Non confirmation of the NYSE advance / decline line:

Just to review a clip from the Getting Technical market letter - Interim Update December 4, 2013 GT1417 – page 2 – “A Probable Short Trading Correction”

“The Advance / Decline Line (AD line) is one of the most widely used indicators to measure the breadth of a stock market advance or decline. The AD line tracks the net difference between advancing and declining issues. It is usually compared to a market average where divergence from that average would be an early indication of a possible trend reversal.

Clearly that observation was 20 days ago – and now here we are with the S&P500 at all time highs and the NYSE A/D line (see chart) still not confirming the recent advance. This is a sign of thinning leadership.  Reducing into the current bullish stampede may be prudent.

Selling into strength

Yesterday’s big rally on the Dow to 16167.97 - UP 292.71 points or 1.84% was a new record high. The Dow is also up 146.95% from its Bear low of 6547.05 hit 3/9/2009. The S&P500 also closed at a new all-time high – but the NYSE advance / decline line did not confirm the current bullish stampede. I will display a chart – next post.

Here at GT we are selling our CDN Multi-National selections of April 26, 2012 that has returned about 63% to date. A clip from a Getting Technical letter Interim Update December 18, 2013 GT1419 TSX Comp 13335 DJII 16168 – “Cyclic peaks in many Stock sectors suggest we sell into the current period of seasonal strength.”

And:

“Canadian Multi-Nationals - We take advantage of the current bullish stampede into equities. It has been a great 20-month run but with all components at long and intermediate term cyclic peaks - we liquidate all positions - only laggard Bombardier could be retained. The final returns will be based at the close of December 24, 2013

I bought a gold stock yesterday:

There is a difference between trading and investing. For trading I don’t usually buy gold stocks because I think you get more opportunities in the small cap technology and health science names,

However yesterdays price behaviour in the CME Feb gold contact and the price behaviour in many of the gold miners was a compelling divergence signal. The metal was down sharply and yet many of the miners were about to close up on the day. I bought some B2Gold Corp. (BTO) just before the close at $2.15 for several technical reasons. The weekly chart (I rarely use dailies) displays several positive technical signals – first of which is the higher weekly price and the double bottom. We also have an intermediate cycle trough and the money flow numbers – while not compelling did not break down. If the price posts a daily close under the lowest low of 10-weeks ago ($1.98) I am gone.