Guardian Checklist for Friday 6/10/05
Published Thursday 6/09/05
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Intermediate-term Outlook (weeks):
Seasonal Cycle: Negative.
Coppock Breadth Indicator: Positive. The CBI was up 0.2 to 216.6, 1.0 above the exponential.
Weekly MACD: Positive.
Bull Bear Market Indicator: Positive.
Conclusion: We are still in a Cyclical BULL Market, though the Seasonal is negative. The trend is up.
Short/Intermediate-Term
NYSE Cumulative A/D Volume: Positive.
ITBM: Positive. Turning negative on the NDX.
Summation: Positive. Buy on the NDX.
KTT*: Neutral.
CCI Daily: Neutral.
10-day ARMS: "Buy" which we view as Bearish in an up-trend.
MACD Daily: Positive. Turning.
21-day MA: Positive.
Senticator: Buy.
Conclusion: Longs are favored, but we could use more breadth and volume.
Short-term
Stochastic Turn Spotter: Neutral.
VIX 30': Positive.
MACD 60': Positive.
Moving Averages: Positive. Watch the 1199 area.
Conclusion: Longs are favored.
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Last time, I said that we should watch out above 1199 and we got there and held. That's good news for the Bulls near term. I also pointed out that while we had some sells from the NDX Summation and MACD, the early sells are rarely all that good, after a strong run such as we've had. I noted that these more obvious and well-followed technical measures are rather likely to give false signals. That turned out to be a useful observation and one worth sticking in your trading arsenal.
This morning, we were still seeing a strong tendency for folks to want to pick a top in here, in the Rydex data. That strikes me as premature and thus far it is. I'm pretty sure that we will get a more substantive pullback, but I think we need some Bearish capitulation first. Even after that, I think we probably have higher prices still.
As a result, I'm going to remain modestly Bullish until we break the 21-day MA along with turning breadth down in a compelling fashion.
The KTT traders are waiting for a solid signal. The Stochastics are neutral with a positive bent.
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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):
50% QQQQ @ 35.31, or better.
50% SPY @ 116.65
We will go flat this week if the trend turns, or we may lighten up. We can afford to hold, but on a rally, I'm likely to trim our position by half. Sell the Q's at 38.50.
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Mutual Fund Models Position Summary
1) STAMP
75% Money Market.
25% Velocity
2) Rydex Naz Trader
75% Money Market.
25% Velocity
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1)*Real Money* Seasonal Trading Asset Management Program (All weightings are approximate)
25% Velocity.
75% Money Market.
We sold half of our position in Velocity and now have a 25% position (50% long). Check your email at both cut-offs, if we are up big, as we may go flat on a big capitulation rally day or an official downturn. We might also BUY BACK our long if they take out some of the risk.
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: Neutral.
MACD Risk Reducer: Negative. Improving.
CCI Entry Improver: Buy.
NDX Stochastic: Buy
We are long a 25% position in Velocity. If the NDX is down 10 at either cut-off, double up. If it's up 25 dump.
QQQQ traders went 50% long at 38.08. Double-up or dump if the Naz Trader does .
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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See our Web site for more
www.equityguardiangroup.com
Mark Young
President
Equity Guardian Group, LLC.
859-393-3335
