Overall the bifurcated stock market continues to act sluggish, although the NASDAQ Composite continues to power ahead. The financial Olympics in the Washington and the continued flare ups in the Middle East are weighing on the markets. Continued uncertainty into October 17 will result in continued roller-coaster market moves.
The DJIA and S&P 500 advance has stalled in the past three weeks, However, the tech-heavy NASDAQ Composite has continued to advance in the past three consecutive weeks while the other two averages had an MACD downside reversal (key in the $SPX and $INDU symbols in the $COMPX chart) on September 27. The DJIA made an all-time high above 15,700 on September 18 (Fed announcement day), but has given back over 700 points since then, and also crossed below both its 50-dma and 100-dma.
The S&P 500 also hit an all-time high of 1730 on September 27, but closed this week at 1690.50, still below the critical 1700 level and slightly above its 50-dma. The NASDAQ Composite’s MACD did have slight downward crossover on Thursday and Friday at -0.534, but needs a more definitive crossover to be considered a sell signal on Indicator #5. Moreover, this index appears to be consolidating just below the 3820 level (see green horizontal line on the first chart). The number of 52-week NYSE highs rose to 342 from 294 from in the prior week.
The NASDAQ continues to show the best performance for 2013. This past week the NASDAQ Composite was the only winner for the second consecutive week gaining 0.69%, followed by the S&P 500 losing 0.07%, and lastly the DJIA losing 1.22%. So far year-to-date, the BDH ETF portfolio is up 11.29%, according to dark-liquidity.com. This compares with the NASDAQ Composite’s 26.10% performance, S&P 500 performance of 18.53%, and the DJIA performance of 15.02%.
Bond ETF prices have bounced back nicely from the early September lows, but are still down significantly from the May highs (type in TLT, BOND or JNK in first chart to see the uptrend).
Indicator Review – No Changes This Week
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator had two consecutive minimal MACD negative crossovers (-0.534) on Thursday and Friday. A sell signal is imminent if the index declines early in the week and the crossover amount exceeds 1.00. So be on the lookout for it this coming week. If it occurs, then the Dashboard Signal will drop to “3” BUY.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 2 bullish percentage reading of 37.8% was slightly lower than the September 25th bullish percentage reading of 36.1%. Investors now are much less bullish than they were three weeks ago looking out six months ahead. This indicator remains on its April 18th BUY
Indicator #8 NASI Summation Index and MACD. The index crossed below its moving average on Thursday. The MACD has not yet done so. When it does this indicator will be on a sell signal. Be on the lookout for it this week. The index is shown in purple behind the indicator for ease of comparison to high and low points. (Refer to second chart).
Dashboard Remains on Maximum “4” BUY Signal
The latest Dashboard data is presented in the link below:
Dark Liquidity BDH Performance Statistics
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 11.29% which has improved substantially from prior weeks, but is still below that of the three major indexes which have advanced smartly for the year. Note that XLY has replaced XLV.
Top 5 ETFs – 100% Invested
The Top 5 ETFs were bought on the open on September 10th as mentioned in the September 9th blog posting. Performance details are provided in the following link:
As mentioned in my updated blog during the week, XLV dropped below rank 10 and was replaced by XLY. The corrected data are in that blog’s Top ETF table, and of course in the current table. Note that three of the currently held ETFs have “fail” ratings due to negative MACD crossovers. They will be held until a Dashboard SELL signal is given, or drop below rank 10, or are sold based on 3% stops.
Note that on the etfscreen.com/buydonthold Decision page that now only 6 out of 42 ETFs have a “pass” rating down from 18 the previous week. With the market’s weakening the number of ETFs showing “pass” ratings has begun to decline again from 27 three weeks ago. Since their purchase, the Top 5 ETFs have gained 3.03% versus a gain of 1.08% for the averages.
Conclusion – Market Stalling Out
The stock market is having trouble making progress as both the DJIA and S&P 500 are in short-term downtrends with negative MACD crossovers, while the NASDAQ Composite continues to move higher but nearing a similar crossover. Indicator #5 is extremely close to a SELL signal and Indicator #8 could follow if the NASDAQ prices decline this week.
Be careful and make sure you have your stop LIMIT orders in place to protect your profits. News out of the Washington, DC regarding the budget and debt ceiling will likely result in higher than normal volatility going forward.
Note: I have a few month subscription to stockcharts.com which has enabled me to enhance the usual charts. Hopefully, further improvements will be provided going forward.