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CGTS WEEKEND EDITION - 18 AUGUST 2009

CGTS WEEKEND EDITION 
18 AUGUST 2009

This week the rally ran out of steam a bit.  Chinese indices pulled back.  Whether this was anything more than an overdue correction will become more evident over time.  But it was not just the Chinese stocks that pulled back.  Our weekly portfolio, almost entirely long, gave back $100,000 in profits last week.  This is an indicator to us also.

We keep running bullish and bearish trends in our own group of stocks.  On 7/24/09 our M5/M5Average indicator showed 167 long issues and 11 short issues (88% bullish); this week that ratio has changed a bit: 102 bullish vs. 16 bearish (73% bullish). 

The market seems to be showing that an exhaustion of the bull is taking place.  We're still bullish on the market if not on the economy.  We think this is a 'head fake' rally (or just a 'fake rally'), financed by taxpayer money given to banks for the supposed purpose of loaning money to strapped consumers but in reality being a pool of money for banks to invest in stocks.  If the banks can make enough money off this rally, they can help pare down the toxic assets they are currently hiding on their books.  So the banks are driving this rally, out of desperation.  If the market tanks, and the banks lose more money in the process, will they go whining to the government again, asking for more money?  I'm sure they will.  They will blame it on the consumer, for not joinging the bull rally.

The Shanghai Index has broken short-term support and has the next level of support at 2722.22, which is 10.6% below the current price.  We are not sure that SSEC is not just pausing.  But it is short-term negative.  And, since it has led the world stock index charge, it is not surprising that this is the first index to fall back -- and this may, as well, lead other world indexes down.

SOXX, the Semiconductor Index, is another stock index that seems to be at a trading top -- and seems to be heading down.

SSEC
SOXX

In looking at momentum, we asked our computer program to show us all the weekly issues that were showing another of our momentum indicators, M4 Sum plus, with at least two weeks in a row minus zero.  We look at the charts of a few of these.  We would expect, from this, to see EQR and SLM decline over the next few weeks.  And we would expect VIX, which is making a long-term bottom in momentum, to continue base-building for a rally.




We keep talking about issues losing their momentum.  M5, we say, is a leading indicator.  However, we have seen some evidence recently of issues losing momentum but continuing to gain in price.  But M5 is a shot across the bow -- a warning that all is not well.  How do we know this?  We have a picture of this in the Electronic Arts daily chart -- ERTS is showing a pretty strong disparity between current momentum and price.  The scond charts shows  a similar disparity, followed by a pretty significant decline in price.  From this example, we'd expect the price of ERTS to also decline over the next few weeks.

ERTS 2ERTS 1




We've changed our momentum leaders (below) to indicate M5 leaders -- those only with the highest and lowest momentum scores.  This is a kind of relative strength indicator, showing which issues have the highest or lowest momentum:

TOP 30 Momentum Leaders Week of 8/14/09 (1-30)

PCLN PRICELINE
TEVA Teva Labs
ECH I-SHARES MSCI CHILEAN INDEX
SGINX DWS GNMA S. FUND
EMC EMC Corp
AMSC AMERICAN SUPERCONDUCTOR
MRK Merck Pharmaceuticals Weekly
EDU NEW ORIENTAL EDUCATION & TECH GROUP
F Ford Weekly
EOC EMPRESSA ELECTRICAL S.A.
SGP Schering Plough Weekly
HAL HALIBURTON
RHT RED HAT INC.
KUSMX DWS GOVERNMENT SECURITIES
BWLD BUFFALO WILD WINGS
SBUX Starbucks
AAPL Apple Computer
ORCL Oracle Inc.
JPM JP Morgan Chase
AMGN Amgen Corp
IBM International Business Machines
SSTGX DWS GLOBAL BOND FUND
IAU IShares Comex Gold Trust
DHI DR Horton Inc.
BLK BLACKROCK
UNH United Healthcare
HD Home Depot
CA Computer Associates Inc
RGR STURM RUGER INC.
BEN Franklin Resources


Bottom 30 Momentum Trailers Week of 8/14/09 (30-1)
FMCN FOCUS MEDIA HOLDING GROUP
TWX Time Warner Weekly
GE General Electric
BHI BAKER HUGHES INC
ERTS Electronic Arts
WMT Wal-Mart Stores
C Citigroup
HMY Harmony Gold Mining
GMGMQ.PK General Motors
TMX Mexico Telecom
FSLR FIRST SOLAR
PNC PNC Financial Svc Weekly
^DOT Internet Stock Index
FST FOREST OIL CORP
DRYS Dry Ships Weekly
COP Conoco Philips Inc
MCD McDonald's
XOM Exxon Mobile
ELY Callahan Golf
PG Procter & Gamble
UUP POWERSHARES DB US DOLLAR BULLISH
DOG Short DOW 30
^VIX CBOE Volatility Index
MYY Short Midcap Index ETF
SH Short SP 500 ETF
DXD Short Dow Index ETF
PSQ Short QQQ Index ETF
QID Short Nasdaq Index ETF
HURN HURON CONSULTING
TBT Ultrashort T-Bond 20+ Year ETF



% Gain Weekly Trades Profit Active Active
        Trades Cost
           
48.35% M5 (7) 2   $96,705 20 200000
193.41% M5 (10) 2   $96,705 5 50000
0.01% M2F alt Trade   $1 2 20000
14.12% M2F alt LT   $1,412 1 10000
8.42% Momentum   $38,735 46 460000
11.25% M4 Sum Plus   $54,007 48 480000
68.19% M4 Plus LT   $313,691 46 460000
31.53% MA5 MA 40 LT   $104,064 33 330000
35.09% Total   $705,319 201 $2,010,000


NEW POSITIONS THIS WEEK

NEW CGTS WEEKLY TRADING SIGNALS 8/17/09    
M5 7 TRADING SYSTEM          
               
Issue Price New Position Shares Name of Issue    
MCD 55.27 ENT LONG 181 McDonalds      
               
CLOSED POSITIONS          
Issue Bought Price Sold Price Gain Long/Short Name of Issue
QID 7/17/09 29.77 8/17/09 26.49 12.38% short Short Nasdaq Index ETF
PSQ 7/17/09 54.29 8/17/09 51.20 6.04% short Short QQQ Index ETF
MYY 7/3/09 58.76 8/17/09 51.17 14.83% short Short Midcap Index ETF
^HSI 7/17/09 18,805.66 8/17/09 20,893.33 11.10% long HANG SENG INDEX
BLK 7/17/09 179.79 8/17/09 197.77 10.00% long BLACKROCK
GS 7/17/09 156.84 8/17/09 162.73 3.76% long Goldman Sachs
AAPL 7/17/09 151.75 8/17/09 166.78 9.90% long Apple Computer
IBM 7/17/09 115.42 8/17/09 118.57 2.73% long International Business Machines
FXA 7/17/09 80.26 8/17/09 83.07 3.50% long Australian Dollar ETF
MMM 7/3/09 60.25 8/14/09 71.32 18.37% long Minn. Mining & Manufacturing
BBL 7/3/09 44.31 8/14/09 51.83 16.97% long BHP Billiton PLC
SAP 7/17/09 42.87 8/14/09 46.92 9.45% long SAP International
SCINX 7/3/09 36.46 8/14/09 42.14 15.58% long Scudder International Fund
EPP 7/17/09 32.64 8/14/09 36.34 11.34% long Asia (No Japan) ETF
EL 7/3/09 32.43 8/14/09 36.08 11.26% long Estee Lauder
ADBE 7/17/09 31.02 8/14/09 32.27 4.03% long Adobe Systems
SLAFX 7/3/09 36.58 8/14/09 42.00 14.81% long Scudder Latin American Fund
AMSC 7/3/09 25.47 8/14/09 31.96 25.48% long AMERICAN SUPERCONDUCTOR
EWC 7/3/09 21.26 8/14/09 23.62 11.10% long Canada ETF
CSCO 7/17/09 20.51 8/14/09 21.31 3.90% long Cisco Systems Corp
EWQ 7/3/09 20.26 8/14/09 23.11 14.07% long France ETF
BMY 7/17/09 20.00 8/14/09 21.81 9.05% long Bristol Meyers Squibb
SCGEX 7/3/09 18.24 8/14/09 21.25 16.50% long DWS European Equity Fund
EMC 7/17/09 13.92 8/14/09 15.17 8.98% long EMC Corp
EWM 7/3/09 8.89 8/14/09 9.85 10.80% long Malaysia Index ETF
^TYX 7/17/09 4.53 8/14/09 4.41 -2.74% long 30 YEAR TREASURY BOND
               
M5 10 TRADING SYSTEM          
               
Issue Price New Position          
No new trades.            
               
CLOSED POSITIONS          
Issue Bought Price Sold Price Gain Long/Short Name of Issue
EWM 8/14/09 $9.22 8/14/09 9.85 6.83% long Malaysia Index ETF
IBM 8/14/09 $115.42 8/14/09 118.57 2.73% long International Business Machines
CSCO 8/14/09 $20.51 8/14/09 21.31 3.90% long Cisco Systems Corp
               
M4 3 AVERAGES TRADING SYSTEM        
               
Issue Price New Position  Shares  Name of Issue      
STJ 38.09 ENT LONG 263 St. Jude Medical      
               
M2F ALT TRADING SYSTEM          
               
Issue Price New Position Shares Name of Issue    
STJ 38.09 ENT LONG 263 St Jude Medical    
               
M2F ALT LONG-TERM #2 TRADING SYSTEM      
Issue Price New Position Shares Name of Issue    
STJ 38.09 ENT LONG 263 St Jude Medical    
               
M4 SUM PLUS LONG-TERM TRADING SYSTEM      
Issue Price New Position Shares Name of Issue    
HURN 13.15 ENT SHORT 760 Huron Consulting    
FRE 1.41 ENT LONG 7092 Freddie Mac      
MGM 8.94 ENT LONG 1119 MGM      
               
CLOSED POSITIONS          
Issue Bought Price Sold Price Gain Long/Short Name of Issue
MGM 6/26/09 6.78 38580 8.94 -31.86% short MGM
               
MA5 MA40 LONT-TERM TRADING SYSTEM      
Issue Price New Position Shares Name of Issue    
FRE 1.41 ENT LONG 7092 Freddie Mac      





Everyone, have a good weekend.

More information on this system can be found at
www.home.mindspring.com/~mclark7/CGTS09.htm


Those interested in reading a draft of 'Turn Out the Lights', my description of the metaphysical causes of the financial collapse, can find it at:

www.hoalantrangallery.com/Turnoutlights.htm

 

Michael J. Clark
Clark's Gate Timing System
Hanoi, Vietnam
84 4 221 92210

Disclosure: the author personally owns none of the issues mentioned in this article.