Guardian Checklist for Wednesday 11/04/09
Published Tuesday 11/03/09
by Mark S. Young
President of Equity Guardian Group, LLC.
Investment Management & Research
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Intermediate-term Outlook (weeks):
Seasonal Cycle: Positive.
Coppock Breadth Indicator: Negative. The CBI was up 0.2 to 228.5, 1.1 below the exponential.
Weekly MACD: Sell.
Bull/Bear Market Indicator: Bull.
Conclusion: We are still in a Bull Market condition. The Seasonal Cycle is Positive but now unconfirmed. The Weekly is now negative, implying weeks of weakness.
Short/Intermediate-Term
NYSE Cumulative A/D Volume: Negative.
ITBM: Negative.
Summation: Negative.
KTT*: Buy. Unconfirmed.
CCI Daily: Positive.
10-day ARMS: Neutral.
MACD Daily: Negative. .
21-day MA: Negative.
Conclusion: The trend has turned down, confirmed and we have bounced. Nothing has changed, however. We need to be careful.
Short-term
Stochastic Turn Spotter: Buy.
VIX 30': Positive. Overdue for a Sell.
MACD 60': Positive.
Moving Averages: Negative. Watch the 1047-1050 area.
Conclusion: Longs are favored, but they have significant risk.
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Last time, I said that while the action yesterday wasn't bad and it could continue to work things higher, I was doubtful that the decline was anywhere near over. Bottom line for me: Rallies are for selling. I'm still about there. We mounted a nice rally off a miserable open and that's good, but it didn't break any resistance.
Nothing really has changed except that we're not particularly oversold any more. If we work higher we can probably position for another sell off, unless we chop sideways and start showing too much optimism.
As I reminded yesterday, though, we're still in a Bull market and if we get things down enough and show enough pessimism, we'll start wading in long.
KTT traders are flat and will remain so until we see the pattern working again.
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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):
25% QLD 34.30
50% QID at 33.21
25% QLD at 26.09
We re-balanced at the open on 10/22.
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Mutual Fund Models Position Summary
1) STAMP 100% Money Market.
0% 2X Dow Long fund
0% 2X Nasdaq Long fund
2) Rydex Naz Trader 25% Money Market.
75% Venture
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1)*Real Money* Seasonal Trading Asset Management Program (All weightings are approximate)
100% Money Market.
0% 2X Dow long fund
0% 2X Nasdaq long fund
We have gone to cash here. It is probably early, but the gut moved us out. We note that many accounts managed to add to their Naz position near the low and so managed to eke out a gain.
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: Sell.
MACD Risk Reducer: Negative.
CCI Entry Improver: Buy.
NDX Stochastic: Buy.
25% Money Market.
75% Venture.
We are short via a 25% position in Venture fund at the early cut-off 8/5 and we added another 25% position in Venture at the close 8/11, and another 25% at the early cut-off 8/13. We may take this off shortly, but I think we'll see more weakness. Looks like we're getting bailed out.
QQQQ Trading model: Long a 25% position in the QID at 27.50. We added another 25% at 26.83 and another 25% at 25.97. Add or cover if the Naz Trader does.
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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
www.EquityGuardian.com
Editor
859-393-3335
818-MARKETS
