Market Review
After another roller-coaster week in which triple digit ranges occurred on four days out of five, the DJIA and the other two major averages ended on a negative note. Thus the market has declined three out of the last four weeks. Bonds also moved lower as yields increased. And the Japanese market has dropped over 20% since its market peak in May, and volatility (as measured by the $VIX) has increased again. In summary, the market is in a correction mode with wild swings. This compares to the calm upward moving market in the few weeks prior to the May 22 top so far.
This week the number of NYSE stocks making 52-week highs totaled 221 a slight improvement from 203 the prior week but at levels not since 12/28/2012.
For the second consecutive week, the NASDAQ Composite was the worst performer losing 1.32%, followed by the S&P 500 down 1.01%, and the DJIA down 1.17%. So far in the past four weeks the markets have lost a bit over 2%, hardly a drop in the bucket compared to year-to-date major average gains of about 14%. However, the short-term market trend is now down while the long-term trend is still up as measured from last November.
Indicator Review – No Changes This Week
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its January 3 BUY signal with the index price 4.20% above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator had a negative MACD crossover on May 24, thus triggering a SELL signal on that date. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest June 12th bullish percentage reading of 33.0% was a small increase from it June 5th bullish percentage reading of 29.5%. Investors are now much less bullish looking out six months. Therefore, this indicator remains on its BUY signal as of April 18th.
Remember that the May 22nd bullish reading of 49.0% was one percentage point away from the critical 50% reading. When the bullish reading reaches 50% or higher, and then in a subsequent week falls below 50% that is considered a SELL signal. Now that the Indicator is at 29.5% this indicator is not close to a SELL signal. If the indicator on May 22nd had reached 50%, then the Dashboard would have had a sell signal on June 4 when it would have had a “1” reading. But this indicator never made it to the 50% level.
Indicator #8 NASI Summation Index and MACD. The indicator issued a SELL signal as of the June 4th as both the Index and the MACD had negative crossovers, the latter on this past Tuesday after the close. (Refer to second chart).
Dashboard Remains on “2” Neutral signal
The latest Dashboard data is presented in the link below:
A chart of the buy and sell signals is presented here:
http://tinyurl.com/cth7plq
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 4.92% which is still well below that of the three major indexes. Year-to-date, the NASDAQ Composite is up 13.38%, S&P 500 is up 14.06%, and the DJIA is up 15.00%.
Top 5 ETFs
The Top 5 ETFs are up 3.77 % since last recent buy signal compared to the market averages up 3.13%. The table with the data is provided in this link:
Top 5 ETF Tracking June14, 2013
SMH is ranked 10th as of Friday’s close. A drop below that ranking on a closing basis will result in this ETF being sold as of the open the next business day after it drops below rank 10. Since the Dashboard is Neutral the cash generated from its sale should not be reinvested in any of the Top 10 ETFs at this time.
Moreover, note that on the etfscreen.com/buydonthold Decision page that 41 out of 42 ETFs have a “fail” result. This situation has occurred since June 4 and indicates that almost all of these ETFs have a negative MACD crossover situation which is not bullish going forward.
Conclusion – Be Very Careful Here
The stock market has had a volatile four weeks with the four down days last week. Bonds continue to sell off with yields rising as prices are falling. The stock market correction has begun and we see how far it goes before a new Dashboard BUY signal is generated.
Note that the Dashboard may not give a timely SELL signal for quite a while as Indicators #2 and #6 are nowhere near SELL signals. This means that investors need to have tight stops (such as 3%) in place to protect principal.
Warning on Holding Bond ETFs
Investors holding bond ETFs need to determine and implement their protection strategy as prices have slid dramatically in the past two weeks. Remember that any income received from the bond ETFs can be eaten up by losses in principal. If both bond and stock prices fall, then one of the only alternatives without risk is cash. Cash has its place when this situation occurs.
Market Review
After a roller-coaster week, the market ended on a positive note with a big advance on Friday, thereby wiping out the intra-week losses. This price action has stalled the prior two-week decline, although volatility (as measured by the $VIX) has increased further. The strong showing at week’s end may end the latest market downswing or the market may reverse again to the downside this coming week. Note on the NASDAQ Composite chart that the index needs to exceed the horizontal red line to reach its high point for the year. This level may act as resistance and stall any further advance. We will have to wait and see what develops.
This week the number of NYSE stocks making 52-week highs fell hard again to 203 which was the lowest level since 12/28/2012 compared to 408 from the prior week. This is not surprising as the market had a volatile week.
For the week, the NASDAQ Composite was the worst performer gaining only 0.38%, followed by the S&P 500 up 0.78%, and the DJIA up the most at 0.88%. So in the past three weeks the markets have lost a bit over 1%, hardly a drop in the bucket compared to year-to-date gains between 14.89% to 16.36%.
Indicator Review – Indicator #6 SELL signal
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its January 3 BUY signal with the index price 6.08% above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator had a negative MACD crossover on May 24, thus triggering a SELL signal. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest June 5th bullish percentage reading of 29.5% was the second weekly drop in a row from it May 29th bullish percentage reading of 36.0%. Investors are now much less bullish looking out six months. Therefore, this indicator remains on its BUY signal as of April 18th.
Remember that the May 22nd bullish reading of 49.0% was one percentage point away from the critical 50% reading. Remember that when the bullish reading reaches 50% or higher, and then in a subsequent week falls below 50% that is considered a SELL signal. Now that the Indicator is at 29.5% this indicator is not close to a SELL signal.
Indicator #8 NASI Summation Index and MACD. The indicator issued a SELL signal as of the June 4th as both the Index and the MACD had confirming negative crossovers, the latter on this past Tuesday after the close. (Refer to second chart).
Dashboard Now on “2” Neutral signal
The latest Dashboard data is presented in the link below:
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
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 6.07% which is still well below that of the three major indexes, but improving recently. Year-to-date, the NASDAQ Composite is up 14.89%, S&P 500 is up 15.23%, and the DJIA is up 16.36%.
Top 5 ETFs
The Top 5 ETFs are up 4.91 % since last recent buy signal compared to the market averages up 4.21%. The table with the data is provided in this link:
Top 5 ETF Tracking June 7, 2013
Note that on the etfscreen.com/buydonthold Decision page that 41 out of 42 ETFs have a “fail” result. This situation has occurred since Tuesday night and indicates that most of these ETFs have a negative MACD crossover situation which is not bullish going forward. Going forward a continued market advance could change this situation.
Conclusion – Be Very Careful Here
The stock market has had a volatile three weeks with the big rebound on Friday resulting in a positive weekly performance. Bonds continue to sell off with yields rising as prices are falling. The expected stock market correction has stalled this week, but may continue next week. We will have to wait and see.
Note that the Dashboard may not give a timely SELL signal for quite a while as Indicators #2 and #6 are nowhere near SELL signals. This means that investors need to have tight stops (such as 3%) in place to protect principal.
Warning on Holding Bond ETFs
Investors holding bond ETFs need to determine and implement their protection strategy as prices have slid dramatically in the past two weeks. Remember that any income received from the bond ETFs can be eaten up by losses in principal. If both bond and stock prices fall, then one of the only alternatives without risk is cash. Cash has its place when this situation occurs.
Dashboard Change
Today the stock market declined again. This resulted in Indicator #6 NASDAQ Summation Index and MACD issuing a SELL signal as the MACD had a negative crossover at today’s close.
This change has resulted in a Dashboard reading of “2″ NEUTRAL (HOLD).
If any ETFs drop below rank 10 going forward they should be sold and no new ETFs should replace them. A full report will be provided this coming weekend.
Market Review
The market has now declined two consecutive weeks as volatility has increased. After a powerful advance that was halved on Monday the market had a mixed week, but then tumbled in the last few hours on Friday to close at the lows of the week. This may be the beginning of the long awaited correction. We will have to wait and see.
This week the number of NYSE stocks making 52-week highs fell hard to 408 from 851 in the prior week. This is not surprising as the market had a rough week.
Interestingly, the percentage of NYSE new 52 week highs compared to the total number of stocks was 26.37% two weeks ago and now as of Friday is 12.7%. A weekly decline from a level of 25% or above to below 25% usually signals a topping market. (This was Indicator #3 in the original Dashboard of eight indicators).
For the week, the NASDAQ Composite was the best performer losing only 0.09%, followed by the S&P 500 down 1.14%, and the DJIA down the most at 1.23%. So in the past two weeks the markets have lost a bit over 2%, hardly a drop in the bucket compared to year-to-date gains between 14.34% to 15.35%.
Indicator Review
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its January 3 BUY signal with the index price 5.84% above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator had a negative MACD crossover on May 24, thus triggering a SELL signal. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 29th bullish percentage reading of 36.0% was a large decrease from the May 22nd bullish reading of 49.0%. Investors are now much less bullish looking out six months. Therefore, this indicator remains on its BUY signal as of April 18th. Interestingly, the indicator was one percentage point below the key 50 reading on May 22. Remember that when the bullish reading reaches 50% or higher, and then in a subsequent week falls below 50% that is considered a SELL signal. Now that the Indicator is at 36.0% and did not reach 50% this week before declining this indicator is not close to a SELL signal.
Indicator #8 NASI Summation Index and MACD. The indicator issued a BUY signal as of April 30th close. However, on Friday the Index had a negative crossover of its 5 day-ema. This needs to be confirmed by the MACD (which is nearing a crossover) before a SELL signal on this indicator will occur. A market decline this coming week will result in a SELL signal. (Refer to second chart).
Dashboard Remains on “3” BUY signal
The latest Dashboard data is presented in the link below:
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 5.43% which is still well below that of the three major indexes, but improving recently. Year-to-date, the NASDAQ Composite is up 14.45%, S&P 500 is up 14.34%, and the DJIA is up 15.35%.
Top 5 ETFs
The Top 5 ETFs are up 4.27 % since last recent buy signal compared to the market averages up 3.64%. The table with the data is provided in this link:
Top 5 ETF Tracking May 31, 2013
Note that XLY is at rank 10. Remember that any daily drop below rank 10 is a SELL signal on that ETF. Any replacement will come from the top ranked ETFs not yet owned. I do not report on ETF changes during the week only in the weekend blog, so it is your responsibility to monitor the rankings at the end of each day after 4:30 PM for the closing prices of 4:00 PM and make any portfolio changes.
Conclusion – Be Very Careful Here
The stock market has had a volatile two weeks ending at its lows on Friday. Bonds have also had a tough month as yields are rising and prices are falling. The expected stock market correction may have begun, but we will have to see what happens going forward.
Note that the Dashboard will not be issuing a SELL signal unless two of the three Indicators (#2, 6 and 8) give a SELL signal. This situation will only occur if Indicator #8 gives a SELL signal soon, and either #2 or #6 do also. However, Indicator #2 is at least 5.84% away from a SELL signal, and Indicator #6 is not even close to one. Therefore, the Dashboard may not give a timely SELL signal for quite a while. This means that investors need to have tight stops (3%) in place to protect principal and sell ETFs before they decline much further.
Warning on Holding Bond ETFs
Investors holding bond ETFs need to determine and implement their protection strategy as prices have slid dramatically in the past two weeks. Remember that any income received from the bond ETFs can be eaten up by losses in principal. If both bond and stock prices fall, then one of the only alternatives without risk is cash. Cash has its place when this situation occurs.
Market Review
After four consecutive positive weeks, the market finally declined this week, but by less than 1.2%. A rough Wednesday session with a 230 point trading range in the DJI was a cause of concern, but the market stabilized on Thursday and Friday going into a 3-day weekend. Whether this is the beginning of a correction or whether the market will power higher is the question of the day. No one knows the answer to this question.
This week the number of NYSE stocks making 52-week highs fell slightly to 851 compared to 914 from the previous week. This is still the third highest level for the year to date and the best showing of the year with the prior week’s the best one so far. Interestingly, the percentage of NYSE new 52 week highs compared to the total number of stocks is at 26.37%. A weekly decline from a level of 25% or above to below 25% usually signals a market at or nearing a top. (This was Indicator #3 in the original Dashboard of eight indicators).
For the week, the NASDAQ Composite was the laggard falling 1.14%, followed by the S&P 500 down 1.07%, and the DJIA down only 0.33%.
Indicator Review
Indicator #2 NASDAQ Composite and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator had a negative MACD crossover on Friday thus triggering a SELL signal. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 22nd bullish reading of 49.0% % was a large increase from the May 15th bullish reading of 38.5%. Investors are still very bullish looking out six months. This indicator remains on its BUY signal as of April 18th the release date of the survey. Interestingly, the indicator was one percentage point below the key 50 reading. Remember that when the bullish reading reaches 50% or higher, and then in a subsequent week falls below 50% that is considered a SELL signal. So at the minimum, we are at least 2 weeks away from a SELL signal on this indicator.
Indicator #8 NASI Summation Index and MACD. The indicator issued a BUY signal as of April 30th close, as there was a positive MACD crossover confirming the Index which crossed over its 5 day-ema the prior Thursday. (Refer to second chart).
Dashboard on “3” BUY signal
The latest Dashboard data is presented in the link below:
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
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 5.95% which is still well below that of the three major indexes, but improving recently. Year-to-date, the NASDAQ Composite is up 14.56%, S&P 500 is up 15.66%, and the DJIA is up 16.78%.
Top 5 ETFs
The Top 5 ETFs are up 4.79% since last recent buy signal compared to the market averages up 4.50%. The table with the data is provided in this link:
Top 5 ETF Tracking May 24, 2013
Note that XLY is at rank 9. Remember that any daily drop below rank 10 is a SELL signal on that ETF. Any replacement will come from the top ranked ETFs not yet owned. I do not report on ETF changes during the week only in the weekend blog, so it is your responsibility to monitor the rankings at the end of each day after 4:30 PM for the closing prices of 4:00 PM and make any portfolio changes.
Conclusion – Be Careful
The NASDAQ Composite which has blasted through the 3000 resistance level, although this week it declined 1.1%. The other major averages are also holding up very well. Perhaps Wednesday’s wide range reversal day (big rise followed by a drop and ending in negative territory) was the top of this market’s move. We will know the answer over the next few weeks if that is the case.
Note that the NASDAQ Composite Index is 6.36% away from its 100-dma (refer to first chart). Therefore, if the Index falls approximately 6.4% from here, a SELL signal would be given on this indicator. Unfortunately this would give away too much of the recent gains. Therefore, make sure you use tight stops going forward such as 3%, and abide by the etfscreen.com ETF sell criteria on the Top 5 ETFs.
Market Review
This week the market continued its slow but uphill advance into the clouds to either all-time highs (S&P 500 and DJIA), and/or yearly highs (NASDAQ Composite Index). This continued market strength is amazing in light of the fact that over the past six months it has not had even a 5% correction. This is rare.
For fourth consecutive week, all the major averages showed gains. Again, the NASDAQ Composite had strong performance up with a solid 1.82 % advance closing the week at 3498.97, followed by the S&P 500 up the most at 2.07% closing at 1667.47, and the blue chip DJIA up the least at 1.56% closing at 15354.40 solidly above the 15000 reached in the past two weeks. This week the number of NYSE stocks making 52-week highs continued to be high at 914 with 74 new 52-week lows. This is the next best showing of the year with the prior week’s the best one so far. Interestingly, the percentage of NYSE new 52 week highs compared to the total number of stocks is at 28%. A weekly decline from a level of 25% or above to below 25% usually signals a market at or nearing a top. (This was Indicator #3 in the original Dashboard of eight indicators).
Interestingly, in the past few weeks new sector leadership has emerged as the defensive sectors that were leading the market higher for 2013 – healthcare, consumer staples, and utilities – have lost momentum. Now industrials, energy, and financial are the leaders. These are growth stocks that are more speculative and riskier than the defensive issues. Moreover, margin debt has reached near all-time highs which indicate investors are taking more risk in an attempt to cash in on the market’s momentum. This activity usually ends badly, as evidenced by similar margin growth during 2007 before the market began its descent.
Indicator Review – No changes this week
Indicator #2 NASDAQ Composite and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator remains on itsApril 25th buy signal. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 15th bullish reading of 38.5 % was down a bit from the May 8th bullish reading of 40.8%. Investors are still bullish as the market continues to rise. This indicator remains on its BUY signal as of April 18th the release date of the survey.
Indicator #8 NASI Summation Index and MACD. The indicator issued a BUY signal as of April 30th close, as there was a positive MACD crossover confirming the Index which crossed over its 5 day-ema the prior Thursday. (Refer to second chart).
Dashboard on “4” BUY signal
The latest Dashboard data is presented in the link below:
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
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 7.37% which is still well below that of the three major indexes, but improving recently. Year-to-date, the NASDAQ Composite is up 15.88%, S&P 500 is up 16.92%, and the DJIA is up 17.17%.
Top 5 ETFs
The Top 5 ETFs were up a solid 5.97 % since the recent buy signal compared to the market averages up 5.39 %. The table with the data is provided in this link:
Top 5 ETF Tracking May 17, 2013
Note that SMH and XLY are close to rank 10 so be aware of any daily drop below rank 10 for a SELL signal on these ETFs. Any replacement will come from the top ranked ETFs not yet owned.
Conclusion – Be Careful
The NASDAQ Composite which has now retaken its leadership role has blasted through the 3000 resistance level and continues to advance. The DJIA had closed solidly above the 15000 level, but has taken a back seat to the other two major averages during the past three weeks. We could be at a blow-off top or the advance could continue for a while.
Stop LIMIT Orders on Bond ETFs
For those investors that own bond ETFs as a core position in their accounts, I suggest that a stop LIMIT order of 3% or less below the current price be put in place to protect principal, in case interest rates rise. If you need more information on stop orders then refer to www.investopedia.com and review the definitions of stop loss order and stop limit orders.
Market Review
This week the market continued to advance to either all-time highs (S&P 500 and DJIA), and/or yearly highs (NASDAQ Composite Index), although the percentage increase was more subdued from the prior week’s. This Teflon market keeps moving ahead without a worry and with investor and professional bullish sentiment at high levels. Usually this type of scenario turns out to be near a market top.
For the third consecutive week, all the major averages showed gains. Again, the NASDAQ Composite led the way up with a solid 1.72 % advance closing the week at 3436.58, followed by the S&P 500 up 1.19% closing at 1633.70, and the blue chip DJIA up the least at 0.97% closing at 15118.49 after exceeding 15000 for the first time ever. This week the number of NYSE stocks making 52-week highs soared to 925 with only 40 new 52-week lows. This is the best showing of the year.
Interestingly, in the past few weeks new sector leadership has emerged as the defensive sectors that were leading the market higher for 2013 – healthcare, consumer staples, and utilities – have lost momentum. Now technology, energy, and basic materials are the leaders. These are growth stocks that are more speculative and riskier than the defensive issues. Moreover, margin debt has reached all-time highs which indicates investors are taking more risk in an attempt to cash in on the market’s momentum. This activity usually ends badly, as evidenced by similar margin growth in 2007.
Indicator Review – No Changes
Indicator #2 NASDAQ Composite and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator remains on itsApril 25th buy signal. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 8bullish reading of 40.8% was up a big 9.8 percentage points from the May 1st bullish reading of 31.0%. Investors are becoming much more bullish as the market rises. This indicator remains on its BUY signal as of April 18th the release date of the survey.
Indicator #8 NASI Summation Index and MACD. The indicator issued a BUY signal as of April 30th close, as there was a positive MACD crossover confirming the Index which crossed over its 5 day-ema the prior Thursday. (Refer to second chart).
Dashboard on “4” BUY signal
The latest Dashboard data is presented in the link below:
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
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 5.96% (up from 3.48% in prior week) which is still well below that of the three major indexes, but improving recently. Year-to-date, the NASDAQ Composite is up 13.81%, the S&P 500 is up 14.55%, and the DJIA is up 15.37%.
Top 5 ETFs
The Top 5 ETFs were up a solid 4.80 % since the recent buy signal compared to the market averages up 3.51 %. The table with the data is provided in this link:
Top 5 ETF Tracking May 10, 2013
Note that RWX is ranked 11th as of the Friday close, was old on Monday’s open, and replaced with IYT.
Conclusion – Be Careful
The NASDAQ Composite which has now retaken its leadership role has blasted through the 3000 resistance level and continues to advance. The DJIA had closed above the 15000 level, but has taken a back seat to the other two major averages during the past two weeks. We could be at a blow-off top or the advance could continue for awhile. I remain 100% in cash.
Stop LIMIT Orders (repeated for last few weeks)
For those investors that are long the market tight stop LIMIT orders, such as 3% are suggested to protect principal.
Remember that if the market suddenly drops, as it did this week due to false twitter news, the stop LIMIT order will only be hit if the market hits the limit price on the way down. If the price suddenly falls 4% for example, then your 3% stop limit will not be executed. However, if the stock then reverses up and hits your stop LIMIT price your position will be sold out. If you decided to use regular stops without a limit price, then you would have been sold out at 4% below the market in the example above. If you need more information on stop orders then refer to www.investopedia.com and review the definitions of stop loss order and stop limit orders.
Market Review
This week after a slow start Monday through Wednesday, the market soared on Thursday and Friday closing at either all-time highs (S&P 500 and DJIA), and/or yearly highs (NASDAQ Composite Index). Favorable domestic economic news spurred the rally. On April 30, Indicator #8 issued a BUY signal as the MACD confirmed the Index moving average crossover. Therefore, the Dashboard is on a MAXIMUM “4” BUY signal which reinforces the April 25th “3″ BUY signal.
For the week, all the major averages showed gains. The NASDAQ Composite led the way up with a solid 3.03% advance closing the week at 3378.63, followed by the S&P 500 up 2.03% closing at 1614.42, and the blue chip DJIA up the least at 1.78% closing at 14973.96 after exceeding 15000 on Friday intra-day. This week the number of NYSE stocks making 52-week highs totaled 789 with new 52-week lows at 54. This showing was the best showing since March 8 (734 new highs) and March 15 (718).
Indicator Review
This week Indicator #8 issued a BUY signal:
Indicator #2 NASDAQ Composite and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator remains on its April 25th buy signal. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 1bullish reading of 31.0% was up 2.7 percentage points from the April 24th bullish reading of 28.3%. This indicator remains on its BUY signal as of April 18th the release date of the survey.
Indicator #8 NASI Summation Index and MACD. The indicator issued a BUY signal as of April 30th close, as there was a positive MACD crossover confirming the Index which crossed over its 5 day-ema the prior Thursday. (Refer to second chart).
Dashboard on “4” BUY signal
The latest Dashboard data is presented in the link below:
Dark Liquidity
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 3.48% which is well below that of the three major indexes. Year-to-date, the NASDAQ Composite is up 11.89%, S&P 500 is up 13.20%, and the DJIA is up 14.27%.
Top 5 ETFs
The Top 5 ETFs were up 2.32% during the week compared to the market averages up 2.20 %. The table with the data is provided in this link:
Top 5 ETF Tracking May 3, 2013
Note that RWX is ranked 11th as of the Friday close, and will be sold on Monday’s open. It will be replaced by IYT.
Conclusion – Be Careful
The NASDAQ Composite which has now retaken its leadership role has blasted through the 3000 resistance level with ease which it has previously touched twice before this month (refer to first chart). The current gains may be just the beginning of a much further advance in prices or may be in a topping area before a decline begins. So far the market has defied the odds and is powering higher after two small corrections in April.
Stop LIMIT Orders
For those investors that are long the market tight stop LIMIT orders, such as 3% are suggested to protect principal.
Remember that if the market suddenly drops, as it did this week due to false twitter news, the stop LIMIT order will only be hit if the market hits the limit price on the way down. If the price suddenly falls 4% for example, then your 3% stop limit will not be executed. However, if the stock then reverses up and hits your stop LIMIT price your position will be sold out. If you decided to use regular stops without a limit price, then you would have been sold out at 4% below the market in the example above. If you need more information on stop orders then refer to www.investopedia.com and review the definitions of stop loss order and stop limit orders.
Market Review
As reported in this past Thursday night’s blog, the Dashboard is now on a “3” BUY signal as Indicator #5 had a positive MACD crossover. The market had a positive week after the previous week’s 2+ percent decline. Since last Friday the market has shown strength and is powering ahead although not all market averages are following exactly. While the NASDAQ Composite is leading the way forward, the S&P 500 and DJIA are lagging behind a bit, but the DJ Transports and Russell 2000 small-cap stocks are further behind.
For the week, all the major averages showed gains. The NASDAQ Composite led the way up with a gain of 2.14%, followed by the S&P 500 up 1.74%, and the blue chip DJIA up the least at 1.13%. This week the number of NYSE stocks making 52-week highs totaled 570 with new 52-week lows at 75. This showing was improved from the previous week, but new highs are still below the levels of the week ending March 8 (734 new highs) and March 15 (718).
Indicator Review
This week indicator #5 had a positive signal change and #8 is nearing a positive signal change:
Indicator #2 NASDAQ Composite and 100-dma. This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart).
Indicator #5 NASDAQ Composite with MACD. This indicator is now on a new BUY signal as of its April 25th (Thursday) closing price as the MACD had a positive crossover. (Refer to first chart).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest April 24th bullish reading of 28.3% was up 1.4 percentage points from the April 17th bullish reading of 26.8%. This indicator remains on its BUY signal as of April 18th the release date of the survey.
Indicator #8 NASI Summation Index and MACD. The indicator remains on its SELL signal as of March 25, buy is nearing a BUY signal, as the Index has crossed over its 5 day-ema on Thursday, but the MACD has not yet done so. (Refer to second chart).
Dashboard Remains a “3” BUYl
The latest Dashboard data is presented in the link below:
A chart of the Dashboard signals is presented at the following link:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893
Dark Liquidity
www.dark-liquidity.com/BDH2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 0.85% which is well below that of the three major indexes. Year-to-date, the NASDAQ Composite is up 8.60%, S&P 500 is up 10.94%, and the DJIA is up 12.27%.
Top 5 ETFs
The Top 5 ETFs that passed the test were purchased on the open on Friday. The table with the data is provided here:
Top 5 ETF Tracking April 26, 2013
Conclusion
The NASDAQ Composite is closing in on the 3000 which it has previously touched twice before this month (refer to first chart). We’ll see if that level acts as resistance or whether the index will blast through that level for further gains. The Standard & Poor’s 500 Index and the DJIA are a few percentage points away from exceeding their yearly highs that were attained a few weeks ago.
The current gains may be the beginning of a further rise in prices or may result in the overdue correction. Based on the market’s seasonally weak six-month period beginning on May 1, the odds favor a decline going forward, but that does not mean a further advance will not occur. So be extremely cautious here.
Stop LIMIT Orders
For those investors that are long the market tight consider using stop LIMIT orders, such as 3% are suggested to protect principal.
Remember that if the market suddenly drops, as it did this week due to false twitter news, the stop LIMIT order will only be hit if the market hits the limit price on the way down. If the price suddenly falls 4% for example, then your 3% stop limit will not be executed. However, if the stock then reverses up and hits your stop LIMIT price your position will be sold out. If you decide to use regular stops without a limit price, then you would have been sold out at 4% below the market in the example above. If you need more information on stop orders then refer to www.investopedia.com and review the definitions of stop loss order and stop limit orders. Make sure you understand how these orders work.
Market Review – Full report this weekend as usual
So far this week the stock market has had a one-way ticket on the upside. Remember that the market had a nice up day last Friday when the market hit lows reached in early April. The NASDAQ has been the leader this past week and as a result Indicator #5 (refer to chart) has had a positive MACD crossover today resulting in a Dashboard “3” BUY signal.
Dashboard Now on a “3” BUY signal
The latest Dashboard data is presented in the link below:
Top 5 ETFs
Tomorrow at the open the following five ETFs will be purchased for the portfolio as indicated in ETFscreen’s decision page: IBB, SMH, XRT, RWX, and XLY as they all past the test.
Conclusion – Extreme Caution is Urged
The stock market is again approaching the highs of a few weeks ago. This will be another test to see if the new highs can hold or be exceeded. The latest Dashboard signal is coming at an inopportune time, as the market is in an overbought rather than an oversold condition, so buying any ETFs right now is very risky. Moreover, we are also a few days away from May 1 which is typically the beginning of the weakest six month period for stock prices. Therefore, I am personally staying in cash because of this situation. You can take the signal or not, as you are responsible for your investments. If you do take the BUY signal, then I suggest a tight stop such as 3% to protect your principal.
A complete blog report will be issued over the weekend. Be careful here.
