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The stock market was struggling from Monday through Thursday, but with Friday’s blistering tech rally, the NASDAQ Composite Index skyrocketed 144.49 points or 2.2%, the market closed higher for the week by a marginal amount as follows: DJIA + 0.45%; S&P 500 +0.23%: and NASDAQ +1.09%. For the YTD: DJIA + 18.49%; S&P + 15.25%; and NASDAQ = 23.24% compared to 10.45% for the BDH strategy.
All major averages closed at or near all-time highs. The big point gain in the top tech companies ( Amazon +$128.52 or 13.22% at $1100.95, and Google +$42.25 or 4.26% at $1033.67, and a handful of others. AMZN and GOOGL closed at all time highs). helped he market recover its bearing. Whether this is a blow-off move by these tech companies, reminiscent of the 2000 top in the market, or a new era in tech company profits, remains to be seen.
Market Internals Weaken
There are still many stocks not participating in this rally. The number of new 52-week NYSE highs is in the 450 to 520 range, 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 66.30% down from a reading of 79% on October 18, also the percentage of stocks above their longer-term 200-dma is currently at 66.30% declining from 71% on October 18. Clearly, the market is weakening internally, but certain groups of stocks with the best performance 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 4 t0 5 %, while gold was down 0.48%, and gold miners down even more at 2.84% . 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).
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD SELL signal on October 23 cancelling the previous BUY signal on September 25 (refer to upper chart’s MACD indicator). Note the orange circle in the top chart showing the up turn in the MACD. but not yet a crossover.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 25, 2017 Bullish Percentage reading was 39.6% up 1.7 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 BUY signal on September 1 as the MACD had a positive crossover(see green circle in the nearby chart). This confirms the earlier Summation Index positiive crossover a few days earlier (see upper portion of that chart). Note that the indicator’s are starting to curve down on the chart nearby.
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” BUY signal
Here is the latest Dashboard. Click on the line below:
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 12th 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.
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” were 32 with 19 of the top 20 with pass ratings. Using the old criteria, this number for the top 20 would have been 11. 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 (BRF, EEM) and sectors (SMH, PBW, VGT, XLF, and XLB) are performing the best).
Conclusion — Market Advance Stays Intact
The stock market continues to resist a decline, although the market was weak early in the week. It turned around abruptly on Friday. The huge 2% tech rally on Friday brought the market back to new all-time highs. We’ll see if the market can make further headway. This may be a blow-off top so be careful here. 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.