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The stock market was flat for the week with the major indexes down between 0.20% to o.50% For the YTD: DJIA + 18.52%; S&P + 15.34%; and NASDAQ +25.41% compared to 10.45% for the BDH strategy.
All major averages closed at or near all-time highs again during the week.
Market Internals Weaken
There are still many stocks not participating in this rally. The number of new 52-week NYSE highs fell from 434 two weeks ago to 356 this past week, still not very impressive for a market at new highs. Normally, a market near its highs has 700 t0 800 stocks or more participating. The percentage of NYSE stocks above their 50-dmas is currently at 55.79% compared to 66.30% two weeks ago, and down from a reading of 79% on October 18. The percentage of stocks above their longer-term 200-dma is currently at 65.91% declining from 71% on October 18. Clearly, the market is weakening internally, but certain groups of stocks with their best performers is making it appear that most stocks are participating in the rally. This is NOT the case.
Oil and energy stocks were up again about 2 %, while gold was up 0.42%, and gold miners up 0.40% . Fixed income moved lower about 0.50%. 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. Also,key-in in AMZN and GOOGL to see the massive moves on Friday
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on November 8, 2016. (see first chart above). This buy signal is now over one year old and has stayed with the trend.
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD BUY signal on October 31 cancelling the previous SELL signal on October 23 (refer to upper chart’s MACD indicator). Note the orange circle in the top chart showing the down turn in the MACD. but not yet a crossover.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest November 8, 2017 Bullish Percentage reading was 45.1% even 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 October 17 as the MACD had a negative crossover(see green circle in the nearby chart). This confirms the earlier Summation Index negative on the same day (see upper portion of that chart).
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 on “3” BUY signal
Here is the latest Dashboard. Click on the line below:
Note that I could not provide a spreadsheet type link due to a software issue with this WordPress software. Go back to January 2017 to see the last spreadsheet and all prior data.
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 10.45%. It is dropped to 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 – 100% Cash Position
We are still in a 100% cash position, so no ETFs are currently held. The risk is too high to enter the market right now. Prudence is called for as the market internals continue to weaken, as is the Small Cap 600 index,
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, when 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 change is aimed at entering the market as soon as possible after a BDH Dashboard buy signal
This week the number of “passes” was 31 with 9 of the top 10 with pass ratings, similar to the prior week’s numbers Using the old criteria, this number for the top 20 would have been 6. So going forward this will allow the strategy to buy the top ETFs in a more timely manner.
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, gasoline (UGA), international (EWC, EEM, EWT) and sectors (SMH, PBW, VGT, DIA, and QQQ) are performing the best).
Conclusion — Market Advance Stays Intact
The stock market continues to resist a decline. 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.