As is the case every other week, this will be a shortened blog.
The stock market continued to steam roll ahead, oblivious to any negative news domestically or internationally. All major averages, as well as the Russell 2000 made or closed at new all-time highs.
On Monday, Indicator #5 issued a BUY signal as the MACD had a meaningful positive crossover, as mentioned as the probable occurrence in last weekend’s blog posting. This resulted in a BDH Dashboard reading of “4” Maximum BUY rating.
For the week, the DJIA led the way up 1.65%, followed by the NASDAQ Composite up 1.45%, and the S&P 500 up 1.19%. For the year, the DJIA is up 15.24%, the NASDAQ is up 22.42%, and the S&P is up 13.87%. The BDH strategy is up 10.45%.
Oil was down 4-6% for the week, while fixed up was up slightly, and gold miners advaned 2.7%.
There were 528 new highs for the week, the best level in months.
Nevertheless, based on the big rally since September 25 through October 6, it would not be prudent to re-enter the market at this time. Look at the chart above and notice the three prior occasions (upward sloping green trend lines) when the NASDAQ advanced and then fell between 2.8% – 4.38% right after. These dates for these up trends were as follows:
April 17 – May 16
May 18 – June 8
July 6 – July 27
September 25 – October 6
If the market takes a similar average percentage turn downward (3.6%) beginning next week, then we can expect the NASDAQ Composite drop to about 6353 (red horizontal line). At that point a better entry point would be present, unless the market continues to decline from that point.
In conclusion, the BDH portfolio is 100% in cash and will stay there until a better entry point occurs. Note that the BDH strategy has been on a BUY signal since November 2016, the longest one since this website went live in April 2010. Had we not used stop loss orders this year, the performance of the BDH strategy would have been much better. But no one has a crystal ball.