Guardian Checklist for Thursday 12/09/04
Published Wednesday 12/07/04
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Intermediate-term Outlook (weeks):
Seasonal Cycle: Positive.
Coppock Breadth Indicator: Positive. The CBI was up 0.2 to 214.6, 0.5 above the exponential.
Weekly MACD: Positive.
Bull Bear Market Indicator: Bullish.
Conclusion: We are in a Cyclical BULL Market. The Seasonal is positive, and the MACD has re-confirmed. The Weekly trend is positive.
Short/Intermediate-Term
NYSE Cumulative A/D Volume: Positive.
ITBM: Sell. Confirmed.
Summation: Sell.
KTT*: Sell. Confirmed. Short at 1182.50 or better.
CCI Daily: Buy.
10-day ARMS: Neutral.
MACD Daily: Negative.
21-day MA: Buy.
Senticator: Neutral.
Conclusion: Shorts are favored. Until the Cumulative A/D volume turns, pullbacks aren't likely to turn into a major change in trend.
Short-term
Stochastic Turn Spotter: Weak Buy.
VIX 30': Positive.
MACD 60': Negative.
Moving Averages: Negative. Watch the 1186-1187 zone.
Conclusion: Shorts are favored.
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Last time, I said that it was probably not the end of the Bull market, but we had a lot of room to fall, with the seasonality providing some periodic support. I did and do expect a correction that runs down fast and a bit further than most of the Bulls expect. The bounce today was what I'd call Pavlovian. From here, we ought to see some selling get going at any time.
Breadth bounced today, which was a positive, but the ARMS remains high. That tells me that there is big money distributing stocks under cover of the rally. The S&P closed above it's 21-day, which is also a positive, but the Dow did not and the Utilities are looking weak.
This is normally a great time of year to be long, given liquidity and seasonality, but I want to point out that a ton of that liquidity is being sopped up by new and secondary issues, with more in the pipeline. I suspect that we have a pretty good shot down before the end of year rally. Doug Nelson (ChartSmarts) has a possible target of 1141, and I think that's about right.
The KTT is on a Sell. We took a full short position at 118250. Stop it at 1192.50. Target 115250, for now. We'll update tomorrow morning.
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Not everyone likes a short-term trading model, and would like something that hangs onto bigger moves and reflects a less frenetic trading pace. If you want to know how I would trade based upon the big picture and the sentiment, the following tracking portfolio is it.
Ideal ETF Portfolio (tracking portfolio):
100% Money Market
We are now flat after having sold the DIAmonds for a nice profit. We'll be looking to get long again on more pullback, but for now, let's be patient in here. We'll be long for Christmas (You can count on us).
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Mutual Fund Models Position Summary
1) STAMP
100% Money Market.
2) Rydex Naz Trader
100% Money Market.
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1)*Real Money* STAMP Seasonal Trading Asset Management Program (All weightings are approximate)
100% Money Market.
0% Titan
We are looking to re-enter, but now we have to be more careful. The decline is not likely to be shallow. Check your email near either cut-off if we are down appreciably. I'm looking for a sharp rise in pessimism.
This is a very conservative approach (~1/3 the risk of the market), using both long and short funds as well as the occasional favored sector/stock idea. All performance is net of fees, commissions, and interest. Your results may vary, especially if we trade for our accounts intra-day, and standard disclaimers apply. We use discretion. For further information, call us at 1-800-769-6980.
2) Rydex Naz Trading Model
Weekly Trend: Positive.
Rydex Ratios Trigger: Negative.
MACD Risk Reducer: Sell.
CCI Entry Improver: Buy.
NDX Stochastic: Negative.
We are short and hold a 25% position in Venture at the early cut-off. So far, so good.
QQQ traders are short the Q's at 39.80. ADX remains negative.
As of August 27th, we've had 19 winning Rydex trades since we started this service March 22, 2002, and just 4 losers. The total net return on investment for this period is 58.06%. The Conservative portfolio return was 17.64%. The return for the NDX over this same period was -5.49%.
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Trading is not only risky, but trading different vehicles also entails unique risks. Traders can lose a significant amount of money trading options, and more in futures. Mutual funds have certain trading limitations that must be understood before you undertake any market timing approach. Traders should discuss the forgoing issues with their broker before taking any trades. We aren't your advisor unless you have a signed contract with us. You are responsible for your own trading decisions and results. Take your time and do your homework. Past performance is no indication of future returns.
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Mark Young
President
Equity Guardian Group, LLC.
859-393-3335
