Blog

May 28

Market ReviewCOMP may 27 2016

This week the market managed to break out of two-week trading range, experience a golden cross ( 50-dma crossing over 200-dma on NASDAQ ON 5/24), and issue a BUY signal at the close on May 24.  All in all a solid week after lackluster results over the past year.

The NASDAQ Composite easily surpassed its 200-dma resistance level (see nearby chart) and is approaching the previous highs April.  A big resistance area lies above at 5000.  But closing at 4933.50 for the week with a gain of 3.44% puts the index just 66.51 points away from crossing the 5000 level.  The S&P 500 gained 2.28% for the week, followed by the DJIA which rose 2.13%.

Year-to-date, the NASDAQ is down 1.48% while  the S&P is up 2.70% and DJIA up 2.13%.  The BDH strategy is up a respectable 0.96% with most of the money safe in cash for many days during the year.

There were only 241 new 52-week NYSE highs this past week compared to 277 two weeks ago, and 50 new lows,compared to 76  two weeks ago.  The percentage of NYSE stocks above their 50-dmas has increased to 67.87% from a low of 46.00% a few weeks ago. This number is now well below the excessively elevated levels at near 90% in April. The percentage of stocks above their longer-term 200-dma advanced this week to 70.27% which is 0.73 percentage points shy of its April high.  Believe it or not. this percentage fell to 15.50% in January 2016.  So the market has come a long way back in a short time.

Bond prices were flat and have been in a tight trading range over the past eight sessions. Gold (GLD) prices and gold miners (GDX) fell. Oil prices surged to their highest levels since early January.  In the above chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current bond weekly performance, or GLD, GDX and USO and $BRENT for the other averages.

Indicator Review – One Positive ChangeNASI May 27 2016

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on March 29, 2016 (see first chart).

Indicator #5 NASDAQ Composite with MACD This indicator issued a MACD BUY signal on May 24th,  (refer to first chart MACD indicator).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 25 2016 Bullish Percentage reading was 17.8% which was down 1.6 percentage points from two weeks earlier.  This indicator remains on its long term buy signal with numerous confirmations along the way.  Moreover, the readings the past few weeks have been among the lowest on record.  This bodes well for the market, as this as sentiment is a contrary indicator.  The lower the bullish percentage the more likely the market is to reverse direction and move higher.

Indicator #8 NASI Summation Index and MACD. This indicator issued a SELL signal on April 8 as the Index crossed to the downside over the 5 day-ema confirming the prior MACD SELL signal.  However, on May 25 the 5-dma had a positive crossover of the index (see second chart), and the MACD is also nearing a crossover (green circled area).  If this crpssover occurs this week, then this indicator will be on a BUY signal and the Dashboard will be at maximum “4” BUY reading.

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):
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard Now on “3” BUY Signal

Here is the latest:

Dashboard-V2-May 27 ,2016_WC-1-1

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance.  Thus, BDH strategy is slightly behind the DJIA and S&P 500 so far this year and ahead of the NASDAQ, but having been invested for a much smaller period.  So on a risk-adjusted basis the BDH strategy is outperforming the market. It is in 10th place out of 18 strategies followed by the website.  See the “Strategies Summary” link on the top of their page.

Top 5 ETFs –   100% Invested

The portfolio is now 100% invested.  On May 25, at the close, positions were taken in four ETFs.  5% of the XLI ETF was sold.  Now all five ETFs have a 20% position This past week 20 ETFs had pass ratings compared to two two weeks ago.  So the market is rebounding.

Top-5-ETF-May 27, 2016

The  ETF portfolio has gained 1.58 % since the May 24the BUY signal compared to 0.44% for the major averages.   So far so good.

Decision Page

Here is the link to the Decision Page:  http://www.etfscreen.com/buydonthold/bdh-decision-page.php

Thirty-two ETFs have “fail” ratings including four out of five in our ETF portfolio.  This will change for the better 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 — e.g., sector ETFs.  You can click on the down arrow in the three month and one month columns of the each grouping to see short-term performance.  You will note the strong performance of metals,  and a few sector funds, plus GDX and SLV in Commodities.

Conclusion  —  Short-Term Market Uptrend In Place

The market has finally awoken and broke through some important technical levels this past week.  With a 100% invested position, it is prudent to put in appropriate stops.  I will be using 7% stops going forward and may adjust that level as conditions change.

Have an enjoyable and restful holiday weekend!

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.

May 24

COMP May 24, 2016

Market Situation — Interim Update

Today, the market took off to the races.  This resulted in the NASDAQ Composite easily blasting through its 200-dma with gusto, and Indicator #5’s MACD crossing over to the upside for a BUY signal.  Although the vast majority of ETFs have a fail rating, it is prudent to buy now with the market finally breaking through the trading range to the upside (see green box on chart).  As long as the NASDAQ closes above its 200-dma tomorrow, the BDH strategy will be add a 2o% position in XLP, VNQ, XLB and SMH tomorrow at their closing prices, not their open price as the market may give back some of the gain after the open.  We will reduce the percentage in XLI to 20% from 25% by selling a portion at the close as well.  Thus, we will have an ETF portfolio with five ETFs at 20% positions as is our standard situation.  A 5% trailiong stop will be placed after the buys have been made.

For those conservative investors who do not want to take any new positions until the investible ETFs have a ‘pass’ rating that is their prerogative.

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.

May 21

Market Review — This will be another shortened blog as is the market situation has not changed muchCOMP May 20 2016

This week the markets struggled to make progress.  However,  the NASDAQ Composite finally rose 1.10% after four weeks of losses.  On Monday and Friday the market advanced nicely, but that sandwiched in the three declines mid-week.  The DJIA fell 0.20% for the week and the S&P 500 rose 0.28%

The NASDAQ Composite fell below its 100-dma (Indicator #2) on May 13  (see chart), but quickly reversed higher the next trading day (May 16).  So the Dashboard is still NEUTRAL:

Dashboard-V2-May 20 ,2016_WC-1-1

As the chart shows, the NASDAQ is in a trading range between the 100- and 200-dmas.  A breakout either way will determine the market direction going forward.  The MACD will experience a positive crossover to the upside if the market moves higher this week, thus generating a new BDH BUY signal. Still below its 200-dma, the NASDAQ is struggling to stay above its 100-dma   A big resistance area also lies above at 5000.

Year-to-date, the NASDAQ Composite is down 4.75% compared to a gain of only 0.41% for the S&P 500, and a gain of only 0.44% for the DJIA.  The BDH strategy is up 0.33% year-to-date.  The number of new 52-week highs fell to 277 from 445 the prior week.

The number of NYSE stocks above their 50-dmas has taken a big drop to 46.0% during this past week from a 69.32% two weeks ago, but managed to settle at 52.47% by Friday’s close, so maybe the short-term bottom has been reached.  The percentage of stocks above their longer-term 200-dma advanced rose this week to 62.92% compared to 59.82% a few weeks ago.  This is a positive sign.

Top 5 ETFs –   Stay 75% in Cash Until Next Buy Signal

The portfolio is still 75% invested in cash.   The only remaining position is XLI up 4.92% since its purchase.  This past week only 2 ETFs had pass ratings compared to 10 the prior week.  So the market may have hit bottom here as there is an extreme number of “fails:  50 out of 52!

We are still keeping XLI in the portfolio with a trailing stop in place, even though it has a “fail” rating and a ranking of 23.  The rationale is that the NASDAQ Composite has exceed its 100-dma and possibly moving higher from here.  If not we still have the 5% trailing stop at $54.32 which is nearby its closing price of $55.03 on Friday.

Conclusion  —  Caution is Still Urged — Market Now in Trading Range from Four-Week Downtrend

The market stabilized last week with a strong close on Friday. Because of the market’s technically oversold condition, the market may mark time (as it has this past week) or slowly move higher.  I will provide an interim post during the week if there is a BDH Dashbaord BUY signal.  Make sure you check the charts yourself to look for the MACD crossover on the chart.

Enjoy the week ahead.

May 14

Market Review — This will be a shortened blog as is the case every other week.COMp May 13, 2016

This week the markets struggled to make progress with the NASDAQ Composite continuing its decline of the last few weeks.  On Monday, the market started off with a solid rally but gave it all back and more by week’s end with major averages declining 0.39% (NASDAQ) to 1.16% (DJIA).

The NASDAQ Composite fell below its 100-dma (Indicator #2) on Friday (see chart) by 2.32 points resulting in a SELL signal on this Indicator, as well as a “1” SELL signal on the BDH Dashboard. 

Still below its 200-dma, the NASDAQ is struggling to get above that level (red line on chart) as well as the 50-dma (blue line).    A big resistance area also lies above at 5000.

Year-to-date, the NASDAQ Composite is down 5.79% compared to a gain of only 0.13% for the S&P 500, and a gain of only 0.63% for the DJIA.  The BDH strategy is up 0.34%.

There were 445 new 52-week NYSE highs compared to 365 the prior week, and 80 new lows,compared to 64.  The number of NYSE stocks above their 50-dmas has taken a big drop to 56.11% this week from a 69.32% two weeks ago..  This number is coming down from excessively elevated levels. The percentage of stocks above their longer-term 200-dma advanced fell this week to 59.82% compared to 71% a few weeks ago.  Thus, the market decline in the past few weeks has brought the market down to earth from the high readings reached after the significant 2.5 month advance off the February 11 lows.

Top 5 ETFs –   Stay 75% in Cash

The portfolio is still 75% invested in cash.   The only remaining position is XLI up 4.96% since its purchase.  This past week only 10 ETFs had pass ratings compared to 6 last week.  So the market decline had resulted in numerous ETFs experiencing negative MACD crossovers which one of the ‘fail’ criteria.

Although the Dashboard has issued a SELL signal on Friday, we are still keeping XLI in the portfolio with a trailing stop in place.  The rationale is that the NASDAQ Composite only needs to rise about 3 points for it to exceed its 100-dma which would result in another Dashboard NEUTRAL signal.

Conclusion  —  Caution is Still Urged — Market Now in Short-term Down Trend

The market has declined for the last three weeks. We’ll maintain the 5% trailing stop at $54.32 on XLI  to protect against a further market decline.

Because of the market’s technically oversold condition, the market may mark time or slowly move higher.  However, neither of those conditions may occur and the market may continue to decline further.

Enjoy the week ahead.

May 08

Market ReviewCOMP May 6 2016

This week the markets struggled to make progress with the NASDAQ Composite continuing its decline of the prior week.  This week Monday and Friday were up days and the other days were down days. The NASDAQ Composite fell below its 100-dma (Indicator #2) on Wednesday resulting in a SELL signal on this Indicator and a “1” SELL signal on the BDH Dashboard.  However, by Friday the index rallied above the 100-dma just barely reversing the signal to BUY and the BDH Dashboard back to a “2” NEUTRAL reading.  This indicator needs to be watched to see if there a definitive signal either way instead of  fluctuating around it (see green around in chart).

Still below its 200dma, the NASDAQ is struggling to get above that level (red line on chart) as well as the 50-dma (blue line).    A big resistance area lies above at 5000.  With the weak NASDAQ performance the BDH ETF portfolio remains 25% invested in XLI and 75% in cash.

Since the February 29 BDH BUY signal,the three major averages have advanced 5.20%  while the BDH portfolio is up only 1.76%.  That is to be expected with only 50% of the money invested initially and only 25% at present.

Last week the NASDAQ Composite was down 0.82% compared to -0.40% for the S&P 500, and -0.19% for the DJIA.  Year-to-date, the NASDAQ Composite is down 5.42% compared to a gain of 0.65% for the S&P 500, and a gain of 1.81% for the DJIA.  The BDH strategy is up 0.62%.

There were 365 new 52-week NYSE highs compared to 270 the prior week, and 64 new lows,compared to 25.  The number of NYSE stocks above their 50-dmas has taken a big drop to 69.32% this week from a 86% two weeks ago..  This number is coming down from excessively elevated levels. The percentage of stocks above their longer-term 200-dma advanced fell this week to 62.43% compared to 71% a few weeks ago.  Thus, the market decline in the past few weeks has brought the market down to earth from the high readings reached after the significant 2.5 month advance off the February 11 lows.

Bond prices advanced nicely and making it two weeks in a row of advancing prices. Gold (GLD) prices and gold miners (GDX) backed off slightly from their yearly highs. Oil prices took a breather and fell this week.  In the above chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current bond weekly performance, or GLD, GDX and USO and $BRENT for the other averages.

Indicator Review – No  Change By Week’s End NASI May 6 2016

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a SELL signal on April 4, 2016, and then a BUY signal on May 6. (see first chart).

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a MACD SELL signal on April 21,  (refer to first chart MACD indicator).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 4, 2016 Bullish Percentage reading was 22.3% which was down five percentage points from two weeks earlier.  This indicator has now dropped below the critical 25% level.  A rise above this level in subsequent weeks would another confirming BUY signal.

Indicator #8 NASI Summation Index and MACD. This indicator issued a SELL signal on April 8 as the Index crossed to the downside over the 5 day-ema confirming the prior MACD SELL signal.

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):
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard Still on “2” NEUTRAL Signal

Two changes over past few weeks in Dashboard signal.

Dashboard-V2-May 6 ,2016_WC-1-1

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For 2016, the BDH portfolio is up 0.62% compared to the S&P 500 and DJIA both up around 1.2%, although the NASDAQ Composite is down 5.42% so far.  Thus, BDH strategy is slightly behind the DJIA and S&P 500 so far this year and ahead of the NASDAQ, but having been invested for a much smaller period and with only a 25- 50% invested position.  So on a risk-adjusted basis the BDH strategy is outperforming the market. and is in 10th place out of 18 strategies followed by the website.  See the “Strategies Summary” link on the top of their page.

Top 5 ETFs –   Stay 75% in Cash

The portfolio is still 75% invested in cash.   The only remaining position is XLI up 6.08% since its purchase.  This past week only 6 ETFs had pass ratings compared to 24 a few weeks ago.  So the market decline had resulted in numerous ETFs experiencing negative MACD crossovers which one of the ‘fail’ criteria.

Here is the link to the Top 5 ETF spreadsheet:

Top-5-ETF-May 6, 2016

The  ETF portfolio has gained 1.76% since the earlier Dashboard BUY signal compared to 5.20% for the major averages.   Clearly, by not going all-in on the earlier BUY signal, the portfolio performance has suffered.  Our prudence had cost us about a 3.4 percentage points of profit, but year-to-date, as mentioned earlier the BDH performance was more in line with two of the three major averages.

Decision Page

Here is the link to the Decision Page:  http://www.etfscreen.com/buydonthold/bdh-decision-page.php

To get a feel where the best performing ETFs are by asset class, I suggest that you pull up the seven asset classes on the right side of the Decision Page (in blue ink) to see which ETFs have been doing the best — e.g., sector ETFs.  You can click on the down arrow in the three month and one month columns of the each grouping to see short-term performance.  You will note the strong performance of metals,  and a few sector funds, plus GDX and SLV in Commodities.

Conclusion  —  Caution is Still Urged — Market Now in Short-term Down Trend

The market has paused to refresh the past two weeks. We’ll maintain the 5% trailing stop at $54.32 on XLI  to protect against a market reversal that may start at any time.

Because of the market’s technically oversold condition, the market may mark time or slowly move higher.  However, neither of those conditions may occur and the market may continue to decline further.

Have a good week!  Happy Mothers Day !!

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.Has Mixed

May 01

This will be shortened blog as is the case every other week.  For all the links go the prior weeks blog.

Market ReviewCOMP April 29 2016

This week the markets got hit with poor earnings from a few high-flying tech stocks, coupled with other news, resulted in a solid decline of about 1.27% for the DJIA and S&P 500, but a 2.67% decline in the NASDAQ Composite.

Note on the accompanying chart the decline of the NASDAQ below the red 200-dma, and the touch below the critial 100-dma in the green line, before closing about 30 points above the latter moving average on Friday.  A decline below the 100-dma on a closing basis would result in a SELL signal on both Indicator#2 and the Dashboard (would be a 1 reading).

Since this bull market is the second longest in duration, it would not be surprising to see it have difficulty going forward from here.  Moreover, the May to October time period tends to be the weakest six-month period compared to November to April. That may or not be the case this year, but it pays to be aware of this situation in conjunction with our BDH strategy which is still in a NEUTRAL situation, 25% invested in XLI.

The  six-month strategy (being out of the market in May to October and in the market from November to April period) is not just hearsay, but confirmed by multiple sets of researchers over the years with statistical significance.  Sven Bouman and Ben Jacobsen analyzed 37 international stock markets and found the under performance of the May to October period over an 18 year period.  Moreover, a more recent study by Dandroc Andrade published in the Financial Analysts Journal in 2013 came to the same conclusion.  I devoted a full chapter (#7) to the six-month strategy in my book All About Market Timing (1st and 2nd editions).  It is also documented in the 2016 Stock Trader’s Almanac (page 52 and 54) and prior editions.

Gold, gold miners and oil had a good week and made 2016 highs.  Bonds had a good ending to the week after a weak open, and closed a bit higher.

The BDH portfolio is up 0.87% year-to-date.  XLI is up 7.07% since its purchase and has a trailing 5% stop at $54.32 in case the market declines further.  The DJIA is up 2.00% YTD. with the S&P 500 up 1.05%, and the NASDAQ down 4.63%.

Here is the latest Dashboard:

Dashboard-V2-April 29,2016_WC-1-1

Conclusion  —  Market Trend May Be Reversing Downward

The market uptrend was halted during the past two weeks.  We’ll maintain the 5% trailing stop on XLI  to protect against a market reversal that may start at any time.   The price action this week should give us a clear indication of the market’s mood going forward.  Watch the 200-dma on the NASDAQ Composite for the clue about the market’s direction !

Have a good week!

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.

Apr 23

Market ReviewCOMP April 22, 2016

This week the markets struggled to make progress with the NASDAQ Composite falling on poor earnings on a handful of leading tech companies.  Indicator #5 went back on a MACD SELL signal on April 21 resulting in a current Dashboard reading of NEUTRAL.  Still above its 200dma, the NASDAQ is struggling to stay above that level (red line on chart).    A big resistance area lies above at 5000, so we’ll wait and see which way that index goes from here.

With the weak NASDAQ performance the BDH ETF portfolio will remain 25% invested in XLI and 75% in cash.  Investing at this point is not prudent, after the market’s recent assault on the late 2015 yearly highs.

Specifically, the three major averages have advanced 7.55% since the February 29 BDH BUY signal, while the BDH portfolio is up only 2.41%.  That is to be expected with only 25% of the money invested.

There were 336 new 52-week NYSE highs compared to 276 two weeks ago, and 27 new lows,compared to 20  two weeks ago.  The number of NYSE stocks above their 50-dmas has dropped slightly to 86.21% this week from a high of 90.00% the prior week.  This number is still at excessively elevated levels. The percentage of stocks above their longer-term 200-dma advanced again this week to 69.06% its highest level of the year and reaching the levels of September 2015.  This is a very positive sign of a solid uptrend.

Bond prices fell hard by week’s end. Gold (GLD) prices and gold miners (GDX) were down slightly. Oil prices surged to their highest levels since early January.  In the above chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current bond weekly performance, or GLD, GDX and USO and $BRENT for the other averages.

Indicator Review – Two Changes in Past Few Weeks NASI April 22, 2016

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on March 29, 2016 (see first chart).

Indicator #5 NASDAQ Composite with MACD This indicator issued a MACD SELL signal on April 21,  (refer to first chart MACD indicator).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest April 20, 2016 Bullish Percentage reading was 33.4% which was up 5.6 percentage points from two weeks earlier.  This indicator remains on its long term buy signal with numerous confirmations along the way.

Indicator #8 NASI Summation Index and MACD. This indicator issued a SELL signal on April 8 as the Index crossed to the downside over the 5 day-ema confirming the prior MACD SELL signal.

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):
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard Now on “2” NEUTRAL Signal

Two changes over past few weeks in Dashboard signal.

Dashboard-V2-April 22,2016_WC-1-1

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For 2016, the BDH portfolio is up 1.03% compared to the S&P 500 and DJIA both up around 3%, although the NASDAQ Composite is down 2.0% so far.  Thus, BDH strategy is slightly behind the DJIA and S&P 500 so far this year and ahead of the NASDAQ, but having been invested for a much smaller period and with only a 25- 50% invested position.  So on a risk-adjusted basis the BDH strategy is outperforming the market. and is in 10th place out of 18 strategies followed by the website.  See the “Strategies Summary” link on the top of their page.

Top 5 ETFs –   Stay 75% in Cash

The portfolio is now 75% invested in cash.  On April 7 at the open the 25% position previously taken in XRT was sold due to hitting its trailing stop.  The only remaining position is XLI up 7.72% since its purchase.  This past week 24 ETFs had pass ratings compared a much lower number a few weeks ago. 

Here is the link to the Top 5 ETF spreadsheet:

Top-5-ETF-April 22, 2016

The  ETF portfolio has gained 2.41% since the earlier Dashboard BUY signal compared to 7.55% for the major averages.   Clearly, by not going all-in on the earlier BUY signal, the portfolio performance has suffered.  Our prudence had cost us about a five percentage points of profit, but year-to-date, as mentioned earlier provided a more in line performance.

Decision Page

Here is the link to the Decision Page:  http://www.etfscreen.com/buydonthold/bdh-decision-page.php

To get a feel where the best performing ETFs are by asset class, I suggest that you pull up the seven asset classes on the right side of the Decision Page (in blue ink) to see which ETFs have been doing the best — e.g., sector ETFs.  You can click on the down arrow in the three month and one month columns of the each grouping to see short-term performance.  You will note the strong performance of metals,  and a few sector funds, plus GDX and SLV in Commodities.

Conclusion  —  Caution is Still Urged — Market Uptrend May Take a Rest for Now

The market has paused to refresh this past week. Therefore, it is still prudent to wait to see what happens going forward before putting  the 75% cash position to work once a new BUY signal occurs.  We’ll maintain the 5% trailing stop on XLI  to protect against a market reversal that may start at any time, especially by May 1 (based on historical seasonal patterns).

Because of the market’s technically oversold condition, the portfolio will not be changed at the current time. 

Have a good week!

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.

Apr 17

This will be another short blog this week.

Market ReviewComp April 15 2016

The major averages all rose this week about 1.75% or so.  This resulted in a BUY signal on Indicator #5, as the MACD had a positive crossover (refer to chart on the right).  You can see the blue horizontal resistance line near 5000 on the NASDAQ Composite  which is the next hurdle higher.  The Dashboard has issued a new BUY signal as of Friday which is now at “3”.

In addition, Indicator #8 is nearing a BUY signal.  This will occur when MACD has a positive crossover.  The Index and 5 day-ema has already crossed to the upside. NASI April 15, 2016(See nearby chart).

There was no real change in the number of new 52-weekly highs or lows.

XLI is still the only position held in the portfolio with a 25% allocation.  Cash is still at 75%.  This is not a time to enter the market, as the market is at or near its highs for the year. Only a few ETFs in the Top 20 have a “pass” rating and most of those are defensive (utilities, bonds, metals).

A full blog report will be provided next weekend.  Be careful and have stop limits in place.

Apr 10

This will be a shortened blog, as is the case every other week.

Market ReviewCOMP April 11, 2016

The stock market had a downward bias this past week with most averages declining about 1.25%.  As the NASDAQ Composite chart indicates (on the right) the index is hanging on to its 200-dma as support.  You will also notice that the MACD had a negative crossover on Friday, thus issuing a SELL signal on Indicator #5.

Indicator #8 also experienced a SELL signal as both components on that chart also had negative crossovers  (see second chart).

Therefore, the BDH Dashboard has changed from a “4” reading to a “2” NEUTRAL.  The BDH portfolio is up 0.04% YTD compared to a gain of 0.87% for the DJIA, a gain of 0.18% for the S&P 500, but a 3.13% loss for the NASDAQ.

Market internals have weakened with only 277 NYSE new 52-week highs compared to 376 the week before.

In our ETF portfolio, XRT was sold on Thursday at $44.18 which was a 5% trailing stop off the highs. XLI ($54.71) is still held, but has a 5% trailing stop at $53.23.  Therefore, the ETF portfolio is now 75% in cash.

A full report will be provided next weekend.NASI April 11, 2016

 

Apr 02

This weeks blog is divided into two parts:

COMP April 1 2016Part I. Market Review

This week the markets headed higher again, up about 2%.  The NASDAQ Composite was the star performer since it surpassed both its 100-dma (Indicator #2), as well as the critical 200-dma (see chart to the right).  Note that there are three blue line resistance levels above the current price, so it may be tough sledding ahead to break through those without some reaction to the downside.   My recommendation to hold off on investing the remaining 50% of the cash has resulted in an under performance since the last buy signal. Specifically, the three major averages have advanced 6.87% since the February 29 BDH BUY signal, while the BDH portfolio is up only 3.08%.  That is to be expected with only half the money invested.

There were 376 new 52-week NYSE highs compared to 248 two weeks ago, and only 31 new lows,compared to 37  two weeks ago.  The number of NYSE stocks above their 50-dmas has dropped slightly from 88.97% to 88.30% this week.  This is still at excessively elevated levels. Only the level of 89.07% occurring at the market peaks in 2011 and 2013 had a higher number than this past week before declining along with the marketThe percentage of stocks above their longer-term 200-dma advanced again this week to 54.68% its highest level of the year and reaching the levels of June 2015.

Bond prices rallied during the week. Gold (GLD) prices rose slightly while gold miners (GDX) were flat. Oil prices closed at its lowest price in the last eight trading sessions.  In the above chart, please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current bond weekly performance, or GLD, GDX and USO and $BRENT for the other averages.

Indicator Review – One ChangeNASI April 1, 2016

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on March 29, 2016 (see first chart)_.

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a MACD BUY signal on February 17th,  (refer to first chart MACD indicator).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest March 30 Bullish Percentage reading was 27.2% which was down 10.0 percentage points from two weeks earlier. Although, this indicator remains on its May 27, 2015 BUY signal (with numerous confirmations along the way) the large percentage point drop over the past two weeks is unusual.  A decline below 25% and then a subsequent weekly advance above that level would be another confirming BUY signal.

Indicator #8 NASI Summation Index and MACD. This indicator issued a BUY signal on February 3 as the MACD experienced a positive crossover, coupled with an earlier EMA negative crossover. (Refer to second chart).  On Mach 29th the MACD had a negative crossover which does not change this indicator’s reading until the Index is breached to the downside by its 5 day-ema.

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):
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard Now on “4” BUY Signal

One change this week in Dashboard signal.

Dashboard-V2-March 29,2016_WC-1-1

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For 2016, the BDH portfolio is up 1.70% compared to the  averages which are a similar amount, although the NASDAQ Composite is down 1.9% so far.  Thus, BDH strategy is about even with the DJIA and S&P 500 so far this year, but having been invested for a much smaller period and with only a 50% invested position.  So on a risk-adjusted basis the BDH strategy is outperforming the market. and is in 8th place out of 19 strategies followed by the website.  See the “Strategies Summary” link on the top of their page.

Top 5 ETFs –   Stay 50% in Cash

The portfolio is still 50% invested in cash.  On February 29 at the open a 25% position was taken in XLI and XRT, both with pass ratings.  This past week only 21 ETFs had pass ratings compared to 39 two weeks ago.  We plan to invest the remaining 50% equally (16.67%) in VNQ (ranked 6th), SMH (7), EWA (11) at the right time.  That means we are NOT investing at the present time because of the market’s extremely overbought technical condition.

Here is the link to the Top 5 ETF spreadsheet:

Top-5-ETF-April 1, 2016

The two ETFs in the portfolio have performed well, and the ETF portfolio is up 3.08% since the last BUY signal compared to 6.87% for the major averages.   Clearly, by not going all-in on the last BUY signal the portfolio performance has suffered.  Buy prudence is required when investing.

Decision Page

Here is the link to the Decision Page:  http://www.etfscreen.com/buydonthold/bdh-decision-page.php

To get a feel where the best performing ETFs are by asset class, I suggest that you pull up the seven asset classes on the right side of the Decision Page (in blue ink) to see which ETFs have been doing the best — e.g., sector ETFs.  You can click on the down arrow in the three month and one month columns of the each grouping to see short-term performance.  You will note the strong performance of metals,  and a few sector funds, plus GDX and SLV in Commodities.

Conclusion  —  Caution is Still Urged — Market Uptrend May Take a Rest for Now

The market still needs to pause to refresh before working its way higher, but has refused to do so the last few weeks. Therefore, it is still prudent to wait to see what happens going forward before putting the remaining 50% to work.  I recommend tightening the  trailing stops from 7% to 5% on XLI and XRT to protect against a market reversal that may start in the next few weeks, especially by May 1 (based on historical seasonal patterns).  I will post an interim blog if there is an opportunity to buy the additional ETFs.

Because of the market’s technically oversold condition, the portfolio will not be changed at the current time.  We still have VNQ, EWA and SMH on the radar as purchase candidates, but not at their current prices.  Aggressive investors may want to add these positions to their portfolios with appropriate trailing stop limit orders, as mentioned a  number of times in past blogs.

Have a good week!

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.

Part II.  Report on 2016 ETF.com Inside ETFs Conference (January 24-27, 2016)

I attended this conference for the last three years, although this was the ninth year of the conference.  Each year it provides more insights and valuable information on ETFs than the year before.  This year’s conference was no different, with an attendance of 2,200 compared to 1,900 the prior year.  Moreover, the exhibit hall was expanded from last year because of more players and service companies.

The tradition of the Sunday ETF University was continued for the third year.  It offers a complete one-day up-to-date education on ETFs that is offered in modules with wide ranging topics including selecting the best ETF in every area of the market to examining the Smart-Beta trend.  Another tradition that continued this year was the Annual Women in ETFs Breakfast (by invitation only).

Interestingly, a number of conference speakers (about 120) offered varying market views with both bull and bears putting forth their views, as well as others offering their expertise in specific areas. There was a focus on smart beta and alternative investments. Kevin O’Leary (of Shark Tank) fame was at the booth for his O’Leary funds which offers five ETFs focusing on quality, lower volatility, strong dividends and sector/global diversification.  Keynote speakers included William McNabb (Chairman and CEO of Vanguard), Jeremy Siegel, Jeffrey Gundlach, Liz Ann Sonders, and Stephen Dubner, among others.

I spoke with a number of new ETF players to the marketplace including BioShares, ETF Managers Group, (tickers:BITE, HACK and RISE, among others), and Amplify Online Retait ETF (IBUY). All the major ETF providers and the more recent ones were present.  I picked up many fact sheets,product lists, brochures and white papers that provided useful information.  To have all this information available to access and retain, investors and traders can study the materials after the fact and hopefully make higher quality investment decisions.

In summary, this conference offers a true treasure trove of information, industry contacts, and insights on ETFs.  For anyone who wants to learn about and immerse themselves in the world of ETFs this conference offers it all in a top-notch waterfront hotel with a beautiful view.  Go to ETF.com for more information about the 2017 conference (January 22-15, 2017 at the current location) and valuable information on ETFs.  On April 7, 2016 there is a complementary webinar on the factor investing.  Sign up on the website in the webinar tab.