Note To Subscribers: There was no interim update last week and probably not one this week unless we get a BDH Buy signal which does not appear likely.
This will be a shortened blog which is typically the case every other week unless there is a BDH signal change.
In the heat of the summer in many parts of the country, the stock market took a break to cool off. The three major averages moved slightly higher with the DJIA up 0.05%, the S&P 500 up 0.76% and the NASDAQ Composite up 0.96%. The former two averages have risen for the last five weeks, and the later finally moved up after two weeks of losses. That is a pretty good performance considering the summer doldrums which is normally the case. The August through mid-October period is normally one in which the market tends to see a market downtrend, but we are certainly not in normal times if we are aware of what is happening in the news every day.
We are atill on a BDH Dashboard to a “1” SELL signal from the prior NEUTRAL signal on July 10.
For the week, the NASDAQ was down 1.06%, the S&P 500 advanced 0.61%, and the DJIA rose 1.57%. The S&P 500 and DJIA have been up four weeks in a row, but the NASDAQ is now down the last two weeks. Perhaps the NASDAQ rally is over, while large cap stocks represented by the DJIA and &P 500 are starting to take the lead. Small cap stocks had s rough week down almost 2%.
The number of new NYSE 52-week highs was 251 up from 200 the prior week, but still paltry for a market near new highs. The percentage of NYSE stocks above their 50-dmas rose is 58.12%. The percentage of stocks above their longer-term 200-dma is currently at 59.68% flat for the past few weeks.
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator’s last BUY signal was on May 5, 2018. See upper chart
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD SELL signal on July 27, 2018, thereby reversing its July 10, BUY signal. Refer to the first chart’s red circle on the negative MACD crossover on Friday. Note also that the red support line was breached to the downside also on Friday.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest July 25, 2018 Bullish Percentage reading was 31.5% down 3.1 percentage points from the prior week. Remember that a reading below 25%, then followed by any subsequent weekly advance below that level is a BUY signal on this indicator. If the market keeps rising from here the likelihood is that indicator will not decline below 25%.
Indicator #8 NASI Summation Index and MACD. This indicator is currently on a June 21, 2018 SELL Signal, as the Index closed below its moving average in the upper portion of the chart thus confirming the earlier MACD negative crossover. See nearby chart with two red circles
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” SELL signal
Here is the latest Dashboard. Click on the line below:
Note that I could not provide a normal 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. Year- to-date, the BDH strategy is up 2.84%. The NASDAQ Composite is up 12.08% YTD, the S&P 500 is up 5.93%, and the DJIA is up 2.86%.
Top 5 ETFs – 100% Cash
No ETFs are currently held.
BDH Decision Page – BDH Dashboard ETFs
Here is the link to the Decision Page. Copy and paste it into your browser:
Currently, there are 34 “passes” out of 44 ETFs, and 17 “passes” among the top 20 ranked ETFs, clearly indicating the market relative strength leaders are still doing well. Also, remember that I changed the ETF universe a few weeks ago. The current ETFs are shown on www.etfscreen.com/buydonthold Decision page.
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, XOP, VGT, XLE, QQQ, XLY, FDN, ARKW, SKYY, and ARKK are the strongest ETFs in their respective categories.
Conclusion — Market Trying to Work Its Way Higher
Indicator #5 and #8 do not look they will be providing a BUY signal next week, and Indicator #6 will probably not drop below 25% next week so that indicator will not come into play. Therefore, we will have to patiently wait for a higher market to get the next BDH “3” BUY signal. As is normally the case, whenever the market (in our case the NASDAQ Composite as it is the index used for the BDH strategy) comes off a decline, the market has to rise about 5% or more for the BDH indicators to give a BUY signal. It can be difficult for investors to wait for the signal as the market keeps rising while we are 100% in cash, but that is a fact of life, if the BDH strategy is followed.
The NASDAQ Composite’s current position is below its red support line. That line now turns into a resistance line. The Index needs to rise about 70 points from Friday’s close to achieve that goal. We well see what happens next week.
Aggressive investors who want to enter the market before the next BDH BUY signal is given should consider XOP, QQQ, XLY, XLU, and IWM as suitable ETFs. We are not recommending that approach, just mentioning it to those individuals who want to take more risk and want to get back into this market sooner rather than later. Of course, anyone buying these ETFs or others should have appropriate rules for exiting their positions should the market reverse after a purchase is made. Remember that entering this market when there is a BDH SELL signal in place is opposite of what should be done, but each investor is responsible for their own decisions.
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As of March 23, 2018, this site has been offering a yearly subscription for $20 for interim weekly updates and additional analysis, as needed. This blog is still free, but some information and analysis will be provided only to subscribers. If you’ve sent me a payment, but have not received the earlier emails, then please email me at firstname.lastname@example.org. Please click on the following link for subscription details:
Interim mid-week emails to subscribers will not be sent out each week unless there is a BDH signal change, an indicator signal change, an ETF sale or an unusual situation.