Blog

Oct 26

Market Review COMP October 24 2014

The stock market had one of its best weeks in a few years, as the rally off the October 15 low barreled ahead with a sharp advance.  Triple-digit days on the DJIA occurred every day last week except Monday.   All in all it has been a sharp and fast “V” shaped recovery off the intra-day bottom.  Whether the market surges higher to take out the highs for the year that were set in September or gives back some of the gains remains to be seen.  A pause to refresh would be the expected outcome, but news events on a domestic and worldwide basis will have an impact.

All three of the major averages clearly their 200-dma from below which is a very positive sign.   The S&P 500 is now just a handful of points away from crossing above its 50-dma, while the NASDAQ Composite closed Friday about 4 points above it.  The DJIA is still the laggard about 90 points away from that moving average.  Amazingly, last week the NASDAQ Composite proceeded to vault over and close above its 50-dma, 100-dma, and 200-dma which is very rare occurrence.

Looking at the first chart we can see that the next level of resistance for this average is around 4485.  Since that average is currently at 4483.71 the probability of clearing and closing above that level this coming week should be a breeze.  Then there would be no resistance to attack its yearly high of 4610 made in mid-September.

This past week, NASDAQ Composite was the leader up a solid 5.29%, followed by the S&P 500 Index up 4.12%, and lastly the DJIA up 2.59%.

The market internals finally started to turn up from continued weakness for a least a month.  Last week the number of new 52-week highs on the NYSE rose nicely to 214 compared to 10 the prior week. Also, there was a significant reduction in the number of stocks with 52-week lows which totaled totaled 101 compared to 843 the week before.  This is huge reversal in such a short time.

For the year-to-date, with this week’s above average gains,the NASDAQ Composite is up  7.35%, the S&P 500 is up 6.29%, and the DJIA is up 1.3%.  In comparison, the BDH portfolio is up 8.00%

Gold (GLD) and gold mining issues (GDX) declined.   Bonds got crushed by week’s end. In the chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance after pulling up the NASDAQ Composite chart.

Indicator Review – Three ChangesNASI October 24 2014

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a buy signal on October 23, as the 100-dma was pierced to the upside. (Refer to first chart).

Indicator #5 NASDAQ Composite with MACDThis indicator had a clear-cut MACD BUY SELL signal on October 22. (Refer to first chart).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 15th Bullish percentage reading was 49.7% which was higher than the October 15th bullish percentage reading of 42.7% by a full seven percentage points.  Investors were much more bullish going out six-months into the future than they were a two weeks  ago.  This week’s higher reading is nearing the critical 50% level.  Remember if this level is reached going forward that any drop below that level would be considered a sell signal on this indicator.   This indicator continues on its sell signal from September 3rd.

Indicator #8 NASI Summation Index and MACD. This indicator is on a BUY  signal as an MACD crossover BUY signal occurred on October 23 while the Index crossed above its 5 day-ema on October 20.  Refer to the second chart and the blue arrows indicating a potential basing and possible upturn in the Index and the MACD. if the market works higher next or beyond.

A chart of the buy and sell signals is presented here:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard on “3”   BUY Signal

The latest update is shown here:

Dashboard-V2 October 24, 2014_WC

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. So far, year-to-date the BDH portfolio is up 7.68 % compared an average gain of 0.95% for the three major averages.  You will note that under the Strategies tab of this website that the BDH portfolio is in first place for 2014 performance compared to all the other strategies tracked including the major indexes tracked.

Top 5 ETFs –  40% In Cash, but 100% by Monday open

The portfolio is now 40% in cash as of the Thursday BDH Dashboard BUY signal (see interim blog post on Thursday) where IBB and VNQ were purchased as they were the top 2 ETFs with “pass” ratings on that day.  However, as of the Friday close, the following high-rnaked  ETFs had a “pass” ratings: EPI, QQQ, XLV.  Therefore, they will be bought on the open on Monday.

The Top 5 ETF listing containing 42 ETFs had  13 ETF with a “pass” rating an increase from about 3 the prior week and on Thursday.  The number of ETFs with a “pass” rating will increase as the market moves higher.

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.  You can click on the down around in the  3 month and one month columns of the each grouping to see short-term performance.  You will not the strong performance of the sector funds as compared to the weak performance of international funds, except for EPI (India).

The current Top 5 data is presented here:  Top 5 ETF Tracking October 24, 2014

Note that VNQ is ranked 9th and we will watch it closed and replace it in the portfolio if it drops below rank 20.

Point-and-Figure Chart NYSE Percentage of Stocks Above 50-dma

The number of NYSE stocks above their 50-dma on chart on the right has advanced smartly to 40.66% from its low reading of 16% on October 17.  This is a very positive sign and one that could indicate that the recent lows for the 2014 have been seen.

Conclusion  — BUY signal timing is not optimal

Based on last week’s market action this rally appears to be real and have legs for a further advance.  The current BUY signal is NOT coming at an optimal point as the market has skyrocketed higher in a “V” shaped bounce back not allowing us to get in at more realistic and lower price levels.  We may get a pullback next week which could be a better time to buy the portfolio.  It is your call how and when you buy the ETFs for your portfolio.  However, we will follow the BDH strategy and make the purchases on Monday.

Have a great week ahead.

Oct 23

Market Action COMP October 23 2014

After another triple digit rally in DJIA and equivalent or better percentage moves in the other two major averages, the Dashboard registered a “3” BUY signal.  The NASDAQ Composite (see chart) index closed above its 100-day ma (green line) after approaching it last Thursday, but closing below it on Thursday and Friday.  In the interim the MACD had a crossover last Friday (a miniscule crossover on Thursday).

Today the NASI Index had a MACD positive crossover confirming the prior crossover a few days earlier in the Index and its 5-dma.  Look at second chart.

Therefore, Indicators #2, 5 and 8 are on BUY signals.

NASI October 23 2014Top 5 ETFs

Interestingly only three ETFs had a pass rating at today’s close on etfscreen/buydonthold decision page.  So I need to make a judgment call on investing.  Among the top 15 ETFs only two have ‘pass’ ratings — those are IBB and VNQ.  Therefore,  only these 2 ETFs will be purchased on Friday with 20% each of the funds.

Be very careful here as the market has skyrocketed since 1:30PM last Wednesday and is probably due for a decent pullback over the next few days.  You may want to wait for a lower entry point depending on your personal risk parameters.  As far as the BDH strategy is concerned we will buy the two ETFs as mentioned at Friday’s opening price.

I will provide a full report this weekend.

Oct 18

Market Review COMP October 17 2014

The stock market had a monster roller-coaster week, but this time it ended with a solid rebound by week’s end, a good sign.  Triple digit days on the DJIA continued with huge drops on Monday and Wednesday (down 460 points at the day’s low) followed by a 263 point gain on Friday    On Thursday the market took an initial dive almost touching the lows on Wednesday before recovering smartly.  All in all it, was a heart stopping performance, but the week closed out with a strong gain on Friday.

All three of the major averages are approaching their 200-dma from below and need to cross it to ensure that this 2.5 day rally continues to proceed.  The S&P 500 came within 5 points of this average intra-day at week’s end but closed 26 points below it.  If you type in $spx in the ticker symbol box in upper left hand corner of the accompanying chart,then you can see this clearly.

Looking at the above chart, you can see that for the NASDAQ Composite Index’s to continue to advance in price that it needs to stay above its lower support line at 4250, as well as this week’s low on Wednesday at 4116.60, and then needs to take out its 200-dma and then resistance  at 4375.

This past week, the S&P 500 Index was the laggard falling 1.02%%, followed by the DJIA declining 0.99%. The NASDAQ Composite was the leader, but still declined 0.42%.  The Russell 2000 small caps were the big winners up 2.75%, although they fell on Friday after solid relative performance on Wednesday and Thursday.

The market internals continue to weaken as the number of new 52-week highs on the NYSE totaled 10 compared to 103 the prior week.  More disturbing was the number of stocks with 52-week lows which totaled totaled 813 compared to 656 the week before. Clearly, 25% of all NYSE stocks hit their lows for the year this past week when just four weeks ago  hundreds of stocks were hitting new hits.  This is quite a significant reversal in such a short time.  This is not surprising based on past history of corrections which can be quick and deadly causing investor’s to panic.

For the year-to-date, the NASDAQ Composite is up only  1.96%, the S&P 500 is up 2.08%, and the DJIA is down 1.18% In comparison, the BDH portfolio is up 7.68%

Gold (GLD) had a positive week , but surprisingly gold mining issues (GDX) declined.   Bonds had huge advances and extreme volatility on Wednesday (hitting 52-week highs) but gave back most of the gain by week’s end. In the chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance after pulling up the NASDAQ Composite chart.

Indicator Review – No Change

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its October 10 SELL signal, as the 100-dma was pierced to the downside.

Indicator #5 NASDAQ Composite with MACDThis indicator had a clear-cut MACD crossover SELL signal on September 10. (Refer to first chart).  However, the MACD appears to be bottoming and slightly turning up.  A big advance next week would most likely result in a positive crossover by week’s end.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 15th Bullish percentage reading was 42.7% which was higher the October 8th   bullish percentage reading of 39.9%. Investors were slightly more bullish going out six-months into the future than they were a two weeks  ago.  This week’s higher reading is quite surprising as the survey was conducted on Wednesday when the DJIA was down 460 points before gaining a portion back by the close.  I would have expected a reading of 25-30% instead, but that did not happen.  This indicator continues on its sell signal from September 3rd.

Indicator #8 NASI Summation Index and MACD. This indicator is on a SELL signal as an MACD crossover SELL signal occurred on September 17 while the Index crossed below its 5 day-ema on September 13.  Refer to the second chart and the blue arrows indicating a potential basing and possible upturn in the Index and the MACD. if the market works higher next or beyond.

A chart of the buy and sell signals is presented here:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard on “0”  Signal

The latest update is shown here:

Dashboard-V2 October 17, 2014_WC

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. So far, year-to-date the BDH portfolio is up 7.68 % compared an average gain of 0.95% for the three major averages.  You will note that under the Strategies tab of this website that the BDH portfolio is in first place for 2014 performance compared to all the other strategies tracked including the major indexes tracked.

Top 5 ETFs –  100% In Cash

The portfolio is now 100% in cash awaiting the next buy signal.

Interestingly, the Top 5 ETF portfolio containing 42 ETFs had only 2 ETF with a “pass” rating for the past two weeks in a row.   Amazingly, 41 ETFs had fail ratings all but three due to negative MACD crossovers.  The huge number of fail ratings indicates the broad market’s continued weakness among ETFs in varying market sectors w. Tis situation is worrisome and does not bode well for the market going forward.  The market was way oversold, especially after the rout on Wednesday., so the rally by week’s end was not surprising.

I suggest that you pull up the different asset classes on the right side of the Decision Page to see which ETFs have been doing the best.  You can click on the down around in the  3 month and one month columns of the each grouping to see short-term performance.  You will note that bonds and inverse funds have been doing better than average lately.

Point-and-Figure Chart NYSE stock above 50-dma

Correction first: Last week I mentioned that number of NYSE stocks above their 50-dma was one of original indicators in my book.  That was a mistake as I got it mixed up with the NYSE Bullish Percentage, most likely because they both utilize point and figure charts.

Now, getting back to the chart on the right, you can see that the number of NYSE stocks above their 50-dma on chart on the right has reversed higher from its low reading of 16 last Friday to close at a    this Friday.  This is a positive sign and one that could indicate that the lows on this move  have been seen. Continued x’s moving to higher percentages would be welcome. But we will wait and see how the market moves going forward.

Conclusion – Market Plummets and Then Partially Recovers

This past week has been the wildest one in a few years, as far as the increase in volatility  (($VIX hit 31.06% on Wednesday and then dropped to 21.99% by Friday’s close) and the extreme point movement in the major averages.  For example, the DJIA hit a low of 15855 on Wednesday but closed the week at 16380.41.

Next week’s market action will tell us whether the 2.5 day rally is real or whether the lows of last week will be retested.  No one knows how that will turn out. The market will tell us what to do next using the BDH approach.  We will be patient and wait for next BUY signal remaining in cash until that occurs.

Have a great week ahead.

Oct 12

Market Review COMP October 10 2014

The stock market had another roller-coaster week, but this time it was ended with thud on the lows for the week, not a good sign.  Triple digit days on the DJIA continued to occur with reversals down, then up, then down again for a week of whipsaws.  Even the NASDAQ Composite which rarely has a triple digit move, did so to the downside on Friday.  Both the DJIA and NASDAQ Composite have closed below their respective 200-dmas, and the S&P 500 closes just above it’s 200-dma.

Indicator #2 experienced three 100-dma crossovers during the week and ended on the downside on Friday resulting in a SELL signal on this indicator.  The  Dashboard reading is now “0”  — the maximum sell signal.

The NASDAQ Composite Index’s next support level is at 4250 as the chart shows and its next support is at 4100.  The first area of resistance on the upside is at 4375.  This index closed below both its 100- and 200-dma on Friday which is a rare occurrence and one that should be watched carefully.  Since the 200-dma is considered a long-term moving average, a close below it is a serious matter.  This weeks market action will let us know whether this key area is one that can be overtaken again with conviction or not.

This past week, the DJIA was the market leader, but it was still down 2.74%, followed by the S&P 500 Index declining 3.14%, and the NASDAQ Composite plummeting 4.45%.  The Russell 2000 small caps were down big at 4.70% continuing their slide.

The market internals continue to be weak as the number of new 52-week highs on the NYSE totaled 103 compared to 92 prior week.  However , the number of stocks with 52-week lows totaled 565 compared to 445 the week before. Clearly, many of the stocks are having great difficulty making headway.  For the year-to-date, the NASDAQ Composite is up only  2.39%, the S&P 500 is up 3.13%, and the DJIA is down 0.20% In comparison, the BDH portfolio is up 7.68%

Gold (GLD) and gold mining issues (GDX) held firm or advanced slightly after a month of decline.   Bonds vaulted higher again in the flight to safety and closed at their highs for the year. In the chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance after pulling up the NASDAQ Composite chart.

Indicator Review – One Change NASI October 10, 2014

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains is now on a October 10 SELL signal, as the 100-dma was pierced to the downside

Indicator #5 NASDAQ Composite with MACD. This indicator had a clear-cut MACD crossover SELL signal on September 10. (Refer to first chart).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 8th Bullish percentage reading was 39.9% which was well above the October 1st  bullish percentage reading of 35.4%. Investors are a more bullish going out six-months into the future than they were a two weeks  ago.  Note that this survey was completed before the damage inflicted on Thursday and Friday, so expect this reading to drop by October 15. This indicator continues on its sell signal from September 3rd.

Indicator #8 NASI Summation Index and MACD. This indicator is on a SELL signal as an MACD crossover SELL signal (lower arrow on chart) occurred on September 17 while the Index crossed below its 5 day-ema on September 13.  Refer to the second chart and the blue arrows indicating the downturn in the Index and the MACD.  This indicator is not showing any signs of turnaround to the upside.

A chart of the buy and sell signals is presented here:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard on “0”  Signal

The latest update is shown here:

Dashboard-V2 October 10, 2014_WC

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. So far, year-to-date the BDH portfolio is up 7.68 % compared an average gain of 1.77% for the three major averages.  You will note that under the Strategies tab of this website that the BDH portfolio is in first place for 2014 performance compared to the other strategies tracked.

Top 5 ETFs –  100% In Cash

The portfolio is now 100% in cash awaiting the next buy signal.

Interestingly, the Top 5 ETF portfolio containing 42 ETFs had only 2 ETFwith a “pass” rating compared to 1 ETFthe prior week.   Amazingly, 41 ETFs had fail ratings all but three due to negative MACD crossovers.  The huge number of fail ratings indicates the broad market weakness among ETFs in varying market sectors which is a rare occurrence when the market is only three weeks away from its highs for the  year. Tis situation is worrisome and does not bode well for the market going forward.  However, the market may be oversold at this point and may rally a bit further before continuing its decline.

 

Point-and-Figure Chart NYSE stocks above 50-day ma

The number of NYSE stocks above their 50-dma on chart on the right was at 21% on Friday  October 3, but is now at 16%, so the market is continuing to weaken.  I looked back at this chart for previous years (not shown here) and I found that readings below 25% was where rallies began, once the trend reversed into a column of x’s.  You may remember that this indicator was one of the original ones of the eight recommended in my book (refer to page 112 and page 113 ).  It was indicator #4.  Interestingly, during the crash of 2008 and early 2009, this indicator reading was less than 2% indicating a completely washed out market.  I do not expect this indicator to drop to those levels at this time unless we have a devastating bear market which I do not see happening at this time.  When this indicator reverses higher into a column of X’s and goes above 25% then it would  indicate a potential market bottom for this current move.

Conclusion – Market Declines Further, But A Short Term Bounce Is Overdue

As positive as the closing was on the previous Friday (October 3) with a solid advance, this week’s action and the extremely negative market decline and weak close was the exact opposite.  Additionally market volatility as measured by the $VIX (put that ticker in the first chart to see what I mean) was higher than it has been in months.  Although tomorrow is a national holiday, the stock market will be open, however the bond market and banks will be closed.

Expect a possible bounce higher this week, but even that will not result in a Dashboard BUY signal unless it is a BIG rally of 500 points (DJIA) or more which not expected. The market will tell us what to do next using the BDH approach.  We will be patient and wait for next BUY signal remaining in cash until that occurs.

Have a great week ahead.

 

Oct 04

Market Review Comp October 3 2014

The stock market had another roller-coaster week, but this time it was downhill Monday through 12 Noon on Thursday, and then a big rebound  and a solid advance on Friday, closing the week with losses of less than 1% on the three major averages compared to being down almost 3% at the lows on Thursday.  Continued news from overseas, U.S. economic data, Bill Gross’s move to Janus, and other news items moved prices around all week.

Looking at the NASDAQ Composite chart on the right, you can see the Doji candle with the long tail (posssible reversal signal) on Thursday and  the dip below the critical 100-dma intra-day to 4367.74 near 12 noon, before closing above that indicator.  We are still below the top support line at 4485 (horizontal blue line) which now is also resistance on the way up.  In addition, the nearby 50-dma level is at 4496, just above the support line that will act as resistance on the way up.  A break above 4485, and then  crossing 4496 would indicate that an assault on the previous highs two weeks ago can be attempted.  Note also that the MACD line (blue) is curling up slightly the last few days, and could crossover to the upside if the market advances further in the coming week.  However, a drop below 4367.74 would indicate a potential decline to the next level of support at 4250.

This past week, the DJIA was the market leader, but it was still down 0.60%, followed by the S&P 500 Index declining 0.75%, and the NASDAQ Composite falling 0.81%.  The Russell 2000 small caps were down 1.3% continuing their slide, and were down over 10% from their July 2014 highs at the lows on Thursday.

The market internals continue to be weak as the number of new 52-week highs on the NYSE totaled 92 compared to 88 prior week.  However , the number of stocks with 52-week lows totaled 445 compared to 315 the week before. Clearly, many of the stocks are having great difficulty making headway.  For the year-to-date, the NASDAQ Composite is up 7.16%, the S&P 500 is up 6.47%, and the DJIA is up 2.61% In comparison, the BDH portfolio is up 7.68%

Gold (GLD) and gold mining issues (GDX) got crushed again for the fourth consecutive week to the downside.  Gold is at a multi-year (July and December 2013) closing below $1200 as it has gotten pummeled since its July 10 top.  Bonds vaulted higher again in the flight to safety. In the chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance after pulling up the NASDAQ Composite chart.

Indicator Review –No Changes NASI October 3, 2014

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on a BUY signal, although the Index pierced the 100-dma to the downside on Thursday intra-day before closing above that level at the close.  A daily close below the 100-dma will result in a SELL signal on this indicator.

Indicator #5 NASDAQ Composite with MACD. This indicator had a clear-cut MACD crossover SELL signal on September 10. (Refer to first chart).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 1st Bullish percentage reading was 35.4% which was well below the September 24th bullish percentage reading of 41.8%. Investors are a much less bullish going out six-months into the future than they were a two weeks  ago. This is not surprising based on the market action in the past two weeks.  This indicator continues on its sell signal from September 3rd.

Indicator #8 NASI Summation Index and MACD. This indicator is now on a SELL signal as an MACD crossover SELL signal (lower arrow on chart) occurred on September 17 while the Index crossed below its 5 day-ema on September 13.  Refer to the second chart and the blue arrows indicating the downturn in the Index and the MACD.  This indicator is not showing any signs of turnaround to the upside.

A chart of the buy and sell signals is presented here:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard on “2” NEUTRAL Signal

The latest update is shown here:

Dashboard-V2 October 3, 2014_WC

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. So far, year-to-date the BDH portfolio is up 7.68 % compared an average gain of 5.41% for the three major averages.  You will note that under the Strategies tab of this website that the BDH portfolio is in second place for 2014 performance compared to the other strategies tracked.

Top 5 ETFs –  100% In Cash

The portfolio is now 100% in cash awaiting the next buy signal.

Interestingly, the Top 5 ETF portfolio containing 42 ETFs had only 1 ETFwith a “pass” rating compared to 2 ETFs the prior week., and that ETF was UUP the US dollar.   Amazingly, 41 ETFs had fail ratings all but one  due to negative MACD crossovers.  The huge number of fail ratings indicates the broad market weakness among ETFs in varying market sectors which is a rare occurrence when the market is only two weeks away form its highs for the  year. Normally this situation is worrisome and does not bode well for the market going forward.  However, the market may be oversold at this point and may rally further before continuing its decline.

Barron’s Insights

Looking through the October 6, 2014 issue of Barron’s, I came across some interesting data about the market’s current situation:

From Dan Greenhouse, Chief Strategist at BTIG:

– In the S&P 500 Index only 30% of the stocks are above their 50-dma, and only 38% are above their 100-dma

– Russell 2000 (small cap) is 10.2% from its yearly July high.  Also 54% of the those stocks are down 20% from their 52-week highs, while 19% are down 40% from their highs.

From Jim McTague’s column (page 14)

– According to Sam Stovall, chief strategist at S&P Capital IQ, since WWII, the S&P 500 has gained an average of 15.3% from October 31st of each mid-term election year through April 30 of the following year.  This has occurred 94% of the time.

– According to Stovall, from October 31st of the mid-term election year to the following year’s October 31, the s&P gained an averages of 17.5%– rising 100% of the time

Point-and-Figure Chart NYSE  Percent Above 50-dma October 3, 2014

To bring home the point that the market may be heading higher, consider the number of NYSE stocks above their 50-dma on chart on the right.  You can see that only about 21% were above this average through Thursday, and then on Friday the number reversed higher into a column of X’s indicating a potential bottom.

Conclusion – Market Declines Further, But A Short Term Rally May Be Underway

From mid-day Thursday through the close on Friday the market showed strength.  Closing positive on Friday with a solid advance was a positive, after quite a negative performance the prior two weeks.  It is possible the market will rally further from here and test the highs once again or begin its descent again toward lower levels.  The market will tell us what to do next using the BDH approach.  We will be patient and wait for next BUY signal remaining in cash until that occurs.

Have a great week ahead.

 

Sep 28

Market Review COMP September 26 2014

The stock market had a roller-coaster week as domestic and overseas news riled the markets, as volatility increased. Alibaba and many momentum stocks got pounded, but managed to show some resilience on Friday with positive returns.  Every day this week the DJIA had a triple digit advance or decline.  For example,on Monday and Tuesday this index lost a combined 223 points, on Wednesday it gained 154 points, on Thursday it lost 264 points and on Friday it gained 167 points.  The two other major averages followed similar patterns.  The Russell 2000 small cap stocks continued their declines, eclipsing the losses on the other three averages on a percentage basis.

The NASDAQ Composite led the market lower with the worst performance down 1.48%, followed by the S&P 500 Index declining 1.37%, and the DJIA down only 0.96%.  Interestly, only one week ago on September 19, both the latter two indexes had closes on yearly highs, yet the market internals continue to weaken as the number of new 52-week highs on the NYSE totaled 88 compared to 209 the prior week.  Moreover, the number of stocks with 52-week lows totaled 315 compare to 187 the week before. Clearly, many of the stocks are having great difficulty making headw

For the year-to-date, the NASDAQ Composite is up 8.04%, the S&P 500 is up 7.28%, and the DJIA is up 3.24% In comparison, the BDH portfolio is up 7.68%

As you can see in the accompanying chart the NASDAQ close Friday just above its support level of 4485 (blue horizontal line) and its 50-dma.  The top blue arrow shows the close above this support level.

Gold (GLD) and gold mining issues (GDX) got crushed again for the third consecutive week to the downside.  Gold is at a 12-month low as it has gotten pummeled since its July 10 top.  Bonds vaulted higher as stocks took a hit. In the chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance after pulling up the NASDAQ Composite chart.

Indicator Review –No Changes

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on a BUY signal.

Indicator #5 NASDAQ Composite with MACD. This indicator had a clear-cut MACD crossover SELL signal on September 10. (Refer to first chart).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest September 24th  Bullish percentage reading was 41.8% which was slightly below the September 17th bullish percentage reading of 42.2%. Investors are a bit less bullish going out six-months into the future than they were a two weeks  ago.  This indicator continues on its sell signal from September 3rd.

Indicator #8 NASI Summation Index and MACD. This indicator is now on a SELL signal as an MACD crossover SELL signal (lower arrow on chart) occurred on September 17 while the Index crossed below its 5 day-ema on September 13.  Refer to the second chart and the blue arrows indicating the downturn in the Index and the MACD.

A chart of the buy and sell signals is presented here:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard on “2” NEUTRAL Signal

The latest update is shown here:

Dashboard-V2 September 26, 2014_WC

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. So far, year-to-date the BDH portfolio is up 7.68 % compared an average gain of 6.19% for the three major averages.  You will note that under the Strategies tab of this website that the BDH portfolio is in second place for 2014 performance compared to the other strategies tracked.

Top 5 ETFs – Now 100% In Cash

IYT was sold this past Monday at  its $154.24 stop price.  It ended the week at $151.67 after falling below $150 intra-day on Thursday.  Thus the portfolio is now 100% in cash awaiting the next buy signal.

Interestingly, the Top 5 ETF portfolio containing 42 ETFs had only 2 ETFs with a “pass” rating compared to 8 ETFs the prior week..   Amazingly, 40 ETFs had fail ratings all due to negative MACD crossovers.  This indicates the broad market weakness among ETFs in varying market sectors which is a rare occurrence when the market is near its highs for the  year. This situation is worrisome and does not bode well for the market going forward.

Conclusion – Market Runs into Stone Wall

The market averages had a very rough and volatile week with no clear direction as of the close on Friday.  Right now patience is a virtue and cash is king.  Relax until the next Dashboard BUY signal occurs.  Have a great week ahead.

 

Sep 22

As mentioned in my last blog, IYT would be sold if it fell below $154.24.  That is what happened today in the morning hours.  Therefore, the portfolio is 100% in cash awaiting the next BUY signal.  A full report will be provided in this weekend’s blog post.  Have  a good week.

Sep 21

Market Review COMP September 19, 2014

The stock market had a positive week to the upside with lots of news including Fed pronouncements, Alibaba IPO success, and  Scotland’s vote to remain in UK.  Also, what added to the calm were non-escalating  international tensions.  This week the DJIA was the leader as large cap stocks jumped up,  while the Russell 2000 small cap stocks actually took a loss.  As small cap stocks usually lead the market higher, this is unsettling situation.

The BDH Dashboard changed from a “2” Neutral signal to a “1” SELL on September 17 as Indicator #8 issued a SELL signal.   This resulted in a Dashboard SELL signal as well.

The NASDAQ Composite was the laggard this week with a gain of only 0.27% which is another “red” flag, as this index usually leads the market higher.  The DJIA closed the week up a sold 1.72% to a new all-time closing and intra-day high, well above its 17,000 resistance level which will now act as support.  Similarly, the S&P 500 posted a gain of 1.25% closing above the critical 2000 support level and at a new all-time high.  For the year-to-date, the NASDAQ Composite is up 9.65%, the S&P 500 is up 8.77%, and the DJIA is up 4.24% In comparison, the BDH portfolio is up 7.76% year with only IYT left in the Top 5 ETF portfolio as explained below.

As you can see in the accompanying chart the NASDAQ is still well above its support level of 4485 (blue horizontal line).  The blue arrow shows the MACD crossover on September 10.

Gold (GLD) and gold mining issues (GDX) got crushed again for the second consecutive week to the downside.  Gold is at a 12-month low as it has gotten pummeled since its July 10 top.  Bonds also continued to gave back all of their gains since early August, but managed a small recovery on Friday.  In the chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance after pulling up the NASDAQ Composite chart.

The number of new NYSE 52-week highs  fell to 209 from 219 the previous which is still 50% below its reading for the week of September 5.  Clearly, many of the stocks are having great difficulty making headway.  Normally when the market rises, as it has in the past week, the number of new 52-week highs should be increasing not decreasing.

Indicator Review –One  Negative Change NASI September 19 ,2014

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on a BUY signal.

Indicator #5 NASDAQ Composite with MACD. This indicator had a clear-cut MACD crossover SELL signal on September 10. (Refer to first chart).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest September 17th  Bullish percentage reading was 42.2% which was higher than the September 10th bullish percentage reading of 40.4%. Investors are a bit more bullish going out six-months into the future than they were a two weeks  ago.  This indicator continues on its sell signal from September 3rd.

Indicator #8 NASI Summation Index and MACD. This indicator is now on a SELL signal as an MACD crossover SELL signal (lower arrow on chart) occurred on September 17 while the Index crossed below its 5 day-ema on September 13.  Refer to the second chart and the blue arrows indicating the downturn in the Index and the MACD.

A chart of the buy and sell signals is presented here:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard on “2” NEUTRAL Signal

The latest update is shown here:

Dashboard-V2 September 19, 2014_WC

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. So far, year-to-date the BDH portfolio is up 7.76 % compared an average gain of 7.55% for the three major averages.

Top 5 ETFs – Now 80% In Cash

The Top 5 ETFs with a “pass” rating were purchased at the open on August 25, 2014.  Those were as follows: EPI,  SMH,  IYT, EEM, and VNQ.  since September 12, four of these ETFs have been sold as they penetrated their 3% intra-day trailing stops.  The information on the sale price and date sold is provided in the accompanying table.

Normally, all ETFs are sold when a Dashboard SELL signal occurs.  However, IYT has made new all-time highs, had a positive MACD crossover and a “pass” rating on the etfscreen.com criteria.  Due to these very positive characteristics, I decided to hold IYT with a tight stop at $154.24 (which is one penny below the low of September 17 where the price gapped up).  This stop will remain in place for the time being, and then replaced with a 3% trailing stop if it rises more than 3% from $154.24.  As of Friday, IYT closed at $154.81 so it is only $0.57 away from it stop price. If the price closes at or below $154.24 intra-day it will be sold.

Interestingly, the Top 5 ETF portfolio containing 42 ETFs had only 8 ETFs with a “pass” rating compared to 3 ETFs the prior week..   Amazingly, 34  ETFs had fail ratings all due to negative MACD crossovers.  This indicates the underlying market weakness among ETFs in varying market sectors which is a rare occurrence when the market is at its highs for the  year. This situation is worrisome and does not bode well for the market going forward.   The latest Top 5 update is here:

Top 5 ETF Tracking September 19, 2014

Conclusion – Market Powers Higher as Internals Weaken as Uptrend May Be Near Its End

The market averages had gains for the week and appeared frothy, especially with all the hype surrounding the launch of Alibaba.  Internally though the market has a considerable  number of stocks decaying in prices.   Therefore, extreme caution is urged.  A market decline early in the week will most likely result in the sale of IYT which will place the Top 5 portfolio 100% in cash.

 

Sep 17

NASI September 17 2014Market Situation

The market had a mixed day after the release of the Fed’s latest decision.  Indicator #8 experienced an MACD downward crossover (see chart) which confirmed the Index crossover that occurred a number of days ago. This indicator is now on a SELL signal  Thus, the Dashboard reading changes to a “1” SELL as of today’s close.

Normally the Top 5 ETFs would be sold at tomorrow’s open.  However, in the current situation four of these ETFs were already sold last week, as they penetrated their intra-day trailing stops to the downside  The remaining ETF in the portfolio is IYT.  This ETF had a positive MACD crossover today and a “pass” rating on ETFscreen.com,and also gapped up at the open and closed at an all-time high today.  Based on these positive factors, I recommend holding IYT with  a stop-loss just below the low of the day at $154,24.

The chart for IYT is shown nearby: IYT Sept 17 2014

 

A full report will be provided this weekend.  The BDH Dashboard is 80% in cash with IYT as the only open position.

Sep 15

NASI September 15, 2014Market Situation

Today the market was confused.  The DJIA moved higher and the NASDAQ Composite got hit hard to the downside.  As you can see in  the accompanying chart, the NASI crossover on the upper chart deepened, while the MACD is just barely above its crossover level.  So that means that this indicator is not  yet on a SELL signal.  A continuation of the NASDAQ Composite slide will result in a MACD crossover in the next few days.  I will update the blog the day that it  occurs.

Two More Top 5  ETFs Hit Trailing Stops

In the Top 5 ETFs table I forgot to include EPI’s 3% trailing stop that was hit on Friday in my last update.  That ETF was sold at $22.93 on Friday.  It’s recent high was $23.64 on Sept 8 intra-day.  This sale will updated in my table this coming weekend.  Today SMH was sold at $50.97 as its 3% trailing stop was hit.  Its recent intra-day high price was $52.55 on Sept 8 as well.  That means that only IYT remains in the Top 5 ETF portfolio as of tonight.  It’s trailing stop is at $140.74

Stay tuned for any Dashboard SELL signal this week.