As expected the new Dashboard “HOLD” signal occurred by week’s end as both Indicators #5 and #8 registered SELL signals on August 9 and 5th, respectively. The market internals are weakening as the number of new 52-week highs fell to 383 from 563 the prior week and over 900 at the May highs. Moreover, the S&P 500 Index below the critical 1700 level, after vaulting over it the prior week.
For the week, the NASDAQ Composite was the strongest performer, but it fell 0.80%, followed by the S&P 500 falling 1.07%, and lastly the DJIA dropping 1.49%. Overall, the decline was orderly and not a big deal so far. Nevertheless, three of the five ETFs in our portfolio were sold due to training stops being hit, as explained below. Moreover, only 5 of the 42 ETFs had “pass” ratings which illustrates the market weakness.
Indicator Review – Two New SELL Readings This Week
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its January 3 BUY signal with the index price still well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator had a negative MACD crossover on Friday August 9, thus triggering a SELL signal on this indicator. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest August 7th bullish percentage reading of 39.5% was higher than the July 31th bullish percentage reading of 35.6%. Investors now are a bit more bullish looking out six months. This indicator remains on its BUY signal as of April 18th.
Indicator #8 NASI Summation Index and MACD. The indicator issued a SELL signal as of August 5th as both the Index and the MACD had negative crossovers. (Refer to second chart).
Dashboard Now on “2” HOLD signal
The latest Dashboard data is presented in the link below:
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. I had difficulty bringing this site up over the past few days, and you may as well. Hopefully the site owner can correct any problem. I hope to be able to provide it next week.
The Dashboard ETF portfolio year-to-date is up approximately 9.50% (estimate) which has improved substantially from prior weeks, but is still well below that of the three major indexes. Year-to-date, the NASDAQ Composite is up 21.22%, S&P 500 is up 18.60%, and the DJIA is up 17.71%.
Top 5 ETFs
The Top 5 ETFs are up 8.00 % since the April 26, 2013 buy signal compared to the market averages up 7.69%. The table with the data is provided in this link:
On August 5 three of the ETFs – XRT, IBB and PBW – were sold as their 3% trailing stops kicked in. They all had a nice profit as indicated in the table. Therefore, only two ETFs remain in the portfolio – XLY and IWM. Since the Dashboard is on a HOLD signal, no new ETFs will be purchased at this time.
Note that on the etfscreen.com/buydonthold Decision page that now only 5 out of 42 ETFs have a “pass” rating which is a drop of 13 from the previous week. Currently most of the Top 20 have a “fail” rating due to a MACD downward crossover. Remember that these ETFs are held until they drop below rank 10 or are taken out by stop loss orders.
Conclusion – Market in Topping Mode
The stock market has reversed downward this past week as the market internals have deteriorated. Also, the BDH ETF universe has experienced a large number of issues having “fail” ratings. And the S&P 500 has dropped below the 1700 level.
The market is extended but could move higher before it has a more severe decline. So be careful and don’t become complacent. Enjoy this uptrend as long as it lasts, but protect your profits before they wither away, if a decline sets in.