This week the stock market had a wild ride on the roller-coaster. With two up days and three big down days the market took a hit this week with the market internals weakening further and the major averages down over 2%. On Friday the market made a strong comeback to reduce its weekly losses. Two indicators had signal changes on April 17th, but they cancelled each other out as far as the Dashboard reading, as explained in the Indicator Review section.
For the week, all the major averages showed losses. The NASDAQ Composite led the way down 2.70%, followed by the S&P 500 down 2.12%, and the blue chip DJIA down 2.14%. This week the more speculative issues had worse relative performance. The NASDAQ Composite just managed to close above the critical 3200 level, but under its 50-dma (blue line). The index is only 2% away from its 100-dma (green line).
Indicator Review – Two Changes Cancel Each Other Out
This week indicators #5 and #6 had signal changes – one negative and one positive, respectively – which are covered below:
Indicator #2 NASDAQ Composite and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to chart).
Indicator #5 NASDAQ Composite with MACD. This indicator is now on a new SELL signal as of its April 17th (Thursday) closing price as the MACD had a negative crossover. The crossover actually occurred two days earlier, but it was miniscule, so I did not use that date. (Refer to bottom portion of chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest April 17th bullish reading of 26.8% was up 7.5 percentage points from the April 10th bullish reading of 19.3%. Since the latest reading exceeded the 25% threshold, this indicator is now on a new BUY signal as of April 18th the release date of the survey.
Indicator #8 NASI Summation Index and MACD. The indicator remains on its SELL signal as of March 25, and the index and MACD are in a downtrend.(Chart not shown this week).
Dashboard Remains a “2” NEUTRAL signal
The latest Dashboard data is presented in the link below:
www.dark-liquidity.com/BDH2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 1.16% which is well below that of the three major indexes which declined for the second consecutive week. Year-to-date, the NASDAQ Composite is up 6.25%, S&P 500 is up 9.08%, and the DJIA is up 11.07%.
The stock market had difficulty maintaining its recent highs. The current pullback may be the beginning of the overdue correction or just a pause to gather steam for the next up leg. Based on the history of the market’s seasonally weak six-month period beginning in May, the odds favor a further decline. But history does not repeat itself every time. So be cautious here and maintain current cash and short-term bond positions. Patience will prove to be a sound approach while the markets are in a shakeout.