Data does not support end-of-day reversal

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Contrary to what we saw in the markets with the Industrials up +0.60%, the NAS up +0.38%, and the SPX up +0.48%, the underlying data doesn't support the reversal.

Click on the image to view a larger version.

If you're not familiar with the presentation, review yesterday's blog (as well as others).

If there was broad, across-the-board buying at the end of the day, we'd see the white line above start to cross the slower moving averages from below.  At best it showed minor stability -- it certainly isn't enough to support a move of several 100 points in the Dow.

You can also see in both the top trace as well as middle trace that (top) we continued to see new 52-week new lows (red line), and in the middle trace, that computer selling continued into the close.

Tuesday is not a buying day.

My LCR Table suggests the same behavior:

Click on the image to view a larger version.

This is almost a mirror image of what I posted in Monday's entry -- red red red.  There was a bit of slowing on the right hand -- a partial green area approached, but it wasn't across the board and certainly, with red everywhere for Monday, Tuesday is a kick-back day.

Strategy

This isn't to say that we can't have a reversal from here -- we certainly can and the (approaching) oversold data shows it.  The point is that unless we see some follow-through buying on Tuesday it could be more of the same.  Perhaps the Fed has baked in everything they need to bake into the markets, but perhaps there will be a surprise.

Smart money is not taking the bait.  I'm not either.

I need to see the white line of the cumulative tick start moving upward, cutting across the moving averages.

I need to see the LCR Table start to show a sea of green on the right side, which will eventually lead to green on the left side.  We're not there.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Dividends: https://www.collective2.com/details/94780986

Greenfield Leaders: https://www.collective2.com/details/94921209

Greenfield Low Beta:  https://www.collective2.com/details/95702992

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As with all my ramblings, 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

Not buying, but getting shopping lists ready

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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.

 I received a note over the weekend asking what I'm planning to do for the next couple of days.  Without overthinking this too much, here is what I see:

The markets continue to show weakness, as we all are experiencing.  Probably the greatest indicator (other than our unrealized gains) is the Cumulative Tick indicator:

Click on the image to make larger.

The top plots show the new 52-week lows (red) and the new 52-week highs (green).  The net between each is yellow.  Bottom line:  continued decrease on a 52-week basis, with large numbers of stocks hitting their 52-week lows.   Conclusion?  Not a good buying environment.

The middle plot shows algorithmic buying and selling.  When the red trace is above the blue line, we have buying.  When it is below the blue line, it is selling.  The indicator is reset daily.   As you can see, Friday was a strong selling day as far as computer selling was concerned.  In fact, it lasted almost into the final bell, which again, is not a good buying environment.

The bottom plot is my Cumulative Tick plot, and the white is the instantaneous cumulative tick, and the red is a long moving average (about 3 days).  When white is below red we have sustained selling, and when all the slopes are pointing down (upper left to lower right), we have a greater indication of sustained selling.  Terrible buying environment right now -- in fact, don't participate in bottom fishing, because the tide is still flowing out.

What I'm looking for in the above plots are:

1) top plot:  green above red.  This means that more stocks are hitting new 52-week highs than those hitting 52-week lows.
2) bottom plot:  white above red AND all slopes are positive (pointing to the upper right).  This means that the markets are starting to get interested in buying stocks, so hitch your wagon at that time.

We are not there, so Monday isn't a buying day.  Period.

Long-Cash Ratio (LCR) Table

My LCR table is solidly indicating that there is no chance of buying stocks on Monday:

Click on the image to make larger.

The latest data shows red-red-red.  The left side refers to the slopes of numerous moving averages -- moving averages of the number of stocks transitioning from a "long" rating (using my system) to a "cash" rating.  When this multiple-timeframe analysis has all the slopes pointing downward, money is flowing out of stocks and they are getting cheaper.  When we see it across short and long time frames it tells you that it is a broad move to safety.

The left side of the table is red, and has been since around 12/4, which is when I issued a sell signal.

The right side of the table is the rate-of-change of the left side of the table.  For you math types, if the left side is velocity, the right side is acceleration.  Again, considerable red on the RIGHT side means that we are accelerating downward.  An analogy is that the car is in reverse and it is accelerating in reverse -- the number of stocks flipping to a CASH recommendation increases on a day-over-day basis.

I'm looking for green on the RIGHT side, and if it is sustained, it will make green on the LEFT side.  This is when I start buying -- when we start seeing emergence of green on the LEFT side.

We're not there, so Monday is a selling day or sit-pat day.

Percent Longs in Database

All this being stated, we're in prime buying territory, WHEN we get the LCR table and Cumulative Tick to confirm it's time to start buying.  Here's the chart:

Click on the image to make larger.

We are in "green" territory, which means historically, buying stocks when in this zone has been a better proposition than when buying in the red area.  Graphically, this chart shows the percentage of stocks in the database that have a "long" recommendation, and as you can see, the number is dropping, e.g., we are approaching oversold territory.  Most of you will recognize that this is a good place to be, as supply will be high and when the buyers do step in, they will be buying a local lows.

It's not enough to simply start buying when we're in the green area above.  We need the confirmation of the Cumulative Tick as well as the LCR table -- so again, it's time to pay attention, but Monday is not a buying day.

Getting my Shopping Lists Ready

For GGT subscribers of my Dropbox, you have access to the updated stock and ETF files and which stocks are rated "long" and which ones are rated "cash".  The file is updated nightly and obviously, it follows that you should not be in any stock that is rated "cash" and that long candidates are those that are most attractive.

Although I'm not buying on Monday, here's my shopping list for the week:

If we get a signal after the Fed does what it's going to do this week I'll update the list (in the file).

If you're interested in having access to the file simply send me a note to pduncan {a t] v t {dot  ] e du  (fixing the address, of course) with "DROPBOX" in the subject and I'll send you an invite.  Also, PLEASE please please subscribe to this list using the link to the left on this web page -- it's the only way I can communicate with subscribers as Dropbox corporate does not make this very easy for large number of subscribers.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Dividends: https://www.collective2.com/details/94780986
Greenfield Leaders: https://www.collective2.com/details/94921209
Greenfield Low Beta:  https://www.collective2.com/details/95702992

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As with all my ramblings, 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

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UPDATE:

Another question came in while I was writing this concerning the overall performance of different stock portfolios that I have.

In addition to the three links above, here is the relative performance of the stocks in each of my tracked portfolios.  The way to use this information is to

1) subscribe to the Dropbox to get the nightly file
2) look at the individual group behaviors and pick the performance / volatility that you are comfortable with
3) ensure that if you are going to trade something, that it is rated "long" (as per the nightly stock file)
4) unload any position that moves to a "cash" recommendation

SOOOOOOOO, *** IF *** a buy signal were presented (and we do NOT have one right now), the following charts show the relative performance of the stocks in that specific portfolio.

Note that this includes both "long" rated and "cash" rated, so the performance is most likely conservative and volatility is most likely a bit less.

Caveat emptor and all of that.

Greenfield Accelerating Dividends

Click on the image to view a larger version.

Greenfield Active Watch List

Click on the image to view a larger version.

Greenfield Bargains

Click on the image to view a larger version.

Greenfield Dividend Champions

Click on the image to view a larger version.

Greenfield Leaders

Click on the image to view a larger version.

Greenfield Low Beta

Click on the image to view a larger version.

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As you can tell from above, the Greenfield Leaders and Greenfield Active Watch Lists are the best performing portfolios in this present climate, and this is WITHOUT a buy signal.

Again, buyer beware.  Take ownership for your actions.

Raising Cash Position

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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.

With the close of markets on Thursday, December 3rd, there has been a transition in the short-term timer, indicating that I should be increasing my cash position and not purchasing stocks at the present time:

With the short-term and intermediate-term timers in CASH, but the long-term timer still on the long side, it's okay to hold some positions but certainly, buying right now is not a good idea, nor is holding onto stocks that have a major loss at this point (they most likely will continue to drop).

The Long-Cash Ratio indicator shows that Wednesday showed a reversal in sentiment, and that Thursday was a follow-through on this negative view:

The right side of the table is solidly red, indicating that all moving averages were slowing in a negative manner.  The left side of the table confirmed this (in part) on Thursday, with the shorter time frames all moving into negative territory (pointed down).

This same picture was provided by my cumulative tick indicator:

(click on the image to enlarge)

With 52-week New Lows exceeding 52-week New Highs (top plot), sustained selling both days (middle plot), and now the instantaneous CT (white) pulling the averages to a negative slope (all pointing downward), this isn't the environment that I like to purchase stocks.

Many of my positions are doing fine, but some are clearly underwater:

(click on the image to enlarge)

Strategy:

1.  Unload the GGT positions that are transitioning to Cash.  The file indicating this information for December 3rd (only) can be found here.
2.  I've cancelled all pending purchases; waiting for the right side of the LCR table to turn green.
3.  Possibly unload positions that are underwater.  We'll see.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Dividends: https://www.collective2.com/details/94780986
Greenfield Leaders: https://www.collective2.com/details/94921209
Greenfield Low Beta:  https://www.collective2.com/details/95702992

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As with all my ramblings, 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

Long-term Timer Transitions LONG, November 3 Close

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Brief update here -- with the close of markets on Tuesday, November 3rd, my models have transitioned long on all measured time frames.  Target equity is 100%, subject to market ebb/flow.

We are short-term overbought here -- the number of stocks that are rated long is high, relative to recent history, so we can expect a pullback at any time:

Note that the solid red line corresponds to a level of 63,4% longs in the database; we are at 60.4%.  3 more percent -- or roughly 90 more stocks transitioning to a "New Long" status (net of "New Cash"), and we'll be there.  We're averaging about +1.4% per day net New Longs, so 2-3 days at this pace.

When we hit this level I'll not purchase any stocks until we get back to a lower value.  Ideally, we'll pull back to the "Green" zone.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Bargains:  https://www.collective2.com/details/95793176
Greenfield Dividends: https://www.collective2.com/details/94780986
Greenfield Leaders: https://www.collective2.com/details/94921209
Greenfield Low Beta:  https://www.collective2.com/details/95702992

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As with all my ramblings, 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

End-of-Month Update, October 31, 2015

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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 Movie

October 30 2015 MarketUpdate

Cumulative Tick

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

Last week's action was positive in that we have resumed "buying" as far as the market is concerned, but it is negative with respect to the overall strength of the markets.  The top right area of the figure shows that red and greens were fairly matched, meaning that on Friday we saw the 52-week New Lows outpacing the 52-week New Highs.  This is a warning sign of a not-so-strong market.  Volume was higher Friday, so the war was being waged equally on the driving of the NYSE stocks to both new highs as well as new lows.  Not ideal, in my view.

The bottom part of the figure is positive -- upward slopes on all moving averages for the cumulative tick and this indicates a resumption of net buying pressure, which is good.  

Certainly, there is no reason not to be long in the market, but if you're sitting on a bucket of cash, now is probably not the time to jump into the markets with both feet.  Here's justification of that statement:

Percent Longs

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

The percent longs chart plots the percentage of stocks rated in some form of "long", using my GGT methodology, that are in the database.  The database is comprised of about 3000 stocks, and as you can see from the chart above, about 55% of them are "long".  The actual number is 55.3% as of the close on Friday (October 30th).  Historically, when stocks have hit the 55% level, the number of reversal days (where the market goes down to at least 46.2% longs in a series of steps downward) goes upward, indicating that we're in overbought territory right now.  If you look closely you can see that we're bouncing around a bit here -- the market is struggling to move higher.

This chart simply tells me that risk is higher -- it's okay to add stocks to a portfolio, but adding huge positions from large percentage levels of cash should probably be thought through.  This is because the chart shows you that the best place to buy stocks is when the percent longs is in the green zone -- specifically below 46.2%, and chances of moving higher increase dramatically if the value is below 34.3%.

For you statistical folks, the separation between the 46.2% and the 34.3% is one standard deviation (~11.9%)  so it follows that buying stocks below 22.4% would be a good idea.  Conversely, when the percent longs rises above 71.9% (today's numbers), unloading positions that have not been profitable would be a good call.

Long-Cash Ratio Table

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

The LCR table, which shows the slopes of multiple moving averages of the Long-Cash Ratio (LCR), as well as the slope of the slopes, is shown above.  We're slowing -- and here's why:

On the left you can see that we hit a peak of the LCR of 1.331 on 10/28 -- 1331 stocks were long for every 1000 that were in cash.  We've fallen back the last two days with fairly small changes downward -- realize that more stocks in the database are failing in price behavior, hence why a cash ranking is climbing (long in the numerator, cash in the denominator, and if cash numbers go upward, then the value decreases).  

The Slope of the LCR EMAs shows that on the 2d, 3d, and 5d ranges that the slopes are negative.  The 8d is almost ready to flip over to red (negative), and if it does, we'll have another caution signals (like on 10/27).   The rest of the table is green but the numbers are smaller on Friday than on Thursday -- slowing.

On the right side of the table you see far more red -- this is the slope of the slope, and over on the right side, red always precedes red on the left (why?).  The numbers are less relevant on the right, but the color is important -- more red on the right will lead to red on the left.  We need more green on the right or else the table will be telling me to raise cash....

Long-term Timer Transitions LONG

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

On a positive note, the longer-termed 5d/65d price MAs crossed from below, creating a BUY signal on a long-term basis.  We're weak here -- because we're in overbought territory -- but if we pull back slightly yet keep this signal long, it will be good for our portfolios as I'll be able to invest all the way to 100%.    We'll see.

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Strategy

I'm adding positions in my customary way -- I buy strength above the previous day's high.  For those of you who subscribe to my portfolios at C2, you're getting a good idea of how GGT is doing.  The Dividend Portfolio there is 100% invested and is doing well.  Everything else is improving but still underwater -- but I stay with the plan.  For you subscribing to my text messages of trades and breakouts, you see my trades (buys and sells) as they are placed, so you see the good, the bad, and the oh my, what is he doing?

I have most of my monies in my Dividend portfolio strategy, as it seems more stable than any of my other portfolios.

Not making excuses here, but this has been a rougher-than-expected market for me.  I'd be interested to hear how others are doing -- my Dividend portfolio is up 2.3% since June and 6.6% in October.  Every trade is listed at C2 -- the link is below.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Bargains:  https://www.collective2.com/details/95793176

Greenfield Dividends: https://www.collective2.com/details/94780986

Greenfield Leaders: https://www.collective2.com/details/94921209

Greenfield Low Beta:  https://www.collective2.com/details/95702992

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As with all my ramblings, 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

Weekend Update Video - Oct 18 2015

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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.

Here's an updated video for your review:

This is the first one I've linked into my blog, so if you have trouble viewing, please post a comment below with what challenges you're having.

Regards,

Paul

Transition To Cash, Friday, Sep 25 Close

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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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With the close of markets on Friday, September 25th, my models are confirming a transition back to a 100% cash target.

Click on the image to enlarge.

The movement of the left side of the table to all-negative slopes is indicative of retesting former bottoms and indicates that I need to move to the sidelines.  We could either have a higher low, an equal low, or a lower low, so it's not worth jumping in here to ride the next wave upward.

The fact that the longest slopes (88d and 143d) never transitioned to positive/green status, as shown on the left side of the table, is indicative that risk is high and that we should not be committing monies at this time, at least not in any great sums.

Cash is king in this uncertain market.

The right side of the table is been giving me some warning of the decline -- the red is indicating that the acceleration has been decreasing (deceleration has been increasing) and this means that as a whole, the basket of GGT stocks is under great pressure.

Friday *did* show that the 2d and 3d accelerations (slope of the slope) did turn positive.  Could be noise, could be a signal of the bottom (doubt it), so this coming week will be interesting.

My other primary indicator, the Cumulative Tick, is on the fence:

Click on the image to enlarge.

The top trace shows that 52-week new lows are still outpacing 52-week new highs; this is not a buyer's market at this time.  I want to buy strength, and this is not a strong market.

The middle trace shows that the bias upward on Friday for buying was met by strong, sustained selling from about 2;10 p/ET to 3:20 p/ET, then the markets coasted from there.  The interpretation is that the markets simply went into "risk off" mode prior to the weekend.

The bottom trace is the cumulative tick and it shows that we have a slight downward bias to the markets (net selling but not strong), and that we could move either direction (horizontal movement, tight moving average ribbons, white (instantaneous) trace close to the red (longest moving average) trace).

Caution is advised.

Strategy

A large number of stocks transitioned to "cash" with the updates this weekend so I'm unloading those Monday morning with a 1% trailing stop loss, GTC, effective after 9:45 a.m.

I'm unloading everything in my Bargains, Low Beta, and Leader's portfolios using the 1% TSL.  This is due to the confirmation of the move to 100% cash signal.

The Dividend portfolio will sell positions that are indicated CASH but will not move into positions until the LCR acceleration (slope of the slope) improves.  Hence, the Dividend portfolio will raise some cash through the sell of equities that trigger the TSL.

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Here's how to find me:

Stocktwits/Twitter:  grems8544

Greenfield Bargains:  https://www.collective2.com/details/95793176
Greenfield Dividends: https://www.collective2.com/details/94780986
Greenfield Leaders: https://www.collective2.com/details/94921209
Greenfield Low Beta:  https://www.collective2.com/details/95702992

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As with all my ramblings, 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