...and We Keep Marching to the Long Side ...

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Despite the pullback in the major indices yesterday, as a whole, we advanced.  According to FinViz:

• 3679 Advancing (55.1%), 2509 Declining (37.6%)
• 168 New Highs (81.2%), 39 New Lows (18.8%)
• 1747 Above 50 SMA (26.3%), 4884 Below 50 SMA (73.7%)
• 3485 Above 200 SMA (52.5%), 3153 Below 200 SMA (47.5%)

My GGT Summary dashboard indicates the following:

As with all my charts, right-click on it to view in another tab or save to disk.

A few observations:

• Volume (3rd column) is very low -- we've had four consecutive days of 0 change off the 50d MA Volume or below.  This is clearly a period of consolidation and the big boys are not playing.  Caution is advised.
• The Long-Cash Ratio (LCR, 4th column) is advancing, and is now at 0.336.  Compared to the 6/8 low of 0.136 this is a significant advance and is bullish in the short term.
• The LCR is still well below 1.0.  While 1.0 isn't magical, it does represent the point where more stocks are "LONG" compared to those with a "CASH" ranking.  We have far more stocks with a CASH ranking, and this is longer-term bearish.
• The database "GGT Strength Index" (6th column) is now at 0.690, which is short-term bullish.  Once we cross the less-than-scientific value of about 0.7 we've noted in the past that the chance of a short-term pullback increases dramatically.
• The GGT LCR Change Timer (fast, columns 7 and 8), is clearly pointing to the long side.
• Elder's Force Index on the GGT database is
  1) LONG on 13d Force Index (column 7) -- get your LONG stock lists ready
  2) LONG on 13d Force Index Slope (column 8) -- bullish
  3) CAUTIONARY on 2d Force Index, because it is too positive.  Suggests that you wait for a pullback before entering stocks
  4) LONG on 13d EMA pricing slope
  5) LONG on 34d EMA pricing slope; together with 13d, these two are "go for throttle-up" on the long side, as indicated in column 15 "Aggressive Elder Signal"
  6) CAUTIONARY on the "Conservative Elder Signal", because the 13d EMA is NOT above the 34d EMA.  We are very, very early in this new bull, if it materializes.
• Only the 8d Pricing EMA is above the 13d Pricing EMA -- all the others are inverted.  Again, we are very, very early in this new bull, and my suggestion is NOT to commit a great number of long positions at this time.
• Only the 8d LCR EMA is above the 13d LCR EMA -- all the others are inverted.  Same comment as above.
• The slopes of the pricing EMAs are all pointing upward, which is necessary (but not sufficient) for a sustained bull.  

Summary:  Caution is advised, as we are clearly in tide-changing waters.  We have some bullish indicators, but we also have remnants of the bears that are still hanging on.  I intend to wait and see today, with no major transactions planned.

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Remember, you are responsible for your own investment decisions, not me.  Please do your own homework.

Regards,

pgd

GGT LCR Change Timer (fast) Signals; Elder also Signals

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I'm sorry for the delay in posting.  With travel back from Denver on Friday, combined with having my butt kicked in a half-Ironman triathlon this past weekend, time has been short.  I got home late last night (Sunday) and had no energy to review this content.

To start, here's the updated dashboard; as with all my charts, right-mouse click to view in another tab or to save to disk:

If you really take a close look at this chart you'll see that Wednesday's volume was 0% changed over the 50d MA of volume, Thursday's was -15% below the 50d, and Friday's was -25% below the 50d MA.  Rising prices on lower volume is not a good sign for a sustained bull.  When I look back in the history of GGT, new bull legs have never been characterized by falling volume -- so I think we need to be cautious.  If any of you are interested in the chart above back to the beginning of GGT time let me know and I'll send it to you.

The 4th column from the left is the Long-Cash Ratio (LCR), and you can see that it is still "red".  The color is artificial, in that it is red if it is below 1.0 and green if it is above.  It is important to note that we have had two consecutive days of increasing numbers of "LONG" rated stocks in the database, hence the LCR is climbing.  This is necessary for a bull to start so this could be considered bullish.

The 6th column from the left is the GGT Database Strength.  We've see it jump from 0.168 on Wednesday to 0.621 on Friday, and it indicates that we're starting to move into bullish territory.  Again, values above a less-than-scientific value of 0.7 are considered bullish.

As indicated by the heading of this entry, the LCR Change Timer (fast) has signaled a move to LONG, which is shown in columns 7 and 8.  I will close my contra positions that are based on this timer with a 1% Trailing Stop Loss (TSL), all of them for a loss.

Elder's 13d MA Force Index on the GGT price/volume series is clearly positive.  THE SLOPES OF THE 13d MA and 34d MA ARE UPWARD, which is bullish.  For the more aggressive, conclude here that Elder has signaled re-entry into long positions at this time.  I will close my contra positions that are based on this timer with a 1% TSL, all for a nice, healthy profit.  I will also purchase 2x leveraged ETFs today across the major indices if they continue to show strength (e.g., clear Friday's highs).  If you are more conservative, note that the 13d MA is < 34d MA (but both are in an uptrend).  This is a confirmation signal, and right now it is still bearish.

The last time the Pricing EMAs were inverted (55d > 34d > 21d > 13d) and this pattern reversed was the bull that started in March 2009.  Look at the chart above, specifically the group "Pricing EMAs" and the column labeled "34d > 55d Pricing EMA".  As you can see we are presently bearish in the 13/21, 21/34, and 34/55 EMAs, with ONLY the 8d>13d.  We are early, very early here folks, and risk is very high.  Here is a snapshot of the March 2009 period, as a reference:

As another point of reference, also note for March 2009 Bull:

1. LCR did not move above 1.0 until 3/19/09
2. Elder FI signaled "Bull" on 3/17/09, whipsawed, then re-signaled on 3/23/09.  We received confirmation of the bull on 3/26/09.
3. Pricing EMAs did not start their proper bull alignment (8d>13d>21d>34d>55d) until 3/12/09.  The 13/21 pair aligned on 3/23.  The 21/34 pair aligned on 4/2.  It took until 4/27/09 before the 34/55 pair aligned.

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Watch for a close of 1107 on the S&P500 -- this is the 200d MA, and we've tested and failed several times in the last couple of weeks.

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Remember, you are responsible for your own investment decisions.

Regards,

pgd

Elder 13d Force Index Signaled Positive

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Here's today's status chart:

Look across the bottom line in the chart, almost above this text -- the 13d Elder Force Index has moved positive.  THIS IS NOT A LONG RECOMMENDATION, but rather, is a necessary condition for us to move back into the long side of the market.  This being said, I want to highlight the negative side of this point in time, all through the GGT lens:

1. The Long-Cash Ratio (LCR) is at 0.172, an incredibly low number, which is bearish.
2. The LCR Change Timer is oscillating back and forth, and is still in a CASH status
3. Although the 8d Price EMA has just signaled bullish (it is above the 13d EMA), all the remaining EMAs are inverted.
4. All the LCR EMAs are inverted (8d < 13d < 21d < 34d < 55d).  The markets have been heading lower, and until we see continued increases in the LCR, this condition will remain.

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I'm returning from Denver today so I am not sure if I'll get a chance to play in the market.  While selling into a rally may be a loss of long positions at the "bottom", until we see sustained strength, holding substantial long positions at this point in time is very risky.  The markets have clearly been in a down draft, and until I see more green on the chart above, I still am favoring entering contra positions on large rally days.

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Remember, you are responsible for your own trading decisions, not me.  Please do your own homework.

Regards,

pgd

Return of Large Cap Dominance?

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I'm not advocating a move to long positions -- hardly.

What I note with interest is that large cap stocks are performing better than small caps in the present market climate, and in a macro-sense, they represent a safer haven than small caps.  Here's a chart for your consideration:

The graph above is constructed using a function within HGSI which allows you to compare two series of numbers -- in this case, Large Cap stocks as represented by the Russell 1000 (IWB) in the numerator, and Small Cap stocks as represented by Russell 2000 (IWM) in the denominator.  When you divide the two you get the choppy line; when you smooth it using a 34d SMA you get the indicated trend line.

The indicated trend line shows a reversal in slope -- it is now pointing upward.  This indicates that large caps are dominating, and when/if I move into the market, I'll start looking at large cap strategies.

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Here is an update on the status of the GGT system, given in a different format.  Please let me know if this is useful by leaving a comment below.  As with all my graphs, right-click on the graph to view in another window or save to disk:

Lots of red.  Tread carefully right now.

Note that database strength increased slightly yesterday, but the LCR continues to fall.  The LCR Change Timer is still in CASH.  Elder's Force Index Timer is still in CASH.  This information is presented above -- make sure you see where this is indicated.

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Remember, you are responsible for your own investment decisions, not me.  Do your homework.

Regards,

pgd

Price Rises, LCR Falls, Elder Force Index Changing?

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Status: 

• LCR Change Timer: The LCR Change Timer transitioned to CASH-LONG (0) from CASH (-1), but did so on a very narrow margin. 
• GGT Price EMAs are bearish. All but the 65d EMA are below their faster values, e.g., 55d > 34d > 21d > 13d > 8d. Statement is true as of morning of 6/9/10.
• GGT Price ($22.92) is trading BELOW the 8d EMA ($23.66), which is bearish since all of the EMAs are inverted.
• GGT Price ROCs are negative, which is bearish.
• Slope of 65d EMA of GGT Price is negative (bearish).
• GGT Volume was +5% higher than the 50d MA, but this is within a normal distribution (neutral).
• Elder's 13d Force Index on the GGT Price continues negative (bearish) @ (384K) but is nearing a transition to the positive side, which would be bullish.  Note that the 13 and 34d MAs are still very downward-pointing, which is bearish.  We need to watch this (see figure below).
• GGT Long-Cash Ratio (LCR) fell from 0.139 to 0.136, which is short-term bearish.
• GGT LCR EMAs are all inverted (13 < 21 < 34 < 55), which is longer-term bearish.
• GGT LCR ROCs are all negative (bearish) and are pointing downward (bearish).
• GGT Strength Index rose from 0.04 to 0.16, which could be indicative of a short-term bounce.
• GGT Equity Curve, based on the LCR Change Timer, dropped -0.4% with Tuesday's action.

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Here is an interesting chart on the Elder 13d Force Index, applied to GGT stocks:

 

Note the solid black line -- heading upward, nearly ready to pierce the 0-line and move into positive territory.  You can see that when this is positive the GGT Price Index tends to move upward, which means we're making money. 

 

My recommendation is that you start applying Elder's 13d Force Index measurement to your favorite stocks to see where they fall.

 

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This next graph is of the BRIC stocks which I created using FinViz and ADR.com:

 

Note the black line in the 65d EMA Slope window, which is the 21d EMA of the slope of the 65d EMA on all the BRIC stock prices.  Thinkabout that and make sure you understand it, because it is an important indicator that does not get much attention.

We see that the black line is starting to trend upward -- this is usually an inflection point.  Note the scale -- it is below 0 so ALL the BRIC stocks are losing ground when measured on a 65-day lens, but more importantly, with it pointing up, we are bleeding less fast.  The green line in that same window is the 13d EMA of the same, and we see that it too is pointing upward.  I take that as another bullish sign for BRIC stocks.

Risks with BRICs are the normal ones: 

• 50d MA < 200d MA (solid red line below solid blue line in price window),
• the slope of the 200d MA is horizontal, not upward
• aggregate prices well below 50d and 200d MAs, which is usually considered bearish

As an exercise left to the reader (grin), take a look at the constituent stocks in the BRIC countries.  First, start country-by-country (Brazil, Russia, India, China), and look for the same pattern above (21d line turning upward).  Then look for emerging stocks where you see this happening on a per-country basis.

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Setups for Wednesday.

I'm in Denver, so I cannot watch the markets while they are open.  If we have strength today it could be a good chance to add to contra positions.

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Remember, you are responsible for your own trading decisions, not me.  Please do your homework.

Regards,

pgd

LCR Change Timer Signals MOVE TO CASH for 6/8

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Status:

• LCR Change Timer:  As anticipated at the FinViz site, Monday's action resulted in the timer moving to CASH (-1).  I am closing all long positions associated with this timer using a 1% trailing stop loss (TSL).  Unfortunately, they will all be for a loss, but we must live to fight another day.
• GGT Price EMAs are bearish again.  All but the 65d EMA are below their faster values, e.g., 55d > 34d > 21d > 13d > 8d.  Statement is true as of morning of 6/8/10.
• GGT Price ($22.83) is trading BELOW the 8d EMA ($23.70), which is bearish since all of the EMAs are inverted.  Note that the GGT price has penetrated the Fib 23.6% retracement, and the new support would be $20.89.
• GGT Price ROCs all turned down with Friday's action, which is bearish.  All are negative, which further nails the coffin shut.
• Slope of 65d EMA of GGT Price is negative (bearish) and pointing downward (bearish).  This is the wrong direction.
• GGT Volume was -7% lower than the 50d MA, but this is within a normal distribution (neutral).  We are seeing less participation in the market, which I consider bearish.
• Elder's 13d Force Index on the GGT Price continues negative (bearish) @ (470K) but is holding this relative level, which I consider mildly bullish.  We'll see.
• GGT Long-Cash Ratio (LCR) fell from 0.210 to 0.139, which is short-term bearish.  It has dropped below it's 4d SMA, which I consider bearish.  
• GGT LCR EMAs are all inverted (13 < 21 < 34 < 55) and with Friday's action, are all pointing downward.  
• GGT LCR ROCs are all negative (bearish) and are pointing downward (bearish).
• GGT Strength Index dropped dramatically from 0.19 to 0.04, which is the 2nd lowest value since July of last year.  We can't get much lower than this, so we favor a bounce from here.
• GGT Equity Curve based on the LCR Change Timer dropped -1.8% with Monday's action.

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I plan to enter contra ETFs today, and will watch for a bottoming in their prices using the MACD.  My index contras that I will play are TWM, QID, DXD, SDS, and MZZ.  Sell longs into this rally.

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Remember, you are responsible for your own trading decisions, not me.  Please do your own work.

Regards,

pgd

GGT Weekend Update, Posted early Monday 6/7

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Status:

• LCR Change Timer:  Signaled long on 5/27, remains long as of 6/4 close, but has transitioned to LONG-CASH (0).  If Monday is a DOWN day as far as the GGT database is concerned (watch FinViz ADV/DEC) then this timer will transition to CASH (-1).
• GGT Price EMAs are bearish again.  All but the 65d EMA are below their faster values, e.g., 55d > 34d > 21d > 13d > 8d.
• GGT Price ($23.27) is trading BELOW the 8d EMA ($23.88), which is bearish since all of the EMAs are inverted.
• GGT Price ROCs all turned down with Friday's action, which is bearish.  All are negative, which further nails the coffin shut.
• Slope of 65d EMA of GGT Price is negative (bearish) and reversed, now pointing downward (bearish).  This is the wrong direction.
• GGT Volume was +2% higher the 50d MA, but this is within a normal distribution (neutral).  We are seeing less participation in the market, which I consider bearish.
• Elder's 13d Force Index on the GGT Price continues negative (bearish) @ (471K) but is holding this relative level, which I consider mildly bullish.  We'll see.
• GGT Long-Cash Ratio (LCR) fell from 0.291 to 0.210, which is short-term bearish.  It has dropped below it's 4d SMA, which I consider bearish.  We need a strong up day or this trend will continue.
• GGT LCR EMAs are all inverted (13 < 21 < 34 < 55) and with Friday's action, are all pointing downward.  The database is struggling on the long side.
• GGT LCR ROCs are all negative (bearish) and are pointing downward.  This is problematic.
• GGT Strength Index dropped dramatically from 0.57 to 0.19, and is below my less-than-scientific 0.2 threshold.  When we are this low the market favors a bounce upward on a short-term scale.
• GGT Equity Curve based on the LCR Change Timer dropped dramatically from $2.5080 to $2.4017 with Friday's action.  The day-of-the-signal (5/27) value was $2.4812 as a point of reference, so we're down about 3.2%.  This is in the 3rd standard deviation of daily movements, which means that it is very uncommon (but obviously can occur).  Stay the course on the short-duration side.

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Let's take a look at the GGT Universe of stocks through the lens of HGSI.  I like HGSI because it allows you to create specific charts using any list you desire to put together.  As with all my charts, click on the image for a larger view:

Reminder:  The GGT database of stocks is constructed such that I only pick:

• stocks above $1
• stocks on the three major exchanges
• stocks with at least 100K 50d MA volume

Some obvious things are apparent with the graph above:

1. Elder's 13d SMA on the Force Index is NEGATIVE.  We are in a down-trend.
2. Directional Movement for the database is at 34.  I like values above 40, so we're somewhat indecisive --> risk is higher at the present time
3. Wilder's RSI(14) is at 41.  I prefer entry into longs below 20 or 25.  Conversely, I prefer entry into contras above 75 or 80.  We're not in any position to go either way as of the open on Monday.
4. The Money Flow Index(28) is at 35.  Values below 20 are preferred, so again, we're drifting without a good wind to fill our sails.

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Setups for Monday, June 7th

I am still holding LONG ETFs in UWM, DDM, and SSO, in accordance with the GGT LCR Change Timer status (presently Long-Cash = 0).  My profit targets seem out of reach right now, but we'll see.  I believe the timer, and will stay the course.

I am holding DUG per Drew's StockOwl recommendation, and will not change this today.

I will not add to my contra positions, per items 2-4 above.

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Remember, you are responsible for your own trading decisions, not me.  Please do your own diligence.

Regards,

pgd