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The stock market has experienced a rough ride during the past two weeks, and the NASDAQ Composite closed below its 50-dma on Friday (see chart to the right with the red arrow). All three major averages took a hit this past week with the NASDAQ Composite down the most at 1.5%, followed by the S&P 500 down 1.43%, and the DJIA down1.06%.
For the 2017 year-to-date, the DJIA has gained 10.60%, compared to 9.04% for the S&P 500, and a 16.23% for the NASDAQ which is still the big leader among these three indexes year-to-date. The BDH strategy has lagged the market up 6.35%. Over the course of the year, our 5% stop limits took us out of many positions, only to repurchase them at higher prices. Obviously, this tight a stop did not work in our favor. In hindsight, any stop over 8% would have kept us in the market for most of the year with much better results.
There are still many stocks not participating in this rally. The number of new 52-week NYSE highs declined to 258 compared to 388 the week before. Moreover, during the past four weeks the percentage of NYSE stocks above their 50-dmas declined to 40.88% from to 71.42%, a big drop in a short time period. Also, the percentage of stocks above their longer-term 200-dma is currently 58.86% declining from 68% a few weeks earlier.
Oil and energy stocks had a bad week falling over 1% to 2.6%, while gold and gold miners rallied 2.62% and 3.72%, respectively. Fixed income did well up between 0.58% to 1.26%. 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 Review – No Changes This Past Week,
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 SELL signal on August 1 cancelling the previous BUY signal onJuly 13. (refer to first chart’s MACD indicator).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest August 8, 2017 Bullish Percentage reading was 33.7% down 2.4 percentage points from 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. This indicator flashed a SELL signal on August 2 as the MACD had a negative crossover(see red circle in the nearby chart). This confirms the earlier Summation Index negative crossover a few days earlier.
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 Now on “2” NEUTRAL 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 to post a portion since the beginning of the year. 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 6.35%. It is in 13th place out of a 22 strategies followed by that website. See the “Strategies Summary” link on the top of their page.
Top 5 ETFs – 80% Invested as of August 11 2017
PBW was sold on August 11 on a 5% trailing stop. Thus the portfolio consists of 20% cash and BRF, EEM, VGT and XLV. All these ETFs have a “fail”rating. We will not be investing the 20% cash position as the BDH Dashboard is on a “2” NEUTRAL signal.
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). Gold and silver had a good week, yeart to day their performance has been mediocre.
Currently, only 8 ETFs have a “pass” rating out of 52, the lowest number in weeks.
Conclusion — Market Advance Stalls
The stock market has broken down over the past two weeks. This is not surprising based on the market’s phenomenal run to date, the start of August -September traditionally weak period, and the U.S. North Korea tensions. We’ll see if the market can make further headway during the next six weeks.
Be patient and keep the emotion out of the investment equation. Keep your stop LIMITs in place and ride the market as far as it goes. Make sure to check www. dark-liquidity.com for any ETFs in the portfolio that exceed their stop LIMITs . Ride the portfolio until the next BDH sell signal occurs or you are stopped out beforehand.
Have an enjoyable summer week ahead and try to stay cool.
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.