning clouds on the horizon, but there rarely is a perfect blue-sky environment when it comes to investing ...

Timers:

Taken in isolation, all indicators are now long which directs me to become 100% invested.

Long-Cash Ratio Slope Table:

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

The LCR table has transitioned to fully long, with the LCR moving from 1.193 to 1.263, or a move of 6% upward.  This is NOT a big move -- out of all the positive moves since September 2008 it ranks at 575 -- the lower the number the better.  Contrary to the news headlines about the NAS making new 15 year highs, etc. this is not a strong market when we look under the hood.  The "island" of red on the left side of the table indicates that we had a slight pullback, but not everything transitioned so we did not get a "full reset".  Investing in markets that are NOT coming off a bottom is risky business, and my model does not contemplate this specific scenario (but I do...)

You'll see in the next section that we're still in a risky position but certainly, indicators are more positive than negative.

Percent Longs

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

The takeaway from the figure above is that we're closer to where we have historically sold off (light red) than where we make major advances (light green).  This simply means that while my short/intermediate/long term timer models are saying to jump in with both feet, the reality of the situation is that we should be a bit more cautious.

Transitions Edge

I keep track of the success of signals given various conditions of the LCR table.  The figure above paints the current scenario.

Coming into yesterday morning the 2d, 3d, 55d, and 65d moving average slopes were positive with respect to the LCR.  We transitioned to a fully-long market with the close last evening (close of 4/23), so we had a transition of the 5d, 8d, 13d, 21d, 34d moving averages.  The table above indicates that the likelihood of investing today in the GGT index (a simple average of all the stocks in the present database and closely resembling the S&P500 or the Russell 2000) would likely work out between 13% and 41% of the time.

These aren't bad odds, but of course, actual mileage may vary.  This simply tells me that investing in breakouts today as well as other stocks that are moving long probably is a good risk, at least for the short term.

Note that table above uses ANY timer transition to stop the evaluation.  Hence, if the short-term timer moves south, the numbers are calculated, OR, if the intermediate-term timer moves south but the short remains long (possible in this environment) then we terminate the calculations.

Strategy:

I'm a buyer today.  Here are the candidates in my various watchlists:

Steady Eddies:

AZO CERN DLTR HSIC MD NVO ROL

Greenfield Accelerating Dividends:

AAPL

DL

HAR

MATX

MKTX

PZZA

Greenfield Bargains:

AXN

DL

TNET

Greenfield Leaders:

AEC

AFAM

AHS

AMAG

ANIP

APOG

ARIA

BABY

BONA

BSFT

CBM

CDXS

CHGG

CMPR

CNC

CORT

CVTI

CYNO

DEPO

DXCM

EIGI

ELLI

EW

HALO

HAR

HILL

HOFT

INFN

IPGP

ITG

KMX

LGND

LXFT

MACK

MASI

MATX

MKTX

MMS

MNTA

NLNK

NTES

NXPI

PZZA

QLYS

RAX

SCMP

SKUL

SWKS

TNK

TSEM

TWTR

ULTA

USPH

UTHR

VIPS

VRX

XON

BJRI

ISIS

KIRK

RAD

Greenfield Dividend Champions:

AAPL

AOS

ARMH

BNS

BR

CHE

DIS

EFX

FDS

JCOM

LAD

LEA

MCO

MKTX

NKE

OXM

OZRK

PRE

RY

SBUX

SCI

SIAL

SIG

SYA

TSCO

UDR

V

Breakouts on any of these stocks has to be checked in terms of earnings and when they report.  I'll try to buy any price/volume breakout that has already reported.

A breakout for me is taking out the previous day's high plus another 0.1%.  This has to occur after 9:45 a.m.  Volume predictions for the day need to be 100% or greater of the volume of the largest DOWN day in the previous 10 days.  

I am alerted in breakouts using a texting service.  I have room for two more FREE slots if you are interested -- send me a note at pduncan { a t ] V t _dot_ edu (removing the appropriate characters and using the appropriate symbol for at) with TEXTING in the subject line and I'll try to add you as soon as I receive.  Try to send this before 9:45 a.m. ET as once the service starts for the day I do not want to stop it to add your cell number.  I need your cell number as well as your carrier (e.g., 703-123-4567, AT&T).

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As always, these signals are for me and are provided to you for education purposes.  You are responsible for your own actions, and I am not.  Please do your own research, diligence, and thought processes, and please take ownership for your actions.

Regards,

pgd

Short- and Intermediate Model Transitions to Cash, Close of Markets 4/17

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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 GGT system saw a significant pullback on Friday with the GGT index falling about -1.26% on heavier than normal.  The short and intermediate-term timers have transitioned to CASH,  which means that it is time to raise cash to at least 66%.

Back-forth-back-forth.  Choppy waters indeed.

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Timers:

With the transition of the short-term and intermediate-term timers to CASH, I'm forced to raise cash to at least 66% of my holdings.  For those of you familiar with my state flow diagram for money management, we have a transition that looks like this:

The entire state flow for money management looks like this in case you're interested:

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

It looks complicated, but it's really not.  We're now sitting in the "66%" bubble and there's only a couple of options from here:  everything goes "LONG" which means get to 0% cash,  the long-term timer flips to cash and we move to 100% cash, or either the short OR the intermediate move long and we move to 33% cash.

Don't worry about it if you can't follow it -- I keep track of it so you don't have to .

The end result is to raise cash from my present holdings.  66% is the target.  To do this:

1) sell all "cash" rated stocks using a 1% trailing stop loss (TSL), good til canceled (GTC), effective after 9:45 a.m. ET.
2) progressively sell the worse performers in each portfolio until each portfolio is at 66% cash.


Long-Cash Ratio Table:

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

The LCR drop of -29 in one day is significant -- this was the 70th strongest drop in the LCR since September 2008.  The left side of the table didn't fully capitulate --we still have the 88d and the 143d slopes of the LCR showing (barely) positive.  On the other hand, the right side of the table, which shows accelerations of each of the slopes, is clearly showing a picture that points down and to a large amount, so caution is advised.

This all being stated, when you look at the raw numbers on both the slopes (left) and accelerations (right), you see these are REALLY NEGATIVE numbers.  Too negative actually.  Because of this I am expecting a bounce upward on Monday.  What happens beyond Monday is anybody's guess.

Cumulative Tick:

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

The Cumulative Tick chart is weak.  Starting at the upper right, the number of 52 week new highs is about the same as the number of 52 week new lows.  We want the 52wNH to dominate the 52wNL, and this is not the case.  If we end up with 52wNL > 52wNH I will not buy.  Period.

The middle plot shows lots of selling throughout the day.  There was a bit of buying at the end of the day, in the last 30 min, but the damage had obviously been done.

The bottom plot shows that we are precariously close to dropping below the red line, which is a longer moving average of the cumulative tick.  If the white drops below the red all the slopes of the cumulative tick will be negative within a day or two, and this is a TERRIBLE buying environment.  I will not buy if white is below red, period.

Strategy:

1) I'm selling all my "New Cash" and cash-rated stocks.  Period.  1% TSL, GTC, eff after 0\9:45 a.m. ET
2) I'm selling my worse performers in each portfolio until I get to 66% cash position in each portfolio.

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Relatively simple at this point.

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

Regards,

pgd