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Last week’s blog started with the sentence; “After the stock market’s big one day election relief rally on Wednesday, November 7, the market headed straight down and continued to decline through the Friday close”. Amazingly, the situation has completely reversed with a monster weekly rally in all market averages that began on Monday morning. On Wednesday morning, the DJIA jumped 618 point and the NASDAQ Composite advanced 209 points. For the week, the NASDAQ advanced a whopping 5.64%, the S&P 500 ran up 4.85%, and the blue-chip DJIA jumped 5.16%. For the month, the S&P advanced 1.8%, the DJIA added 1.7%, and the NASDAQ climbed only 0.3%. Thus, the big rally this past week saved the month from having a dismal return. Both the S&P and NASDAQ had their best week since December 2, 2011, according to Barron’s (December 3, 2018, pg. M3).
Note on the nearby chart that the NASDAQ is now above the green horizontal support line at 7274 for the last three days and is only 188 points away from its purple 200-dma. During the week, the Dashboard had new BUY signals on three indicators: #5, #6, and #8 resulting in a new “3” BUY signal on the market. The Dashboard’s BUY signal was issued on the morning of Thursday, November 29, 2018 and reported to subscribers the night before. Only a week earlier the Dashboard had a maximum, “0” SELL signal. The NASDAQ must stay above 7274 to keep the momentum going.
Subscribers were kept fully informed about the Dashboard changes and were provided with a specific buy recommendation on the evening of November 28. At that time I recommended a 50% position be taken in five high-ranked ETFs: XLV (1 rank), DIA (5), XLY 10), ARKK (14), and IYT (12). I did not select XLP, XLU, VNQ, TBF, PSQ or IEF, as they are defensive ETFs and have had price deterioration over the past week and month compared to the five I selected. So this latter group had declining momentum. If the market continues to rise this latter group of ETFs will start moving down the ranking table. so we don’t want to be in them.
GLD dropped a measly 0.20% for the week, and GDX lost 1.39%. Oil continued to decline for the eighth consecutive week with USO down 0.92% after losing 12% the week before, and $BRENT gained 0.08% after losing 12.3% a week earlier. On the fixed income side, TLT gained only 0.17% and IEF rose a minor 0.46%.
The number of NYSE new 52-week highs came in at 91 compared to 73 the prior week. The new lows contracted, but there are many fixed income, closed end funds, and preferred stocks in the mix.
The percent of NYSE stocks above their 50-dmas rose to 41.11% from 25.44%, a large increase over a week. This level is much higher than the 12.0% level hit on October 29, so that is a positive. However, the percent of NYSE stocks above their 200-dmas also increased to 33.24% from 24.782% the prior week.
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.
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 be pierced to the upside before the 100-dma and will provide a quicker entry signal. Note the the difference between the 100-dma and 200-dma lines on the upper chart is 3.4%. We can capture that difference on the upside instead of waiting for the 100-dma to be crossed. We will revert back to Indicator #2 once the 200-dma has been surpassed and stays above that level.
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD SELL signal on November 27, 2018, thereby reversing its last SELL signal on November 12.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest November 28, 2018 Bullish Percentage reading was 33.9% up from 25.3% the prior week. This reading was taken on Wednesday. Therefore, this indicator is now on its first BUY signal since 5/21/2015. Note my comments from last week: “Remember this indicator must first fall below 25% and then rise above it a week or more later for a buy signal to occur. I consider the 25.3% reading close enough to 25% to rate this indicator a BUY signal, if next week’s reading comes in at a higher level. I know this is a subjective call on my part, but I feel it is realistic as the the last BUY signal was given over 3.5 years ago on 5/21/2015.”
Indicator #8 NASI Summation Index and MACD. This indicator issued a November 28, 2018 BUY signal (refer to nearby chart) with the faster MACD (6,13,5) and the Index ema crossover in the upper portion of the 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):
Dark Liquidity –www.dark-liquidity.com
Year- to-date, the BDH strategy is up 2.63%. This website is partially restored with the Strategies tab. It will not have my latest BUY signal yet.
BDH Decision Page – BDH Dashboard ETFs
Here is the link to the Decision Page. Copy and paste it into your browser:
On ETFscreen.com, the Decision Page indicated that 28 ETFs had “pass” ratings compared to 13 the prior week. Also, 8 of the top 10 ETFs has a “pass” rating compared to 6 the prior week. If you click on the Additional Fund Stats tab on the right side of the screen, then you will see that these three ETFs have the best 5-day, 1-month and 3- month returns by clicking on the down carat under the time heading.
Our ETF portfolio is now 50% in cash and 50% invested. The current portfolio is as follows with the purchase price on November 29 which was determined by averaging the high and low of the day, as mentioned to subscribers in an interim update:
XLV $93.91 DIA $253.60 XLY $107.23 ARKK $43.94 IYT $193.46
The closing prices on November 30 were as follows: XLV $95.87 DIA $255.51 XLY $107.99 ARKK $44.45 IYT $195.28
BDH Dashboard link: Version 2 Dashboard Weekly Results November 30, 2018
Conclusion — Short-Term Market Direction Is Up Until Further Notice
The new BUY signal took place 6 days after the maximum SELL signal of “0”, quite a performance in less than one week. Subscribers were sent s few interim updates last week to take advantage of the Dashboard changes. With a 50% invested position we will look to deploy the remainder of the money probably this week depending upon the market’s performance. Subscribers will be notified with an Interim update when the timing is right.
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. 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.