Elder Timer Confirms Long, Short-Term Timer Moves Long

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Summary

• The GGT Long-Cash Ratio continues to thaw -- we now have the slopes of the 5d - 34d EMAs on the LCR all pointing upward.  This is the first time that this has occurred since November 4th and can be considered bullish.  I'll call a full bull when the 55d and/or 65d slopes also turn green, which may happen within the next week. 
• The 5d EMA of the LCR has now crossed above the 8d EMA of the LCR.  Again, this tells us where we have been, not where we are going, but the action is bullish and is a necessary step in proper alignment of the EMAs ( we want 5d > 8d > 13d > 21d ...  which we don't have right now ....).  The "so what" here is that the sustainability of this next leg will be confirmed once all these EMAs are properly aligned; until they do so, we should be more short-term focused.
• The Long-Cash Ratio has jumped from 0.762 to 1.554 in three days.  This is an incredibly fast move in the LCR to the upside and shows broad participation in the pricing moves that are supported by volume.
• The GGT Price Index moved upward again another 1.18% on volume that is 11% above the 50d MA of volume.  This now is a three-day sequence of higher prices on higher volume, which is certainly bullish for the intermediate term, and potentially suggests an overbought condition on the short-term.
• The Elder Intermediate-Termed Timer has signaled long using both methods.  We should now start selecting purchasing equities using this method.
• The Short-Term LCR Change Timer has confirmed a move back to the LONG side.  Because this timer never reset, I will not chase and will not enter today.
• %B is overbought at 1.08, and suggests that we should wait for entry now for a pullback.

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General Comments

Three solid days of gains, the jobs report, and the day of the week (Friday) make me nervous about jumping into the market with both feet today.  I think that selective entry of stocks with lower %B (a rising tide raises all boats) with controlled positions sizes will be okay, but I am erring on the side that we should use a pullback to massively enter new positions.

If we look for the following combination:

• GGT New Longs
• Elder Force Index 13d > 0
• Elder Force Index 2d < 0

The list returns ZERO results.  We are overbought.  TODAY is not the day to enter intermediate-termed GGT positions.

I simply think it prudent to wait for a bit of a pullback before entering.  At least we now have a green light to enter.  Patience is generally rewarded -- chasing is generally punished.  I must keep reminding myself of this.

THIS BEING SAID, I like to watch good candidates, just to prove that I can still pick stocks that are appreciating.  Here's my list for today:

HD

MI
RF
GLW
WY
LXK
WYN
SD
DE
RYAAY
PAY
ORCL
ARUN
PFE
CBS
PSA
EBR
ADM


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Trading Plan for Friday

I intend to sit passively on the sidelines for most of the day, but may enter the positions above with a 20% position if they pullback then resume an upward movement.

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

Regards,

pgd

Short Term Timer still Long-Cash, Elder timer still CASH

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Summary

• SOME slopes of the Long-Cash Ratio (LCR) EMAs have started to point upward.  Specifically, the 5d, 8d, and 13d slopes are pointing upward.  All the longer slopes are pointing downward.  So for short-termed behavior, the selection of stocks to choose from is expanding, so we are bullish, and for longer-termed behavior the database is contracting, so we are still bearish.  I'm looking for a "row of green", which means that all of the slopes, 5d through 65d, are pointing upward.  We're only 1/2-way there, so according to the slopes of the LCR EMAs, we should err on the side of caution.
• ALL of the LCR EMAs are still negative.  This simply tells us where we are, not where we are going.  The universe of stocks has been contracting for a considerable time and this set of negative values simply tells us that "yes, risk is higher". 
• The talking heads have said that volume the last two days has been low.  I disagree.  Compared to the 50d MA of volume, the last two days have seen a 16% increase over the 50d MA (Tuesday) and +7% increase on Wednesday.  This rising prices on rising volume is bullish, and I'm encouraged.
• ALL of the pricing EMAs, through the 55d, are positive and properly aligned.  Again, this simply tells us where we have been, not where we are going.  Prices have been increasing, and this is bullish.
• ALL of the slopes of the pricing EMAs are pointing upward.  We put prices in the bank, so this means that our equity values should be increasing.  The obvious problem is that these pricing gains are coming on a tremendously smaller database of longs, so bullish selection of stocks has been difficult.  Nevertheless, the bear ice is thawed from where we are today, so risk is coming off the table.
• The short-term LCR timer is still in LONG-CASH mode, and if today is an up day according to the market's advance/decline line, we should see the timer move back to LONG.  I'm not going to chase this signal, as I prefer to only move into stocks when this transitions after resetting from CASH, which it has not done.  I personally would wait until tomorrow for interpretation and sit this out today.
• The intermediate-term Elder timer is still in CASH, although it depends upon what method we use to make that determination.  If we use a simple moving average (take 13 values, add them up, then divide by 13), then Elder is in cash because this value is negative.  If we take 13 values, apply an "exponential moving average" (weight yesterday heavier than 13 days ago), then Elder is positive.  Until these confirm each other I'd be cautious.  Confirmation may come as early as the close of today's action if today is an up day.
• The GGT universe %B value is 0.9351, which is high.  The likelihood of a pullback has increased, so we may see a good opportunity to jump in here.

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Top 25 Stocks

Being Thursday, I'm obligated to determine the new list of stocks and ETFs for the next week.  Recall that this portfolio is invested 100% of the time, between 65% full investment to 100% investment.

Here is the top 25 stock list:

PCLN

CMG
CEO
AZO
NFLX
CME
MTD
AMZN
RL
CKH
FFIV
MIDD
FCX
NOV
DRQ
BIDU
SLB
ETN
DECK
LVS
CSTR
MEE
NEU
NFG
TIF

Unchanged in position are (maintaining strength):

PCLN
CMG
RL

New additions to the list that were not in the top 100 last week (new because they have moved into a New Long/Affirmed Long/Long status within the last week):

CEO
CME
MTD
MIDD
SLB
LVS
NEU

Stocks that have risen in position (increasing strength):

CKH
FFIV
DECK
CSTR
TIF

Stocks that have fallen in position (increasing weakness):

AZO
NFLX
AMZN
FCX
NOV
DRQ
BIDU
ETN
MEE
NFG

Since inception on 10/28, the Top 25 stock portfolio is up 1.44%.    Since last week (11/26 start), the portfolio has increased 1.38%.  The worse maximum drawdown since inception is 5.28%.

Sell list (gain/loss since introduction)

ABV (-2.47%)
FOSL (+13.77%)
IBM (+0.24%)
MGA (+3.36%)
PH (+4.57%)
PXD (+7.90%)
UFS (-0.88%)
WLL (+5.10%)

Buy list:

CEO
CME
CSTR
LVS
MTD
NEU
SLB
TIF

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Top 25 ETFs

There has been a large rotation in the ETFs; here is the new top 25 list:

AGQ
TQQQ
OIH
TNA
ERX
SOXL
PALL
MDY
SGG
SOXX
BGU
IJK
USD
RFG
TYH
MVV
IWO
IEZ
DIG
MWJ
VBK
XLE
UYM
IYT
IJT

New additions to the list that were not in the top 100 last week (new because they have moved into a New Long/Affirmed Long/Long status within the last week):


TQQQ
OIH
TNA
ERX
PALL
MDY
SGG
SOXX
BGU
TYH
DIG
MWJ

ETFs that have risen in position (increasing strength):


NONE.

ETFs that have fallen in position (increasing weakness):

SOXL
IJK
USD
RFG
MVV
IWO
IEZ
VBK
XLE
UYM
IYT
IJT

Sells (gain/loss for the week):
EWW (+1.29%)
GLD (+2.20%)
IJR (+0.83%)
IWR (+1.13%)
RTH (+1.42%)
SSO (+2.23%)
UPRO (+3.74%)
VB (+0.86%)
VBR (+0.85%)
XME (+3.89%)
XOP (+2.0%)
XRT (+0.65%)

New Buys:

BGU
DIG
ERX
IWR
MDY
MWJ
OIH
PALL
SGG
SOXX
TNA
TQQQ
TYH
===============

Trading Plan for Thursday

I'm in cash across the board, having locked in some gains yesterday.  I'm also in meetings all day, so I'll not be participating in the markets.  I will update the Top 25 Stock and ETF portfolios, which do buy/sell at market when entered.

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

Regards,

pgd

Short Term Conditions Improving, Mid-Term Ugly, Longer-Term Subject to Interpretation ...

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Summary

• The slope of the 5d EMA on the LCR has moved positive, the first time since 11/9/10.  This is a necessary requirement if we're to see any form of sustained bull leg (and not just trending).  All the other LCR slopes remain pointing downward, which is still bearish on those time frames.
• Despite the ADV/DEC line at http://www.finviz.com showing favoritism to the bears, the LCR actually moved upward +13%.  This shows internal strength within the database that is deeper than just price action, and is bullish.
• Because the LCR did not drop, the Short Term LCR Change Timer remains in Long-Cash (0).  Today's action is a pivot point -- if it is a strong drop the timer will move to CASH (-1), if it is a weak drop today will remain in the present state.  If today is a strong day it will move back to LONG (+1), else if it is a weak increase today it will remain in its present state.  Implications are simply that if we want to move back into IWM, UWM, QLD, UYG, VTI. or TNA on a short-term basis the option is open to us if the markets move higher
• The Intermediate-Term Elder Force Index timer is still in CASH if we use a simple-moving average (SMA) calculation method.  Contrasting, if we use an exponential-moving average (EMA), the timer is LONG.  Since we're not confirming we're on the fence post and we can invest either way.
• In terms of pricing, every EMA slope less than the 21d is still pointing downward.  This isn't bullish, and indicates that we need more bull action in terms of prices in order to move upward.

Given the above, my bias is slightly bullish, but we're too early to declare a breakout of the rangebound markets that we are in.

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The LCR

As with all my images, right-click on it to open in a different tab or window.

On the left, the Long-Cash Ratio, which measures the performance of the universe with respect to price, volume, and rates of change, moved upward +13% on Monday.  This is bullish and indicates that there is internal strength in terms of price, volume, and/or pricing rates of change.

Next, we have the raw LCR value.  When this is getting negative on the time frames indicated, life is bearish.  Since they are all red life is bearish.  What causes them to be bearish is that despite the 1-day change in the LCR value above (+13% on Monday), overall, on the time frames indicated, the database is contracting day-over-day.  This is bearish.

In the middle of the figure we have the "slopes of EMAs".  "Rise over run" is the way to think about this.  If you take the various EMAs and plot them, look at the direction they point.  If they point up, the middle part of the figure is green.  If they point down the middle part of the figure is red.  With the exception of the 5d slope, everything is red.  This is bearish.  Until these start turning green (pointing up) the LCR EMAs on the left will continue to indicate red.  This too is bearish.

The fact that the slope of the 5d EMA has now pointed upward is bullish, but just barely.  We need the entire row to be green; right now it simply says that on a 5-day interval (but less than 8d, mind you) the database is starting to reverse the decline.  This is good, but early.

The right side of the figure shows the "slopes of the slopes".  This is hard to picture, so Ken Phillips has a way to describe it ...  if we have a car which is driving forward (middle part of graph green) or backward (middle part of graph red), the right side indicates if we are slowing in a given direction (foot on brake) or accelerating in a direction (foot on gas).  Since the middle part of the graph is red, we're driving backward.  Since the corresponding right part of the graph is green across the board, our foot is on the brake -- e.g., we are going less-negative day-over-day, which is necessary for the middle part of the graph to turn green.  So, since we've had three days of "green" on the right portion of the graph, we're working hard at turning the middle portion of the graph green (but it hasn't happened yet).  The bears are winning, but the bulls are getting stronger...

Conclusion:  life is really early to declare moving aggressively into the long side of the market.  The database is starting to expand on a 5-day window, but longer time frames are still bearish.  Hence, caution is advised.

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The Prices

Prices actually fell in our world -0.19% on volume that was -17% below the 50d average volume.  This is not too worrisome, but certainly, is NOT a confirmation day of a bull, so don't bet the farm long just yet.  We *really* need to see a banner day on large volume, and until we do, risk is high.

The layout is exactly in the same order as the LCR presentation above.  Here, pricing is still very bullish, with all but the 8d above the 13d (e.g., the 13d *IS* above the 21d EMA, the 21d EMA > 34d, and the 34d > 55d).  This simply tells us where we are, not where we are going, so don't read too much into the green.

The middle portion of the graph shows that the slopes of the 5d through the 21d EMA on prices are pointing down.  You should interpret this as bearish.  The only saving grace here is that the 34d and the 55d are pointing upward, which is bullish.  SO, on longer, intermediate-termed scales, we are still in a bull market.  This is important.

Lastly, the stuff on the right side is the "slope of the slope", or which direction is the price car driving.  The answer is simply "it depends on what length the car is".  We see some cracks in the bear ice on the 5d and 8d periods, but anything longer than 8d is bearish.   SO, we are REALLY at mixed  points in the market, and things are out of sync:

• As shown in the middle, the 5d slope and 8d slope are bearish, e.g., they are pointing down.  "The 5d/8d car is driving backwards".  On the right side we see that the change in slope is positive:  "The car is driving backwards but our foot is on the brake -- we'll be stopping the bleeding soon and will be driving forward shortly".  This is bullish on short time frames.
• As shown in the middle for the 13d and 21d slopes, they too are bearish:  "The car is driving backwards".  Furthermore, as evidenced by the right side of the graph, the 13d and 21d slope of the slopes is DOWN, negative, bearish, whatever:  "the car is driving backwards and our foot is on the accelerator -- we're driving backwards faster on the 13d and 21d time scales".  This is bearish on these time frames.  Yuck.
• Finally, as shown in the middle, the slopes are positive for the past 34d and 55d windows.  This is good and is to be considered bullish:  "the car is driving forward".  The problem here is that the right side of the figure shows that the slope of the slope is negative for each of these periods:  "the car is driving forward but our foot is on the brake -- if this continues, we'll be stopping".  Obviously, an ominous cloud on the horizon.

I really like all green bars ... that's a "Discovery, you're a go for throttle up".  Right now we don't have this, so the only interpretation is that we should be careful.

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Money Flow

Pascal Willain runs a paid site called Effective Volume (http://www.effectivevolume.eu).  Pick up a subscription and dig around; the concepts are intriguing.  One of the charts he presents there is as follows:

You can see that although we're not in a raging bull in terms of money flow by his indicators, money is tricking into the market as opposed to net out flow.  If you look at this in context of the time frames I presented above in the LCR and Pricing analysis, you can see that it all makes sense -- on the 5d and 8d windows, the slopes of the 20d Money Flow Strength has been positive, hence why we're seeing some underlying strength.  It all correlates on a shorter time scale in terms of bullishness, and it correlates well in terms of net outflow if you look at longer time frames (13d, 21d, 34d, 55d).

Simply some independent validation to the LCR and pricing charts ....  :)

Overall, on a short-time frame, we're just starting to emerge from a bearish period.  We are early, very early. Risk is high for a reversal at this point.  We need up days to be stronger than down days.  We need up days with confirming volume.  Until we see such behavior the risk takers can make their money -- I'm content to wait and do surgical strikes...

==========================

The Timers

As you can see above, the Short Term Timer is still with a value of 0.  An up day as far as the LCR will cause it (most likely) to stay at this value, and a strong up day will cause it to move back LONG.  The converse is true too, so we'll have to wait and see.

The GGT equity curve fell slightly on Monday, as did the VTI equity curve.  Nothing we can do there, but I will say we exited with small profits last week from this system, and I'm reluctant to chase it back long if it moves in that direction.  We'll see...

On the right side we have the Elder timer system.  Using simple moving average methods, the timer is in CASH.  Below is a presentation from HGSI that I built that shows a conflicting Elder condition:

The graph above is of the GGT universe, viewed through the HGSI Elder lens.  Bottom line is that the top ribbon bar calculates the Elder timer state using the EMA method (showing bullish), and the middle ribbon calculates the Elder timer state using the SMA method (showing bearish).  GGT uses the SMA method, so the system is bearish.

Slopes for the GGT universe (about the middle of the figure) are flat but positive (the car is driving forward at a constant speed, our foot is neither on the gas nor is it on the brake).  STUDY the HGSI graph and ask questions if you don't understand what you are seeing -- the most important aspect above is that prices are flat.  

I like moving long when prices are in an uptrend, not when they are flat.  I like moving long when the Elder system confirms on both methods -- they are not confirming.  I like moving long when the slopes of the 13d and 34d EMAs are positive (they are) and are pointing upward (they are not).

Risky business indeed.

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Trading Plan for Tuesday

Surgical strikes.  I'll look at Elder and Contra Elder candidates, and if they look good in terms of price and Effective Volume cash inflow I'll place a limited order. 

I'm traveling for the rest of the week starting today around noon and will back Saturday morning (I hate red eyes from LA, but it is what it is).  Blog updates will be thinner the rest of the week.

Post your questions and comments below or in the GGT forum.

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

Regards,

pgd

ST Timer may move to CASH, Elder is in CASH, LCR Bearish, and EFU meets Entry Criteria

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It's 8 a.m. Monday morning and I've been watching the futures react to the Irish bailout.  Futures were up last evening, but the dollar was up more (Euro down almost 1%), so talk about a divergence!  Now, futures just slipped underwater and are down across the board, the dollar is up (Euro down), but now the metals are moving underwater ...

Treacherous times indeed...

Just a reminder -- I'm traveling this week starting Tuesday, and will not be back until Saturday morning.  Blog entries will be short and sweet (which may be an improvement?).

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Summary

• The Long-Cash Ratio (LCR) remains incredibly bearish and consolidated
• The Pricing system is more bullish, but definitely has cracks in the ice in terms of sustainability
• The Short-Term LCR Change Timer is still on the fence, and a down day today will most likely cause it to move to CASH.  Aside from one QLD position, I'm in cash under this timer.
• Elder's Force Index timer is in CASH.

=================

MSCI EAFE

I run another GGT strategy for Thrift-Savings Plan peeps (http://ggt-tsp.blogspot.com), and one of the funds there, the MSCI Europe Asia Far-East (EAFE) fund just confirmed a sell signal in the WEEKLY window.  This tells me that the EAFE is getting slammed, and I need to review it in terms of a contra position.

If you look at EFZ (-1x contra, non-leveraged) and EFU (-2x contra, leveraged), you'll see that indeed, they are looking good for long entry under the Elder system.  Here's the chart:

Here's the bull argument:

• Both Bull AND Bear Power are positive, with Bull Power larger in magnitude than Bear Power.  
• Both methods of calculating the Force Index (exponential moving average - EMA - and simple moving average - SMA -- are both positive (green).
• The 2d Force Index is green, signaling entry if we continue higher.
• MACD histogram is positive and increasing in magnitude
• MACD and MACD signal lines are pointing upward and are moving from the lower half to the upper half
• Both slopes of the 13d and 34d EMAs are positive
• Both slopes of the 13d and 34 EMAs are pointing upward
• The 8d EMA is above the 13d and 21d EMAs

Here's the bear argument:

• %B is higher than I like for entry @ 0.8.  Still within range, but just on the upper end.
• We are still far below the 160d EMA.  Overall, we are in a confirmed downtrend
• We do not have proper alignment of the EMAs; only the 8d is above the 13d, but these are both below the 34, 40, and 160.  

Although not presented here, if you look at the global "Direxion -3x Bear Index" which I presented at last month's meeting, you'll see that we have a global "ok to enter contra ETF positions".  If you want a view of this let me know and I'll post in a subsequent blog entry.

EFU meets all conditions for entry under the Intermediate-Term Elder Force Index Timer, Contra ETF rules. 

So, rather than take a full position, I'm going to derate this position because of slightly higher risk  I'd like to be able to add more to this position if it confirms on the weekly as well as monthly time frames after we enter, as well as a full alignment of the 8, 13, 21 EMAs, so I'm going to enter with a 40% position.

10-day volume is low -- 41K shares, so this isn't as liquid as I'd like.  This being said, it's trading up in premarket at 8500 shares as I write this, so we've already met today's prorated volume requirement through 10:00 a.m.

I missed a premarket opportunity at $30.59, so we'll see how this behaves today and try to pick it up intraday.  It's going to gap up on the open, so I'll wait for it to relax a tad before entering.  My initial pickup level is at the premarket Volume-Weighted Average Price level of $30.60.

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

Regards,

pgd

Deja Vu: Short Term Timer May Move to Cash, Elder on Fence

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Summary

• It doesn't matter how we cut it, the LCR indicators are all bearish.  The slopes of the LCR EMAs are all pointing down, telling us that we're losing available stocks to select on a day-over-day basis.  It's hard to make a case for the bulls when this is the situation.
• The LCR EMAs are all inverted, which is simply a direct reflection of the status of the slopes (see above).  This action confirms that we should not be substantially long in equities right now.
• Despite the status of the database LCRs, the  slopes of the pricing EMAs are still pointing upward (barely).  Since we bank prices and not slopes, there is hope for a bull from here, so keep practicing getting your shopping list ready ('tis the season, right?).
• The Short Term LCR Change Timer is LONG but is in a LONG-CASH (0) condition.  Any failure of the LCR to be significantly on the side of the advancers today will cause us to sell our short-term positions.
• The Intermediate-Term Elder Force Index Timer is on the fence, really.  From the perspective of the 13d Force Index calculation using EMAs, it is LONG.  From the perspective of the FI(13) calculation using SMAs, it is in CASH.  Hence, either we have a great buying opportunity, or we have a run-for-the-hills scenario.  

DISCLAIMER:  I am holding the following equities:  CHS*, DYP*, FXP*, ROVI (* indicates personal account)

=================

The LCR

Here's the LCR dashboard; as with all my images, right-click on the image to open in a new window:

From all perspectives, the LCR is bearish.  On the left we see that the LCR moved upward 15% on Wednesday, ending the day at 0.809.  This is the only glimmer of bull-light in an otherwise dark playground.

Next from the left are the LCR EMAs.  These are all inverted, e.g., the 5d < 8d, 8d < 13d, 13d < 21d, 21d < 34d, and 34d < 55d.  The database is getting more bearish day-over-day, and picking good stocks from what is left (e.g., bullish) is getting harder to accomplish.

The next group, in the middle of the figure, is the most important group.  This area represents the slope of the EMAs, and while these slopes are pointing downward, we have no hope of a bull emerging.  We absolutely need this middle group to show green to reduce the risk of market entry at this time.

The last group, on the right, represents the "slope of the slopes", or in Ken Phillips' parlance, how fast the car is accelerating one direction or another.  The middle area of the graph represents the direction of the car (forward or backward) and the right area of the graph represents whether it is accelerating in that direction.  Wednesday's action tells us that we are going backwards (LCR dropping), yet our foot tapped the brakes on Wednesday (slowing, as evidenced by green across the board).  

If we get several days of green on the right side of the figure we have a reasonable expectation that the middle of the LCR presentation will start showing us some green.  If we see some green in the middle of the picture, we have a reasonable expectation that the left side will start showing green, which means the bull is here.

We're a long way from a broad bull.

==================

The Prices

Lest you think that the LCRs are all doom and gloom, take a view of the pricing dashboard:

This presentation is much like the LCR presentation in terms of layout.  On Wednesday, the GGT database rose 1.78% on volume that was -24% below average, as expected for the day before a holiday.  Contrasting against the LCR EMAs, the pricing EMAs are properly aligned (5d > 8d, 8d > 13d, 13d > 21d, 21d > 34d, 34d > 55d). This is bullish, and is the primary reason why this is a terrible time to short the market vis-a'-vis the status of the LCR EMAs.

The middle of the figure shows the slopes of the pricing EMAs.  You can see that Wednesday's action caused them to be bullish across the board, and overall, this is good.  As long as the slopes of the pricing EMAs are pointing upward we can be assured that the pricing EMAs (left side of the figure) will continue to remain bullish.

The right side of the figure is a presentation of the "slope of the slopes".  This is the same "what direction is the car accelerating" discussion as above for the LCRs.  What we see above for the pricing EMAs is that we are bullish across the board, so in Ken's terminology, we are "driving forward with our foot on the gas".  Note that depending upon your time frame some of the time frames are moving faster than others ....

Overall, we have a divergence between the LCRs and the Pricing system.  The LCR system is not supportive of a bull market, but the pricing system continues to indicate that prices are intact and moving upward.  This means that fewer and fewer stocks are providing a disproportionate amount of the pricing gain within the database, and this is bad over the long haul.  Either of two things must occur in the next few weeks:  1) the pricing system reverses, reflecting the state and mood indicated by the LCR system, meaning the bears are in full control, or 2) the LCR system reverses, providing support to the appreciation of prices that we presently see, allowing the bulls to run.  Your crystal ball is as good as mine.

I'm choosing to sit on the sidelines until the divergence is eliminated.

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The Timers

Here's the timer dashboard:

The Short Term LCR Change Timer is presently flashing a "yellow", which means the present LONG is in jeopardy.  If the markets are down today in terms of the LCR, then because of the internal settings of this timer (time constant less than a day), it goes to reason that this timer will move to CASH.

I exited my positions on Wednesday that were associated with this timer, all for a profit.  I did this because I hit profit targets on Wednesday, not because the timer indicated we exit.

I'm still holding a 40% position in QLD in this timer, and as I write this, it is under huge pressure but is up 1.41% since entry.  Most likely this will be closed today to lock in whatever remains in profit.

The Intermediate-Term Elder 13d Force Index Timer, as indicated above, is in CASH.  The reasoning behind this is that the FI(13) calculation, when performed using a simple moving average (SMA), shows a negative value for FI(13).  Contrasting, but not shown above, is that the FI(13) EMA calculation shows us barely long.   I'm showing the more conservative timer status because it reflects my  investing style.  The result is that the FI(13) timer is telling us to avoid intermediate-length positions in the market.  

I'm holding a sole-holdout in ROVI due to this timer.  It stubbornly has refused to go down and hit it's trailing stop loss, so today may be the day.  I'm content to lock in the gains that I presently have and sit on the sidelines.

Overall, the timers are not clear in their signals, so entering positions either on the LONG side or CONTRA side is risky business.

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Top 25

With the close of markets on Wednesday I generate a new Top 25 stock list.   Because of the market conditions this portfolio is 65% invested.  Here are the new stocks to be added to the list:

AZO

AMZN

DECK

ETN

MEE

MGA

NFG

Stocks to be removed from the portfolio are:

BBL

CLW

GYMB

LAMR

NVO

UNP

Stocks that moved upward in position from last week, including some new additions (meaning they were part of the top 100 but not all were in the top 25) are:

AZO

RL

CKH

FFIV

NOV

PH

MGA

NFG

WLL

DECK

I would consider these stocks the strongest stocks within the portfolio.

The stocks that moved down over the past week are:

NFLX

ABV

FCX

BIDU

DRQ

IBM

FOSL

PXD

These are to be considered the weakest stocks, but still strong out of a universe of over 2900+ equities that I looked at.

Stocks that are unchanged in their position over the past week are:

PCLN

CMG

MIDD

UFS

Interpret how you may... these are holding their own.  Since the close on Thursday of last week the portfolio is up 1.4%, and is up 0.3% since inception on October 31st, 2010.

I will make the changes in this portfolio today after the market stabilizes.

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Trading Plan for Friday, November 26th

Overall, I'm sitting on the sidelines.  I do not think that we have clear signals on which direction to move within the markets, so I'm not willing to commit my hard-earned dollars as well as my kid's college funds to the market right now.

Remember, you are responsible for your own trading decisions, not me.  Please take ownership for your actions and please read the DISCLAIMER listed on the left side of this blog.

I hope that everybody had a nice Turkey Day.

Regards,

pgd

Short Term Timer May Move to CASH; Elder Timer in CASH

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Summary

• The LCR EMAs, slopes of the LCR EMAs, and the "slopes of the slopes" are all telling us to run away from the market right now.
• The Pricing EMAs, with the exception of the 8/13d pairs, are all still indicating bullish patterns
• The 5d/8d/13d/21d slopes of the Pricing EMAs turned down with Tuesday's action.  This is bearish, but because the 34d and 55d slopes are still pointing upward, I'm not in panic mode (I'm never in panic mode by the way)
• The "slope of the slopes" of the Pricing EMAs have all turned down, which is short-term bearish.  
• The Short Term LCR Change Timer is LONG, and I have positions in IWM, QLD, UWM, UYG, and VTI.
• The Elder Intermediate-Term Force Index, depending upon the method selected (SMA or EMA), is on the fence.  Yesterday's action pushed is back down into a CASH signal, but we're on the threshold.

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The LCR 

Here's the chart:

As with all my images, right-click on the picture to open it in a new tab or window.

The presentation has changed a bit.  Over the weekend I talked about "slope of the slope", and have added the appropriate indicators to the right of the picture above.

As you can see above, the LCR fell on Tuesday, landing the day -17% below Monday's level of 0.846.  More stocks in the database are in CASH than are in LONG, and a falling LCR tells us that the number of stocks with a LONG status is getting thinner.

ALL of the LCR EMAs are inverted, meaning that the 5d < 8d, 8d < 13d, etc.  This means that the database is in a contraction mode, and that I need to be careful in stock selection.

I've been discussing the role of the slope of the LCR EMAs, and as you can see from above, the trend has been down since November 11th.  This means that the database is contracting, keeping the aforementioned LCR EMAs inverted.  Until we see some green here the database is getting smaller and smaller.

The inclusion of the "slope of the slope" (SoS) table simply tells me whether the slopes of the LCR are headed downward faster or slower.  With the across-the-board red values as shown, it's clear that we are accelerating to the downside with Tuesday's action.

The LCR dashboard is bearish.  Pay heed or pay with your equity.  'nuff said.  

============================

The Prices

The Pricing Dashboard follows:

The GGT Price Index fell -1.35% on Tuesday on volume that was -7% lower than average.  We can consider this a distribution day, because prices fell on average volume.  

Only one of the pricing EMAs has me on the bearish side.  As you can see above, the 8d EMA is below the 13d, but all the others are properly aligned.  This means that the bull is still alive but because of the LCR's, it's food supply is getting thinner (as is the bull).  

The slope of the pricing EMAs started to head down with Tuesday's action, but note that the 34d and the 55d are pointing upward.  This is good for the bulls, and creates a mixed-signal concerning what we should be doing right now.  I personally am sitting on big pile of cash, simply because I don't like losing my cash.

The right-most view is the SoS of the pricing EMAs.  Since these are all red, we are accelerating downward on all time frames, and if the redness continues, the slopes of the pricing EMAs will all turn red.  If THAT continues, the pricing EMAs will all be inverted, and at that time, contra ETFs make really good sense (but not before).

The last column on the right is the GGT strength oscillator.  As you can see, it fell on Tuesday, which is no surprise, and as you can see with the red/green background on the oscillator, it's behavior closely follows the SoS of the pricing EMAs.  Note that the strength oscillator is much like the %B that my trading partner Hsin uses in his trading decisions.

======================

Short-Term LCR Change Timer

The ST LCR Change Timer is LONG, but it transitioned to a LONG-CASH signal with the decrease in the LCR on Tuesday.  If the ADV/DEC line at www.finviz.com or other ADV/DEC line that you watch is negative by a substantial amount at the end of the day we have a high probability that this will transition to a CASH signal.

I'm modifying my playing of this timer -- I'm setting a price target based upon the entry and will exit 100% of the position when I hit the target.  Right now I'm using a 1% profit target for the 2x ETFs, and will adjust as more data becomes available.

Disclaimer:  At the time of this writing I am presently holding positions in IWM, QLD, UWM, UYG, and VTI.

=====================

Elder Intermediate-Term Force Index Timer

The GGT System has the Elder Timer in CASH, and this is where I am positioned.  The 13d Force Index, via the SMA calculation method, is negative, which block entry into intermediate-term long positions.  Furthermore, the 13d pricing slope is NEGATIVE, which further violates my Elder Timer rule.  

I intend to pay heed, so I am not even screening for Elder candidates.

=====================

Top25 Stocks

The always-invested Top25 portfolio, which is new and is being forward-tested in real time, fell -1.2% on Tuesday.  Since inception on 10/28/10 the portfolio is down -1.1%.  This portfolio strives to maintain long positions and utilize between 65% and 100% of the available capital.  Presently, the portfolio is 69% invested in equities/31% invested in cash, due primarily to the Elder Intermediate-Term Timer Status.  A new top 25 list of stocks will be generated tonight with the close of markets today.

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Trading Plan for Wednesday, November 24th

Simple.  I intend to watch my ETFs hit their profit targets in the Short Term LCR Change Timer, watch them exit, and be happy with 1% gains.

I do not intend to purchase any substantial positions in equities at this time.

===================

Please read the disclaimer to the right of this entry.  You are responsible for your actions -- I am not.

Make it a great turkey day!

Regards,

pgd

Elder Intermediate Timer is LONG

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Summary

• As of 7 a.m. Tuesday morning Yahoo! finance had not updated their database, so correspondingly, I can't update GGT.  The move to integrate Quotes Plus and GGT thus becomes reignited in earnest.
• Leader action for the broad market continues to outpace the contra side of the market, with an important bullish reversal occurring during Monday's action.  
• As anticipated, volume of the DOW, NASDAQ, and S&P indices was below average, reflecting the vacation week.

===============

A Bullish Bias

GGT has a bullish bias; here's my chart:

As a universe, an argument can be made that we should continue to support the long side of the equation:

1. Bull power is significantly bullish.  This is the distance between the high of the day and the 13d EMA.  When this is positive more than the bear power magnitude the bulls are in control.
2. Both calculation methods of the 13d Elder Force Index (EMA and SMA) are very positive, which is bullish.
3. The MACD histogram is improving (less negative day over day).
4. The slopes of the 13d and 34d EMAs are positive as well as pointing upward.  This is strongly bullish.
5. %B indicates that we are at 0.76, which suggests considerable upside room exists.
6. Prices continue to close above all the primary EMAs, which is bullish.

Cautionary indicators are:

1. Bear power is negative.  This is the distance between the low of the day and the 13d EMA.  When this is negative the bears are gaining ground. A resounding bull appears when both bull power and bear power are positive, and this is not the case right now.
2. The MACD histogram is negative, which means that the MACD is below the MACD signal line.  This is inherently cautionary.
3. The slopes of the MACD and MACD signal line are negative, which tells us that over these periods (8d, 25d) that we've not been a powerfully-supported up period.
4. The slopes of the MACD and MACD signal line are in the upper half of the MACD window, which again, suggests that we have already run up significantly so gains on the order of what we have seen since early September are not likely.
5. Volume is drying up.  Rising prices for an index, on lower volume, is a problem for me.  On the other hand, falling prices on lower volume means that selling simply is not going on.

Overall, I continue to have a bullish bias to the markets, but I'm not playing anything significantly long at this point.  I did make trades in the short-term LCR ETFs yesterday, and will continue to play those minor positions at least until that signal changes.

====================

Short-Term LCR Change Timer

Because I cannot update the LCR, and cannot give an exact determination on the LCR.  Using my proxy, the www.finviz.com ADV/DEC indicator, I can guess that the LCR continued upward yesterday hence my entry into long positions should be a good bet.  I will continue to hold these positions despite the futures being significantly down as I write this.

====================

Intermediate-Term Elder Force Index Timer

The chart above shows that Elder's methods still point us on the long side of the equation, and the magnitude of the 13d Force Index levels tells us that we have had a signal change.  GGT's Excel method has had this indicator as being in CASH; the difference lies in the way that GGT and HGSI calculate average price and average volume.  Nevertheless, I'm calling the timer long, independent of the GGT Excel method, hence we can look at stocks through this lens.

Elder candidates that require further screening in terms of effective volume, etc. are the following:

DMAN

LIZ

HAL

XTXI

MMR

HTHT

ELP

MOVE

PSS

LBY

SPPI

HMC

APD

MDR

HHS

JBHT

DOLE

GSK

IDXX

FCT

ZZ

WAVX

PACR

FRO

DNDN

AIB

As always, enter on strength, not on weakness.  Look for prices above yesterday's HIGH (not close) and on volume that is higher than the prorated volume I discuss (look for blog tag "Volume").

I'm sitting on the side lines for the most part, list notwithstanding.

====================

Remember, you are responsible for your actions, and I am not. Please trade responsibly and of your own thought process.  I cannot possibly communicate all of my thoughts in written form, which places you at a disadvantage if you try to follow my moves ....

Regards,

pgd