Blog

Jan 31

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

Market Review COMP January 29 2016

The stock market had a roller-coaster week with the DJIA bouncing around 200+ points four out of five. .  Fortunately, as it did the prior week, the market bounced higher on Thursday and Friday, ending the week with a gain.  In particular, Friday’s powerful advance resulted in a BUY signal on Indicator #5 (see chart) with a positive MACD crossover, as well as closing above the lowest blue support line.  A continuation of this near-term rally this coming week would signal a change in short-term trend.  The ETF portfolio is 100% in cash.

For the month and YTD the DJIA is down 5.50%, the S&P 500 is down 5.07%, and the NASDAQ Composite declined 7.31%, while the BDH portfolio is down only 1.38%.  This has been one of the worst opening months in market history on a percentage basis.

Indicator #6 had another confirming BUY signal on Thursday, as the investor bullish percentage rose to 29.8% from 21.5% from the prior week, thereby rising above the critical 25% level. So the bounce up mentioned in an earlier blog has now occurred.  Also, then number of new NYSE 52-week lows declined dramatically to 253 from 1,451 the week before.

NASI January 29 2016Indicator #8 experienced a BUY signal on its index crossover to the upside (see second chart), but not yet on the accompanying MACD which needs to confirm the index’s move.  A strong market this week would result in a positive MACD crossover  resulting in this indicator’s BUY signal, as well as a Dashboard “3” BUY signal.  Be on the lookout for it!!

Stay safely in cash.

Jan 24

Market Review comp Jan 22 2016

The stock market ended 2015 on a sour note as the market tumbled lower on the last two days of the year prior to New Year’s day. This was nothing compared to the brutal decline through mid-day Wedneswday when the DJIA was down over 563 points at the nadir.  Since then the market has rallied and ended the week on a positive note.  Whether or not Wednesday’s low point is a short-term bottom remains to be seen.  But at that point the market was extremely oversold on many indicators and a rally was overdue.

This week the Dashboard remained unchanged, but the NASDAQ Composite’s MACD Indicator#5 appears to be turning up (see chart to the right), as the circled area shows and the index has just moved above a long-term support level (bottom blue horizontal line).

For the year 2016 to date, the BDH strategy has lost 1.38% compared to an average loss of 6.70 to 8.31% % for the three major averages.  That is the beauty of having a specific rule-based strategy with appropriate stops to minimize losses in difficult market environments.

For the first week of the year, the S&P 500 rose 1.41%, the DJIA gained 0.66%, and the NASDAQ Composite spurted 2.29%. The number of new NYSE 52-week lows surged to 1,451 from 1,283 the  week before.  The number of new 52-week highs was 26 compared to 46 the week before.

Also, note that only 16.18% of all NYSE stocks are above their respective 50-dmas.  During the week this number actually fell to 11%, so the rally from the Wednesday lows was helpful in moving this percentage higher. And only 18.63% of NYSE stocks are above their 200-dmas at week’s end with the low point at 15.50% on Wednesday.

Bond prices backed off their mid-week gains to close down for the week.  Gold (GLD) prices and gold miners (GDX) moved higher for the week on Friday.   Oil prices ($BRENT) surged higher at week’s end, helping the stock market recover from week’s of losses.  Prices hit $27.10 before recovering to $32.16 by week’s end.

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 for the other averages.

Indicator Review –No Changes NASI January 22 2016

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a SELL signal on January 4, 2016, Monday.  Currently the index is 6.6% below this moving average (first chart).

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a MACD SELL signal on January 4, as well (refer to first chart MACD indicator).  However. the MACD appears to curling up and could crossover positively this week if the market rally continues.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest January 20 Bullish Percentage reading was 21.5% which was a 3.6 percentage point gain from the 17.9% (lowest reading since March 2009, the market low) on January 13. A rise in any subsequent week above 25% will be another confirming buy signal.    Thus this indicator remains on its May 27 BUY signal. 

Indicator #8 NASI Summation Index and MACD. This indicator issued a SELL signal on January 7, as the MACD experienced a negative crossover, coupled with an earlier EMA negative crossover. (Refer to second chart).  So far this indicator;s components are not turning around yet.

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 Remains on “1” SELL Signal

No change this week in Dashboard signal.

Dashboard-V2-January 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 down 1.38% compared to the DJIA down 7.64% for the year, followed by the S&P 500 down 6.70%, and the NASDAQ Composite down 8.31%.  Thus, BDH strategy has outperformed the market so far this year.

Top 5 ETFs –  100% Cash

The portfolio is 100% invested in cash. Not surprisingly,  45 of the 52 ETFs have a fail rating.  Bonds, utilities, currency and  inverse ETFs were the “pass” items. 

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 the inverse ETFs, fixed income, and currencies as compared to the weak performance of all other categories.

Conclusion  — Extreme Caution is Still Urged — Market Downtrend Has Paused

The market had a nice 2.5 day rally at week’s end as oil reversed direction.  With one week left to the month it does not appear that January will be a positive month, thereby putting the full year at risk for a decline according to the “January Barometer” espoused by Stock Trader’s Almanac based on historical data.  What actually happens in this Presidential year remains to be seen.   Note that the index in Indicator #2 needs to raise in the neighborhood 6.6% to generate a Dashboard BUY signal. Hold cash until the next Dashboard BUY signal. 

The market has had some major damage as many stocks were down over 20% since January 1 as of Wednesday’s lows.  Actually, the averages were down about 15% from last May’s highs which is certainly a decent correction amount.  So it is possible that the lows were hit this week.  A strong week or two will indicate a possible bottom has been made.

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.

etf.com Inside ETFs Conference starts today:  January 24-27, 2016

This year this high-powered conference on ETFs will be held in same place as the last few years at the Westin Diplomat Hotel in Hollywood, FL.  For those of you who are a active investors or traders, and especially those who live in Florida,  this conference provides the most comprehensive venue for ETF  knowledge available in conference format.  With all the major vendors present in the Exhibit Hall, major market players, and over 1500 attendees this conference offers a tremendous ETF education at a seaside resort.  The the high-quality roster of speakers includes  Jeffrey Gundlach, Liz Ann Sonders, Jeremy Siegel, Stephen Dubner, Kevin O’Leary and others  I will be attending.  Go to www.etf.com for registration information.

 

Jan 17

This will be a shortened blog week.

Market Review COMP January15 2016

The stock market had another bad week, falling about 2%, but the NASDAQ Composite fell 3.34%.  So far this year the averages have cratered about 8%, although the NASDAQ has fallen the most at 10.36%.  This has been the worst opening two weeks in market history on a percentage basis.  The Dashboard remains on its”1″ SELL signal and the ETF portfolio is 100% in cash.

Indicator #6 has fallen to 17.9% its lowest bullish reading since 3/5/09 (18.192%) the week of the bottom of the last bear market low.  So a bounce up from here would be expected, but not guaranteed.

Also, then number of new NYSE 52-week lows mushroomed to 1283 from 665 the prior, again an extreme negative reading.  The NASDAQ Composite has breached its bottom horizontal support line that was set up many months ago.  See the accompanying chart.

We will await the next Dashboard BUY signal which does not appear to be coming soon.  Stay safely in cash.

etf.com Inside ETFs Conference  January 24-27, 2016

This year this high-powered conference on ETFs will be held in same place as the last few years at the Westin Diplomat Hotel in Hollywood, FL.  For those of you who are a active investors or traders, and especially those who live in Florida,  this conference provides the most comprehensive venue for ETF  knowledge available in conference format.  With all the major vendors present in the Exhibit Hall, major market players, and over 1500 attendees this conference offers a tremendous ETF education at a seaside resort.  The the high-quality roster of speakers includes  Jeffrey Gundlach, Liz Ann Sonders, Jeremy Siegel, Stephen Dubner, Kevin O’Leary and others  I will be attending.  Go to www.etf.com for registration information.

Jan 10

Note:  I received an email this past week from Jim, but when I sent him the response it bounced back as undeliverable.  I provided the answer below the conclusion section of this blog.

Normally, this week would have provided a shortened blog.  But due to the current situation it was changed to a full post.

Market Review COMP Jan 8 2016

The stock market ended 2015 on a sour note as the market tumbled lower on the last two days of the year prior to New Year’s day. This was nothing compared to the brutal decline ending on another sour note this past Friday, as the market took a big hit due to concerns about China’s growth and other factors.  This was the worst opening week of a year on percentage terms in stock market history.  Many S&P 500 stocks are down over 20% since the market high last  year.  This past year only about 44% of large cap mutual fund managers exceeded this benchmark.

This week an unprecedented three Dashboard indicators issued SELL signal, as mentioned in the next section of this report.

For the year 2016, the BDH strategy lost 1.38% compared to an average loss of 6.47% for the three major averages.  That is the beauty of having a specific rule-based strategy with appropriate stops to minimize losses in difficult market environments.

This past week, the interim update on Monday indicated a change in the Dashboard to NEUTRAL “2”. On Thursday, Indicator #8 had a SELL signal, thereby resulting in a Dashboard “1” SELL signal. This resulted in the sale of VNQ and XLY on the open on Friday.  XLY was sold at $76.78 on Monday, January 4 as it opened below its 5% trailing stop price of $77.48.  So this turned out to be a bigger loss than desired.  QQQ was also sold at its 5% trailing stop on Monday.  Lastly, XLP was sold on January 7 at its stop price as well.  Thus, by the open on Friday, the BDH ETF portfolio was 100% in cash, thereby avoiding more losses as the market closed on the lows of the day and week.

For the first week of the year, the S&P 500 fell 5.96%, the DJIA dropped 6.19%, and the NASDAQ Composite declined the most at 7.26%.

The number of new NYSE 52-week lows increased dramatically from 93 two weeks ago to 665 this past week, while the number of new 52-week new highs increased to 162 compared to 150 for the prior week which is quite a strange occurrence in a declining market.

Also, note that only 17.20% of all NYSE stocks are above their respective 50-dmas compared to 74% in early November, and only 20.40% are above their 200-dmas at week’s end.

Bond prices surged to their highest levels in three months, as safe heaven in time of turmoil. Oil prices (USO) fell hard closing at the lowest level in years. Gold (GLD) prices and gold miners (GDX) surged higher, but gave back some of the gains on Friday.

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 for the other averages.

Indicator Review –Three Negative Changes NASI January 8 2016

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a SELL signal on January 4, 2016, Monday.

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a MACD SELL signal on January 4, as well (refer to first chart MACD indicator).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest January 6 Bullish Percentage reading was 22.2% which was a 2.9 percentage point drop from the 25.1% on December 30. A rise in any subsequent week will be another confirming buy signal.    Thus this indicator remains on its May 27 BUY signal. 

Indicator #8 NASI Summation Index and MACD. This indicator issued a SELL signal on January 7 as the MACD experienced a negative crossover, coupled with an earlier EMA negative crossover. (Refer to second chart).

Here is a chart showing all Dashboard buy and sell signals (it may take a day or two for the new signal to be posted):
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

Dashboard Now on “1” SELL Signal

Dashboard-V2-January 8 2016_WC-1-1

Since the last BUY signal on October 9, 2015 through this past Friday, the BDH portfolio lost 2.17% vs. a loss of 4.10% for the major averages.  Also, the BDH portfolio was out of the market for 173 days or 47.3% for the year providing less risk than buy and hold.

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For 2016, the BDH portfolio was down 1.38% compared to the DJIA down 6.19% for the year, followed by the S&P 500 down 5.96%, and the NASDAQ Composite down 7.26%.  Thus, BDH strategy  has performed well to start the year.

Top 5 ETFs –  100% Cash

The portfolio is 100% invested in cash. Not surprisingly,  43 of the 52 ETFs have a fail rating.  Bonds, utilities, and gold were the “pass” items. 

Top-5-ETF-January 8, 2016

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 the inverse ETFs, fixed income, and currencies as compared to the weak performance of all other categories.

Conclusion  — Extreme Caution is Urged — Market Has Taken the Low Road

Remember what I wrote in the 12/31/2015 blog post and look at what has unfolded so far:

“Not matter what the market does going forward, intelligent investors need a  time-tested rationale investing approach.  A well thought out approach is to use a non-emotional, mechanical, rule-based strategy based on market price action, like the BDH strategy, that will protect investors from losing big in future bear markets and participate in the majority of gains in bull markets.  We don’t have to guess or predict where the market is going since no one knows.

Even though the Dashboard is at a maximum “4” BUY signal, as mentioned above, Indicators #5 and #8 could easily reverse downward next week, if the market has a 2% or more decline.  That would put the Dashboard at a “2” NEUTRAL reading.  Be extremely careful here, as the market can easily decline rapidly at any time.

The market internals continue to be weak with low number of advancing stocks vs. declining stocks, low numbers of new highs vs. new lows, low numbers of stock above their respective moving averages.  Coupled with a tight trading range, the market is fighting to approach its 2015 highs reached earlier in the year.  Historically speaking a positive January portends a positive year ahead.  We will see if that is the case this year.”

After this week’s market action, the BDH strategy is safely in cash awaiting the next BUY signal.  The market is oversold and a short-term rally could occur early in the week or later on.  But a sustained up move is needed for new BUY signal.

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.

Response to Jim S. email:

Jim,

I don’t understand your scoring calc. If I add up the rows I don’t
understand how you get a 0,1 or 2 or 3,4 ie In some rows your have all -1. In my mind that would -4. Please explain.
-1 and +1 only relate to whether each indicator is on a BUY or SELL signal, respectively They are NOT additive. For example two +1’s and 2 -1’s would be +2 as there are 2 indicators that are positive. Four -1’s would be 0 as n indicators are postive.

I hope this resolves your understanding
Regards, Les

Jan 08

Interim Report

Market Situation

The stock collapse of over 5% during the first five days of 2016 has resulted in the worst start to a year in stock market history.  Yesterday, Indicator #8 had a MACD negative crossover, thereby going to a SELL signal.  This caused the Dashboard to go to a “1” SELL signal.  All 4 ETFs in the portfolio were sold this week as follows:

XLY sold on 1/4 at $76.78 below its 5% stop as the market gapped down at the open.

QQQ sold on 1/4 at $108.81 at its 5% stop.

VNQ will be sold at the opening price today January 8 because of the Dashboard SELL signal.

XLP will be sold at the open on Friday because of Dashboard SELL signal.

Therefore, the entire portfolio is 100% in cash.

 

A full report will be provided this weekend.

Jan 04

COMP January 4. 2016Market Situation — INTERIM UPDATE

The stock market started the year with a bang that sank the DJIA by a 450 point loss intra-day.  It closed off about 276.  Nevertheless, the intra-day low was the worst percentage loss in the first trading day of any year since 1932.  My  extreme caution note in yesterday’s blog proved correct in only one day.

As you can see the chart both Indicators #2 and #5 had sell signals today.   This resulted in a change in the Dashboard from 4 to 2. A decent size decline tomorrow will result in Indicator #8 also changing to a SELL signal.  That would result in a Dashboard “1” SELL signal.

Keep tight stops and protect your principal if this decline continues.

Jan 03

Market Review COMP January 1, 2016

The stock market ended the year on a sour note as the market tumbled lower on the last two days of the year prior to New Year’s day.  After a nice rally on Tuesday, the market sank and gave back more than 1% the rest of the week.  Overall, 2015 was a difficult year to make money in the stock market.   This year’s decline was the first since 2008, so we’ve had a good run so far.  Many stocks were down 20% or more. Commodities got crushed and international stocks did not do well.  Going forward will be more challenging. Hedge funds were down about 3 to 4% on average, and they are supposed to be the smart folks.

For the year, the BDH strategy lost 2.13% compared to a loss of 2.23% for the DJIA, 0.73% for the S&P 500, and a gain of 5.75% for the NASDAQ Composite which was propped up by big gains of over 100% in Netflix (134%) and Amazon(118%).  All the major averages are currently below their 200-  and 50-dmas which is a negative situation.  The market continued to fluctuate in its trading range since mid-October.

For the last week of the year, the S&P 500 fell 0.83%, the DJIA dropped 0.72%, and the NASDAQ Composite declined 0.81%.

On a positive note, the number of new NYSE 52-week lows declined dramatically to 93 from 793 on December 18 while the number of new 52-week new highs increased to 150 compared to 78 for December 18.

Also, note that only 37.76% of all NYSE stocks are above their respective 50-dmas compared to 74% in early November, and only 32.16% are above their 200-dmas at week’s end.

Bond prices closed  lower for the week . Oil prices (USO) fell slightly closing at the lows for the week.   Gold (GLD) prices and gold miners (GDX) ended the weak lower as well.

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 for the other averages.

Indicator Review –Two Positive ChangesNASI December 31, 2015

This past week there were two positive indicator changes resulting in a Dashboard reading of “4”, the maximum bullish reading.

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on November 16, Friday, and then had slight penetrations of the moving average line on December 13 and 20 which we temporarily ignored, waiting for confirmation on the next business day to avoid whipsaws.  On both occasions the market rebounded and this indicator remained bullish.

Indicator #5 NASDAQ Composite with MACD This indicator issued a MACD BUY signal on December 29 (refer to first chart MACD indicator). Note that the MACD is close to the red line and could easily experience a downward crossover next week if the market declines.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest December 30 Bullish Percentage reading was 25.1% which was a 1.3% drop form the 26.4% on December 23. On December 16 this indicator fell below 25% so the December 23 reading resulted in another confirming buy signal.    Thus this indicator remains on its May 27 BUY signal. 

Indicator #8 NASI Summation Index and MACD. This indicator issued a BUY signal on December 31 as the MACD experienced a positive crossover, coupled with an EMA negative crossover a week or so earlier. (Refer to second chart).  Note that the EMA is turning downward (red circle) and that the MACD could easily reverse downward if the market declines next week.

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

Dashboard-V2-December-31-2015_WC-1-1

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For 2015, the BDH portfolio was down 2.13% compared to the DJIA down 2.23% for the year, followed by the S&P 500 down 0.73%, and the NASDAQ Composite up 5.73%.  Thus, the only index performing better than average is the latter.  Interestingly, only a handful of high flying tech stocks account for over 40% of the gain in the this index.

The BDH strategy ended the year in 6th place out of the 18 tracked by that website (Strategies Summary tab).

Top 5 ETFs –  80% Invested

The portfolio is still 80% invested in XLY, XLP, QQQ, VNQ. Surprisingly,  46 of the 52 ETFs have a fail rating   This is still one of the weakest readings since the August 24th lows.   Since the last BUY signal on October 9th the BDH portfolio has gained 1.01% compared to an average gain of 2.54% for the three major averages.  Even though the Dashboard is on a new BUY signal this week we will not add a 5th ETF to the portfolio as XLU is the only one in the top 10 with a “pass’ rating (except for two ETFs that are in the portfolio) and it is a defensive issue.  Therefore, we will wait for a uptrending market and more “pass” ratings before investing the 20% cash.

Top-5-ETF-December 31, 2015

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 the sector funds as compared to the weak performance of commodities and international funds.

Conclusion  — Extreme Caution is Urged — Market Could Go Either Way

The stock market has been bouncing up and down in a confined range since mid October and that has not changed this past week. Where the market will going in 2016 is anyone’s guess. Numerous surveys of market strategists from different firms show that an overwhelming majority are bullish for 2016 projecting an increase in the S&P 500 of between 5 to 15%, with the majority around 10%.  This is useless information since these strategists offer bullish forecasts every year.

The market internals continue to be weak with low number of advancing stocks vs. declining stocks, low numbers of new highs vs. new lows, low numbers of stock above their respective moving averages.  Coupled with a tight trading range, the market is fighting to approach its 2015 highs reached earlier in the year.  Historically speaking a positive January portends a positive year ahead.  We will see if that is the case this year.

Not matter what the market does going forward, intelligent investors need a  time-tested rationale investing approach.  A well thought out approach is to use a non-emotional, mechanical, rule-based strategy based on market price action, like the BDH strategy, that will protect investors from losing big in future bear markets and participate in the majority of gains in bull markets.  We don’t have to guess or predict where the market is going since no one knows.

Even though the Dashboard is at a maximum “4” BUY signal, as mentioned above, Indicators #5 and #8 could easily reverse downward next week, if the market has a 2% or more decline.  That would put the Dashboard at a “2” NEUTRAL reading.  Be extremely careful here, as the market can easily decline rapidly at any time.

Make sure to have trailing stop LIMIT orders in place.  I have been a using 5% trailing stop LIMITs for the BDH portfolio, but each investor needs to select his/her own stop numbers based on the risk tolerance appetite.

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.

Dec 29

Interim Report COMP December 29, 2015

Indicator #5 had a MACD positive crossover today resulting in a Dashboard “3” BUY signal.  Refer to chart on the  right.  No new ETF will be added at this time as most of the top 10 have fail ratings or replicate the QQQ universe.  XLU is a defensive issue which usually falls in rising markets.  Therefore, that ETF will not be purchased either.

A full report will be provided this weekend.

 

Dec 25

This will be a shortened review.

The stock market bounced higher beginning on Monday, thereby remaining on its “2” NEUTRAL signal.  The NASDAQ Composite bounced off its 100-dma to the upside and kept going and ended the week over 2.5% higher.  The other averages had similar gains.

A full blog post will be provided the weekend of January 2.

Enjoy your holidays!

Dec 20

Market Review COMP December 18, 2015

The market had another wild week with a positive close on Monday after a triple digit DJIA drop.  This was followed by solid up days on Tuesday and Wednesday.  Then big drops occurred on Thursday and Friday, closing on the lows of the day and weeks.  This is not the typical December performance.  However, historically speaking the remaining two weeks of the year are usually positive. All averages are below their 200- , 100- and 50-dmas which is a very negative situation.  However, after such a decline the market tends to rebound, but we will see if that is the case next week.

For the week, the S&P 500 fell 0.34%, the DJIA dropped 0.79%, and the NASDAQ Composite declined 0.21%.

The number of new NYSE 52-week lows expanded dramatically to 793 while the number of new 52-week new highs was only 78, a very weak showing.

Also, note that only 23.09% of all NYSE stocks are above their respective 50-dmas compared to 74% in early November, and only 25.55% are above their 200-dmas at week’s end.

Bond prices closed slightly  lower for the week after after big rallies on Thursday and Friday. Oil prices (USO) fell again and closed at new yearly lows.   Gold (GLD) prices ended the weak lowery, especially on Friday. while gold miners (GDX) also ended the week lower.

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 for the other averages.

Indicator Review –One Change on December 9thNASI December 18, 2015

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on November 16, Friday , but on Friday the index fell slightly below its 100-dma (refer to circled area on  first chart) which is normally a SELL signal.  As we did the previous Friday, we will wait for the close on Monday before taking any action to avoid any whipsaws.

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a MACD SELL signal on November 12 (refer to first chart MACD indicator).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest December 2 Bullish Percentage reading was 29.5%.    This indicator has spent considerable time in the 30% area for many weeks.  This indicator still remains still on a May 27 BUY signal. 

Indicator #8 NASI Summation Index and MACD. This indicator issued a SELL signal on December 9 as the MACD experienced a negative crossover, coupled with an EMA negative crossover. (Refer to second chart).

Here is a chart showing all Dashboard buy and sell signals (it may take a day or two for the new signal to be posted):
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

Dashboard-V2-December 18-2015_WC-1-1

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For 2015, the BDH portfolio is  down 3.36% compared to the DJIA down 3.90% for the year, followed by the S&P 500 down 2.59%, and the NASDAQ Composite up 3.95%.  Thus, the only index performing better than average is the latter.  Interestingly, only a handful of high flying tech stocks account for over 40% of the gain in the this index.

The BDH strategy is in 10th place out of the 18 tracked by the website.

Top 5 ETFs –  80% Invested

The portfolio is 80% invested in XLY, XLP, QQQ, VNQ.  48 of the 52 ETFs have a fail rating except.  This is still one of the weakest readings since the August 24th lows.   Since the last BUY signal on October 9th the BDH portfolio has lost 0.22% compared to a gain of 0.74% for the three major averages.

Top-5-ETF-December 18 2015

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 the sector funds as compared to the weak performance of the fixed income.

Conclusion  — Market Still in Three-Month Trading Range

The stock market has been bouncing up and down in a confined range since mid October.  A further decline this week will result in a Dashboard “1” SELL signal based on Indicator #2 failing to move above its 100-dma by the close on Monday.  A bounce higher on Monday will preserve the NEUTRAL signal at least for a few days.  An interim report will be issued if there is a Dashboard SELL signal this week.    Be careful here.

Make sure to have trailing stop LIMIT orders in place.  I have been a using 5% trailing stop LIMITs for the BDH portfolio, but each investor needs to select his/her own stop numbers based on the risk tolerance appetite.

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.

 

Merry Christmas and Happy New Year to all!!