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This past week the stock market hit a new record high, as all three major averages participated in this impressive rally. The BDH Strategy remains on its”3″ BUY signal.
This week two ETFs were sold. IWM hit its 5% trailing stop and XLF sank to ranking 36 in the etfscreen.com table. Therefore, the ETF portfolio is 40% in cash. No reinvestment will be madel at this time, as the risk is too high after the last 12-day rally. We will look for a better entry point. Normally we would reinvest when the BDH Dashboard is on a “3” BUY signal or higher, but this is not the time to entry the market.
For the week, the DJIA rose 0.60%, the S&P 500 gained 0.96%, and the NASDAQ Composite rose strongly gaining 1.54%. For the 2017 year-to-date, the DJIA has gained 7.31%, compared to 8.94% for the S&P 500, and a big 17.14% for the NASDAQ which is still the current leader among these three indexes year-to-date. The BDH strategy has lagged the market up 6.65%. VGT (+22.45%) and SMH (17.46%) are leading the way higher, as technology stocks are clearly outpacing the market. However, IWM, XLF and BRF have all lost money since their purchase on April 3.
There are still many stocks not participating in this rally as there were only 435 new 52-week NYSE highs compared to 370 the prior week. Normally, at or near bull market highs there are well over 700 new highs. Moreover, the percentage of NYSE stocks above their 50-dmas is at 61.47% well below the peak it hit earlier in the year. Also, the percentage of stocks above their longer-term 200-dma is currently 65.61%% not moving much from the prior week.
Oil and energy stocks declined again hitting their yearly lows, gold miners were flat and fixed income prices closed at their highs for the year. In the above chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current bond weekly performance, or GLD, GDX and USO and $BRENT for the other averages.
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on November 8, 2016. (see first chart above).
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD BUY signal on May 26 cancelling the May17 SELL signal (refer to first chart’s MACD indicator).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May31, 2017 Bullish Percentage reading was 26.9% down 5.9 percentage points the prior week. This indicator remains on its long term buy signal with numerous confirmations along the way.
Indicator #8 NASI Summation Index and MACD. The Summation Index did cross below the 5 day ema (see red circle) in the upper portion of the accompanying chart. A negative crossover of the MACD occurred on May 18 (see second lower red circle). Thus, this indicator is still on a SELL signal as of May 18. The Index did cross its moving average a week ago but was not confirmed yet by the MACD.
Here is a chart showing all Dashboard buy and sell signals (it may take a day or two for the new signal to be posted):
Dashboard Remains on “3” BUY Signal
Here is the latest Dashboard:
I have a software problem posting the full Excel spreadsheet of the Dashboard to this blog, so I’m using WORD instead. If you need the complete worksheet since 2010 go to the January 2, 2017 blog and click on it there. Sorry for the inconvenience.
Dark Liquidity BDH Performance Statistics
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For the year-to-date 2017, BDH is up 6.43%. It is in 12th place out of a 20 strategies followed by that website. See the “Strategies Summary” link on the top of their page.
Top 5 ETFs – 60% Invested
Since the 10/26/2017 BDH BUY signal, the ETF portfolio has gained 12.25% compared to a gain of 17.08%% for the three major averages. Our portfolio held three ETFs since April 3 that have lost money — BRF, XLF and IWM — while VGT and SMH have soared. Also, BRF lost 16% intra-day in the prior week whioh hurt the portfolio results. It opened that day well below its STOP LIMIT order and was not executed. We have held it since and it has partially recovered.
Here is the link to the Decision Page: http://www.etfscreen.com/buydonthold/bdh-decision-page.php
To get a feel where the best performing ETFs are by asset class, I suggest that you pull up the seven asset classes on the right side of the Decision Page (in blue ink) to see which ETFs have been doing the best — e.g., sector ETFs. You can click on the down arrow in the three month and one month columns of the each grouping to see short-term performance. Currently, international stocks and sectors (technology and semi-conductors) are leading the pack.
Currently, 32 ETFs have a “pass” rating out of 52. This is not very impressive in a market making new highs. Therefore, it is important to focus on stocks that are leading the market higher, but making sure to weed them out based on the BDH criteria.
Conclusion — Market Vaults to New Highs with NASDAQ Composite Leading the Way
The stock market has confounded most observers, professionals and traders as it seems to continue to ignore most negative domestic and international financial, economic and political events. Even the “Sell in May’ mantra is not working out yet as May was a positive month for the market. Keep your stop LIMITs in place and ride the market as far as it goes. Make sure to check eftscreen.com for any ETF in the portfolio that exceeds its stop LIMIT or falls below rank 20 in the table. Look for the next opportunity to use the 40% cash for reinvestmen.t
Remember that you are responsible for your investments and how you manage them. If you decide to follow the BDH strategy, then you are responsible for checking the BDH indicators daily during times when the market is volatile. Just bookmark the two charts above and look for any signal changes. I may not available during the week to provide interim Dashboard signal changes. It is important to be pro-active, so as not to miss any Dashboard signals. Decide on and place your stop LIMITS that meet your risk profile.