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This will be a shortened blog as is the case every other week.
The stock market continued its slow grind higher closing at all-time highs again. For the week the marginal gains were as follows: DJIA + 0.45% (the same as the prior week); S&P 500 +0.26%: and NASDAQ +0.94%. For the YTD: DJIA + 19.11%; S&P + 15.59%; and NASDAQ +25.66% compared to 10.45% for the BDH strategy.
Market Internals Weaken
There are still many stocks not participating in this rally. The number of new 52-week NYSE highs was 434 compared to 485 the prior week. The percentage of NYSE stocks above their 50-dmas is currently down again at 61.21% down from a reading of 79% on October 18, also the percentage of stocks above their longer-term 200-dma is currently at 66.39% declining from 71% on October 18, but stable the past two weeks. Clearly, the market is weakening internally, but certain stocks and groups of stocks are making it appear that most stocks are participating in the rally. This is NOT the case.
Indicator #5 issued a new BUY signal on October 31 (see first chart), thereby moving the BDH Dashboard to a “3” BUY signal. We are still staying in cash because of the risk involved. We may be given up more upside here, but prudence suggests that we stay on the sidelines.
BDH Decision Page – BDH Dashboard ETFs — Note Change Below
Here is the link to the Decision Page. Copy and paste it into your browser:
Change in ETF Indicator Logic
Effective October 25, 2017,the “pass” criteria was changed from requiring that all three conditions (Initial Tests) be met to requiring that any 2 of the 3 conditions be met. This will make it quicker to purchase ETFs after a BDH Dashboard BUY signal is given. In the past although a BUY signal was given many ETFs in the top 20 did not have pass ratings so they could not be bought at that time. This delayed the purchase date and gave up some upside.
This week the number of “passes” was 32 with 17 of the top 20 with pass ratings. This is similar to the prior week’s numbers.
Conclusion — Market Advance Stays Intact
The stock market continues to resist a decline, although the market internals are getting weaker. Be patient and keep the emotion out of the investment equation. If you are still invested keep your stop LIMITs in place and ride the market until the next BDH sell signal occurs or you are stopped out of any position beforehand.
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.