In light of the big market drop this past week, a full blog posted is provided.
The stock market got crushed this past week with the DJIA declining over 1095 points or 4.12%, and the NASDAQ Composite falling 264 points or 3.53%. The S&P 500 fell 111 points or 3.85%.
The BDH Dashboard changed from a “3” BUY signal to a “1” SELL signal on February 1, as both indicators #5 and #8 went negative (see accompanying two charts). This resulted in 4 ETFs being immediately sold on the open on February 2. XOP was sold on January 30 on its trailing 5% stop. Therefore, as of the open on February 2 all the ETFs were converted into cash. There are currently no open ETF positions. These results are shown in the links below.
This the first BDH Dashboard SELL signal since November 10, 2016. This strategy stayed with the trend the entire time until this past week. As of the close on Friday, the BDH strategy had a YTD gain of 2.79% compared to 3.81% for the three major averages.
YTD the DJIA is up 3.24%, the NASDAQ is up 4.89% and the S&P 500 up 3.31%. The month of January had one of the best performances in years, but this week’s decline in the DJIA was the worst in two years. Whether or not this is the beginning of a correction or worst remains to be seen. No one knows what will happen next.,
The number of new NYSE 52-week highs cratered to 360 from 621 the prior week. Also, the number of new 52-week lows jumped significantly to 483 from 153. Normally, this number of new lows would be a note of caution. However, upon looking through the list of new lows, I found that at least three-quarters were preferred stocks or fixed income related, not equities. Therefore, this increase does not show a broad selling of standard equity ETFs
Note what I wrote in the blog last weekend: “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.” Well we certainly had much worse than a trading range last week as indicated by the top red circled area in the upper chart.
As to be expected the percentage of NYSE stocks above their 50-dmas dropped sharply to 48.46% down from 75.12% the prior week. The percentage of stocks above their longer-term 200-dma is currently at 63.77% falling from 73.65% the prior week.
Oil stocks fell about 1.5%, while gold and gold miners dropped 1.3%, and 3.3% respectively. Fixed income also fel, but less than 1%. 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 BUY signal on November 8, 2016.
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD SELL signal on February 1, 2018 cancelling the previous BUY signal in November.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest January 31, 2018 Bullish Percentage reading was 44.8% down a 0.7 percentage points from the prior week. This indicator triggered its first sell signal on January 10, 2018 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.
Indicator #8 NASI Summation Index and MACD. This indicator is currently on a SELL signal, as of February 1, 2018 (second 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 Now on “1” SELLsignal
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% Cash
The current Top 5 table is shown here:
Note that four ETFs were sold this past week.
BDH Decision Page – BDH Dashboard ETFs — Note Change Below
Here is the link to the Decision Page. Copy and paste it into your browser:
Currently, there are 24 “passes” out of 52 ETFs.
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 ( , XLF, VGT, and DIA are performing the best).
Conclusion — Market Hits Bump in Road
The stock market tanked this past week after a phenomenal rise in 2017, coupled with a solid January. Wait for the next BDH BUY signal by being safely in cash. If you waited until this weekend to read the blog, then you missed the Thursday night SELL signal and the Friday morning ETF sales. Read the warning below so that does not happen to you again.
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.