Note: Interim updates are sent only to subscribers during the week, as needed. There was one interim update this past week on Tuesday in early afternoon. Any subscriber not receiving this interim update should email me at email@example.com. To subscribe go to the end of the blog for instructions.
The stock market experienced its fourth solid weekly advance since the December 24 low point. For the week, the DJIA advanced 2.95%, the S&P 500 rose 2.87%, and the NASDAQ gained the least at 2.66%. For the year-to-date the DJIA is up 5.91%, the S&P is up 6.54%, and the NASDAQ is up the most at 7.87%. This compares to BDH’s performance of 0.90%, based on our 50% entry on Tuesday, as explained below.
GLD lost 0.64% for the week, while GDX fell 3.65%. Oil prices accelerated higher again with USO up a solid 3.76% after big jumps the prior two weeks, and $BRENT was up 3.48%. On the fixed income side, TLT lost 1.13%% and IEF fell 0.71%.
The NASDAQ Composite 7000 resistance level was tested and failed three times the week of January 7th, but it finally was solidly able to vault above it (see circled area on nearby chart) on Tuesday and kept going higher as the week progressed. The next key resistance level is 7274 (the green horizontal line). That is the next near-term target. Also note that the 50-dma was also penetrated to the upside on Tuesday, another positive sign of an advancing market.
Note that the critical 100-dma (Indicator #2) is at 7363 (dark green line), and the 200-dma is right above that at 7451 (purple line).
The percentage of the NYSE stocks are above their 200-dma is now at 34.12% up from 28.48% the prior week. The percentage of NYSE stocks above their 50-dmas (see last chart on page)was 75.92% a tremendous jump from 50.86% the week before, and a huge jump from 25.51% two weeks prior. Thus, the market has made a phenomenal v-shaped recovery from its lows. Looking at the last chart on the page, you can see how the percentage of stocks above their 50-dma has skyrocketed to an oversold level which was reached in a few other years. Clearly, a market pullback from here would be normal to consolidate the gains.
The number of NYSE stocks with 52-week lows rose to 42 from 38 the prior week New highs were 54 compared to 35 the week before. It will take another 2 to 4 weeks of a rising market for the new highs numbers to reach triple digits.
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):
BDH Dashboard Remains on January 3 BUY Signal “3”
The Dashboard from last week has not changed and the link is as follows: Version 2 Dashboard Weekly Results January 18, 2019
Note on the upper chart for that the NASDAQ is getting closer to its 100-dma (Indicator #2).
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator had a SELL signal on the close on Monday October 8. See the upper chart The last signal on this indicator was on April 23, 2018. A new BUY signal is nearing, so get ready for it.
Indicator #2A NASDAQ Composite Index and 200-dma. This indicator issued a SELL signal on November 9. This subset indicator will be used when the market falls below the 200-dma and then begins to turn up. It will normally be pierced to the upside before the 100-dma and will provide a quicker entry signal. Currently it looks like the 100-dma will be pierced to the upside before the 200-dma, therefore this indicator will be removed shortly, as its purpose is no longer useful.
Indicator #5 NASDAQ Composite with MACD. This indicator issued a fast MACD BUY signal on December 27, 2018, thereby reversing its last SELL signal on December 7.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest January 2, 2019 Bullish Percentage reading was 33.5% down from 38.5% the prior week. This reading was taken on Wednesday. This indicator remains on its recent BUY signal.
Indicator #8 NASI Summation Index and MACD. This indicator issued a January 3, 2018 BUY signal (refer to nearby chart) with both the faster MACD (6,13,5) and the Index ema having a positive crossover.
The BDH strategy performance was ranked 10th out of 23 with a 2018 loss of 1.09%.
Here is the link to the Decision Page. Copy and paste it into your browser:
On ETFscreen.com, the Decision Page indicated that 36 ETFs had “pass” ratings compared to 30 the prior week. That was a decent improvement.
Two weeks ago I mentioned that aggressive investors may want to take positions in five ETFs: BRF, XBI,XOP, ARKK, PFF and XRT with a 25% to 50% position knowing that only BRF is a “pass”. Investors who bought these ETFs have a nice profit during the past two weeks. If you click on the “Additional Fund Stats” tab on the right side of the screen, then you can array the ETFs by the best 1-day 5-day, 1-month and 3- month returns by clicking on the down or up carat under the time heading.
LAST WEEK’S CURRENT RECOMMENDATION
“After the big market run the past three weeks, the odds are that the market will stall out here or give back some of its gain. Therefore, I recommend the following approach:
If the NASDAQ opens above 7000 on Monday, then buy a 50% position (10% in each) in BRF (rank 1), XLY (20), XLI (22), SKYY (24), and ARKW (30). If it opens below 7000 the hold off making a purchase until it breaches that level during the day. If it never reaches 7000 during the day, then wait for it to exceed that intra-day level on Tuesday, etc. If that situation does not occur, then stay 100% in cash. I will send an interim update to subscribers as needed for further guidance during the week.
Note that the rankings of the recommended ETFs are all above 20 (except for BRF). Since it takes weeks for equity-based ETFs to rise in the ranking after a big decline, we have no choice but to select those that are not inverse or fixed income which are higher in the rankings. Of course we prefer ETFs to be ranked in the top 5, but we don’t want to buy defensive ETFs in a rising market, as they tend to lag in price performance.”
Top 5 ETF Portfolio – 50% Invested and 50% Cash
Based on the above recommendation, I waited until Tuesday to take a market position. On Tuesday early afternoon I emailed the following to subscribers:
Conclusion — Short-Term Market Direction Is Up Until It’s Not
The market has recovered very well and very quickly from the Christmas Eve plunge, but the question is whether or not we can go up further from here. There is the next support level at 7274 and the two key moving averages (100- and 200-dma) that the NASDAQ Composite must surpass to continue the uptrend. After this big run-up in the last four weeks so pullback or meandering is overdue, but the market may continue higher. The remaining 50% cash will be employed if the market moves at least above 7274 and more importantly above its 100-dma. I will send an interim update to subscribers at that time. Be very careful here and have your personal stop LIMIT orders in place.
Notice About A Subscription To this Site
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 interim 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: BDH Request for Support March 23, 2018
Remember that you are responsible for your investments and how you manage them. This website was developed for educational purposes only and is not responsible for any actions you take with your investments. If you decide to follow the BDH strategy, then you are 100% responsible for your investment outcome. Make sure to check the BDH indicators daily during times when the market is volatile like now. 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.