The stock market had a mixed week with the DJIA falling and the other two averages rising. A combination of positive and negative economic and financial news, coupled with a 3-hour outage on the NASDAQ were the main driving forces last week.
The number of 52-week highs continues to decline as only 122 issues made new highs compared to 232 the prior week and 383 in week before that and well off the 900 level reached in May. Moreover, the S&P 500 Index stayed below its critical 1700 level, after vaulting over it three weeks ago. The NASDAQ Composite held above the 3600 level although wavering below earlier in the week.
For the week, the NASDAQ Composite was the again the strongest performer gaining 1.53%, followed by the S&P 500 gaining 0.46%, and lastly the DJIA dropping 0.47%. Overall, the market’s deterioration has stalled this past week; however a total decline of 10% could easily be in the cards. Since the ETF portfolio is in cash the risk of a further decline is not an issue or concern.
So far, year-to-date the ETF performance has been 8.39% according to dark-liquidity.com. Moreover, now only 3f the 42 ETFs had “pass” ratings which illustrates the market’s continued weakness. The energy, metals and materials ETFs make up three of the “pass” ratings.
Indicator Review – No Change this week
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its January 3 BUY signal with the index price 5.66%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. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest August 21st bullish percentage reading of 29.0% was lower than the August 14th bullish percentage reading of 34.5%. Investors now are a bit less bullish looking out six months. This indicator still remains on its BUY signal as of April 18th and will not issue a sell signal until it rises above 50% and then declines below that level which does not appear to be imminent. The indicator will not issue a BUY signal until it falls below 25% in one week and then moves about that level in a subsequent week.
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 Remains 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. The Dashboard ETF portfolio year-to-date is up 8.39% which has improved substantially from prior weeks, but is still below that of the three major indexes. Year-to-date, the NASDAQ Composite is up 19.15%, S&P 500 is up 16.64%, and the DJIA is up 14.55%. If the market drops in coming weeks, then the BDH year-to-date performance will improve relative to the market’s performance.
Top 5 ETFs – 100% Cash
The Top 5 ETFs were up 6.60 % since the April 26, 2013 buy signal compared to the market averages up 6.14%. Details are provided in the following link:
Note that on the etfscreen.com/buydonthold Decision page that now only 3 out of 42 ETFs have a “pass” rating which is a drop of 1 from the previous week. Currently the first 32 ETFs 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 and Decline Stalled Last Week
The stock market has reversed downward during the past three weeks with slight bounce this past week, as the market internals have further deteriorated. Being in cash and out of equity and bond ETFs is the safest strategy right now. Bond ETFs continue to suffer price declines.