Buy—Don’t Hold:

Market Review

The stock market had an uneventful week, however, it again hit new highs for the past 12-months.  Currently, the market is in a tight trading range after coming off last week’s blockbuster advance.  It finally broke through this trading range on Thursday and continued above that level on Friday.  We’ll have to see whether or not it can gain momentum to make higher highs or succumb to some profit taking next week.

For the week the NASDAQ Composite was up 0.77% closing at 3125.63, well above the critical support level of 3000.  The S&P 500 Index closed at 1472.05 up 0.38 %, also well above critical support at 1400.  Lastly, the DJIA closed at 13488.43 up 0.40% for the week; also well above critical support 13000.

Indicator Review

Indicator #2 NASDAQ Composite and 100-dma.  This indicator remains on its January 3 BUY signal.   (Refer to upper chart).

Indicator #5 NASDAQ Composite with MACD.  This indicator remains in its January 3 BUY signal. (Refer to upper chart).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. As expected, the latest January 9th bullish reading of 46.4% was well above that of the January 2, 2013 bullish reading of 38.7%. Investors had a much more bullish outlook after the market’s big rise on January 3.

Indicator #8 NASI Summation Index and MACD.  The indicator remains on its BUY signal. (refer to second chart).

Dashboard Remains on “4”BUY signal

 Dashboard-V2-January 11 2012

A chart of the Dashboard BUY and SELL signals is presented here:

  http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Top 5 ETFs          

The Top 5 ETFs had a mixed week, as a number of the international ETFs did not perform as well as the domestic ETFs.  So far this portfolio has gained 3.78% compared to the average benchmark’s gain of 4.26 % since the November 28^th Dashboard BUY signal. This is the first week in which the benchmark performance has overtaken the Top 5. The link to the current portfolio and statistics is here:

Top-5-ETF-Tracking-January 11, 2013

EPI fell to rank #14 as of the close on Friday.  This ETF should be sold at the open on Monday and replaced with PHO.

Please note that I do not post changes to the ETF Top 5 portfolio during the week.  It is your responsibility to check the Decision Page daily to see if any ETFs should be sold and replaced if they fall below rank 10.  Any changes will be reported in the weekend blog. There were no changes this past week. Additionally, make sure a Stop Limit order is placed on each position according to your risk tolerance.

Dark Liquidity

www.dark-liquidity.com/BDH2new.php tracks the BDH performance.  Year-to-date the Top 5 portfolio is up 1.83%.  This performance is below that of the benchmarks which have gained over 3% each.

Conclusion

The market took a breather from the prior week’s solid performance.  Moreover, the market traded in a tight range with minimal volatility. So far the market began the year with a bang, has consolidated in the second week, and is looking good going forward.  This price momentum could continue going forward.  Earnings news, financial news from Europe, U.S. economic data and future budget negotiations will cause market volatility and increased price swings in both directions.  We’ll have to wait and see what develops.

Be patient and let your profits run, and do not make emotional decisions on your investments based on news reports.  That is the sure way to make mistakes that you’ll regret.