Blog

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!!

Dec 13

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

Market SituationCOMP Decmeber 11 2015

The market took a big hit this week due to many factors resulting in one of its worst weeks in four months.  Overall, the three major averages were down about 3.5% for the week with the NASDAQ Composite down the most at 4.06%.  The latter index is slightly below its 100-dma (see accompanying Indicator#2 chart to the right), but we will wait until Monday’s close to see if it bounces off it moving average before designating it a sell signal.  The logic behind waiting a day is to avoid a whipsaw back to its positive reading.

Indicator #8 experienced a SELL signal on December 9th as both the index crossed below its 5 day- ema and the MACD  crossed to the downside( on the 7th and 9th of December, respectively).  This change resulted in a Dashboard “2” NEUTRAL signal.

XHB was  sold late this week at its 5% trailing stop at $35.09.  This will be corrected on the decisionpoint.com page.

If Indicator #2 issues a SELL signal at Monday’s close then the Dashboard will be on a “1”  SELL signal for the four remaining ETFs.

Year-to-date the BDH strategy is down 3.53% compared to -3.13% for the DJIA, -2.26%  for the S&P 500, and a gain of 4.17% for the NASDAQ Composite.

The number of 52-week new lows soared to 639 from 267 the prior week. All three major averages are below their respective 50- and 200-day moving averages which is a negative sign going  forward.   The market needs to find support here or we will head much lower.

Dec 05

Market Review COMP December 4, 2015

The market had a wild week cratering 3% on Thursday at their lows, and then reversing on Friday with solid 2% gains.  All averages are above their 200- and 50-dmas which is a positive sign.

For the week, the S&P 500 gained 0.08%, the DJIA gained 0.28%, and the NASDAQ Composite increased 0.29%.  The Friday rebound helped pull all three averages above their respective 200-dmas which were breached on the Thurday close.

The number of new NYSE 52-week lows is still relatively high at 267 with the S&P 500 less than 2% away from its 2015 high.  The number of new 52-weel highs is only at 191, not a very good showing.

Also, note that only 52.97% of all NYSE stocks are above their respective 50-dmas compared to 74% in early November, and only 36.70% are above their 200-dmas at week’s end.

Bond prices closed lower for the week after after big rallies on Tuesday and Friday, and a big loss on Thursday. Oil prices (USO) fell again and closed at new yearly lows.   Gold (GLD) prices rallied nicely, especially on Friday. while gold miners (GDX) also ended the week much higher.

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

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on November 16, Friday (refer to first chart ).

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 BUY signal on December 2 as the MACD experienced a positive crossover, coupled with an EMA 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 “3” BUY Signal

The latest update is shown here:

Dashboard-V2-December 4-2015_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 0.26% compared to the DJIA up 0.14% for the year, followed by the S&P 500 up 1.59%, and the NASDAQ Composite up 8.58%.  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 11th place out of the 18 tracked by the website.

Top 5 ETFs –  100% Invested

The portfolio is 100% invested in XLY, XLP, XHB, 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 gained 2.88% compared to a gain of 5.09% for the three major averages.

Top-5-ETF-December 4 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 Manages to Survive a Late Week Rout

The market was performing well near its highs (especially the NASDAQ Composite) until the big down day on Thursday.  The subsequent bigger rally on Friday reinstated the uptrend since the lows of mid-November.  The underlying market statistics are weak compared to big market movers in the past.    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.

Nov 29

The stock market made little progress this week.  Nothing new to report.  Keep stop LIMITs in place.  A full report will be provided the weekend of December 5.

Nov 22

This weekend and next weekend I will only be able to post very short blogs.  The regular schedule will resume on December 6 0r 7.

The major averages all advanced over 3% for the week which turned out to be one of the best weeks of the year to date.  The recommendation not to sell the ETF portfolio on Monday turned out to be on the money, as the NASDAQ Composite had a positive MACD crossover, thus turning the Dashboard from a SELL the prior Friday (November 13) to a NEUTRAL “2” in my intra-week posting.

Maintain the portfolio and keep your stop LIMITs in place.

Have a great Thanksgiving!!

Nov 16

interim Report

The market experienced a nice rally today.  The NASDAQ Composite closed higher and above its 100-dma (Indicator#2).  Therefore that indicator has reversed its SELL signal of late last week.  The Dashboard improved to a “2” Neutral reading and all ETFs are still in the portfolio.  So far so good on the recommendation to await today’s action before selling out the portfolio.  Today’s market action keep us in the market.