The stock market has opened 2018 with a bang — up two weeks in a row — and up over 4% so far. For the week, the NASDAQ Composite was up 1.74%, while the DJIA rose 2.01% and the S&P 500 gained 1.57%. YTD: NASDAQ up 5.18%; DJIA up 4.39% and S&P 500 up 4.21%. The BDH strategy is up 4.72% outpacing the DJIA and S&P 500. Note on the chart the steep angle of the NASDAQ Composite advance. This rapid price rise is not sustainable so expect to see a trading range at the minimum going forward to consolidate the gains.
One BDH Signal This Week
There was one BDH signal change this past week. Indicator #6 (AAII Sentiment Survey Bullish Percentage) experienced a SELL signal on January 10, 2018, resulting in an overall BDH signal of “3” instead of 4. This reverses the May 27, 2015 signal on this indicator.
The number of new 52-week NYSE highs finally showed some upward momentum this past week as it hit 584 compared to 475 the prior week. Surprisingly, the number of new lows actually rose to 114 from 80 the week earlier. Normally, a market near its highs has 700 to 800 stocks or more participating. The percentage of NYSE stocks above their 50-dmas is currently at 76.14% jumping 10 percentage point in the past two weeks and a reading of 79% on October 18. The percentage of stocks above their longer-term 200-dma is currently at 73.57% surpassing the recent high of 71% on October 18.
Oil stocks rallied big time up about 5%, while gold and gold miners were up 1.5%. Fixed income fell 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.
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a SELL signal on November 8, 2016. (see first chart above).
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD BUY signal on January 3, 2018 cancelling the previous SELL signal on December 18 (refer to upper chart’s MACD indicator). Note the Index has taken out the red resistance line twice in the past few weeks by moving higher, and continues to accelerate higher.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest January 10, 2018 Bullish Percentage reading was 48.7% down a whopping 11.1 percentage points from the prior week. This indicator has now triggered its first sell signal since May 27, 2015. Remember that a reading above 50%, then followed by any subsequent weekly decline below that level is a SELL signal on this indicator. That is what occurred this past week.
Indicator #8 NASI Summation Index and MACD. This indicator is currently on a BUY signal, but both measurements encircled in orange indicate that the upper and lower indicators are flat lining. We will see which way the market goes from here.
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 “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 2018, BDH is up 4.72%. It is in 10th 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% Invested on December 26, 2017 Open
The current Top 5 table is shown here:
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
Currently, there are 42 “passes” out of 52 ETFs, and of the top 38 ETFs have “passes” with the new criteria.
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, EPI) and sectors ( PBW, XLF, VGT, and DIA are performing the best).
Conclusion — Market Advance Continues
The stock market moved higher again last week. Note that the November 2016 BUY signal has stayed in place with no interruption. We are 100% invested in ETFs so the BDH strategy will take advantage of the advance until it reverses.
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.