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This past week the stock market finally moved higher after stalling since its March 1 highs. On Friday Indicator #5 issued a BUY signal (see right bottom corner of first chart). Thus, the BDH Strategy is on a “4” maximum BUY signal.
For the week, the DJIA gained 0.46%, the S&P 500 advanced 0.85%, and the NASDAQ Composite led the way up 1.82%. For the 2017 year-to-date, the DJIA gained 3.97%, compared to 4.91% for the S&P 500, and 9.80% for the NASDAQ which is still the current leader among these three indexes year-to-date. Moreover, the NASDAQ is only 10 points away from its yearly high (see first chart). The BDH strategy has advanced only 2.48% for the year lagging the three major averages. All three major averages are now back above their 50-dmas, but there is still significant deterioration in the number of stocks producing comparable gains to the averages they are in.
The number of new 52-week NYSE highs (295) was higher than that of the prior week (211). Normally, at or near bull market highs there are well over 700 new highs. The current small number of new highs indicates that only a small number of stocks are marching to new high, while many stocks are lagging the market. Barron’s report in the April 24, 2017 issue (page M3) that 10 of the largest cap stocks in the S&P 500 accounted for 39% gain the first quarter of 2017. Also, only 25% of stocks in that index are above their short-term 10-dma indicating short-term market weakness in 75% of stocks in that index. Also, Barron’s reports in the same issue (page 11) that through April 15 only 10 stocks have accounted for 50% of the S&P 500’s gain, including Facebook and Apple.
Moreover, the percentage of NYSE stocks above their 50-dmas has stabilized around to 55% the last few weeks compared to a reading of 83% on January 6. Also, the percentage of stocks above their longer-term 200-dma is currently 69.83%, quite a healthy number ovreall. Thus, overall the market is consolidating in a tight trading range since March 1.
Oil stocks and ETFs got crushed this past week, bond prices advanced slightly and gold prices fell slightly. 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 #2 NASDAQ Composite Index and 100-dma. This indicator issued a BUY signal on November 7 which cancelled the SELL signal on November 2, 2016 (see first chart above).
Indicator #5 NASDAQ Composite with MACD. This indicator issued a MACD BUY signal on April 21 cancelling the March 2 SELL signal(refer to first chart’s MACD indicator).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest April 19, 2017 Bullish Percentage reading was 25.7% down 3.3 percentage points from two weeks ago. This indicator remains on its long term buy signal with numerous confirmations along the way.
Indicator #8 NASI Summation Index and MACD. CORRECTION. This indicator DID NOT have a BUY signal on March 31, 2017, as I reported a few weeks ago, as the summation did not have a confirming BUY signal at that time. (Refer to second chart).I apologize for that error. However, the Summation Index did cross above the 5 day ema (see green circle) this past Thursday. So this indicator is now on a BUY 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):
Dashboard on “4” BUY Signal
Here is the latest Dashboard:
I had a software problem posting the full Excel spreadsheet of the Dashboard to this blog, so I’m using WORD instead. If you need the complete worksheet since 2010 go to the January 2, 2017 blog and click on it there. Sorry for the inconvenience.
Dark Liquidity BDH Performance Statistics
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. For the year-to-date 2017, BDH is up 2.48%. It is in 12th place out of a 20 strategies followed by that website. See the “Strategies Summary” link on the top of their page.
Top 5 ETFs – 100% Invested
Since the 10/26/2017 BDH BUY signal, the ETF portfolio has gained 8.50% compared to a gain of 11.95% for the three major averages. Our portfolio has lost ground to the averages in the past few months with the execution of numerous 5% trailing stops. Three ETFs were purchased on 4/3/2017 after the 3/31/17 BUY signal was issued. Even though they all had “fail” ratings they were ranked high as far as relative strength. This is not the optimal approach to making a purchase, but standing idly bye is not a smart move either.
Check out the updated spreadsheet:
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.
Currently, only 12 ETFs have a “pass” rating out of 52, which indicates that the short-term underlying market trend isweak.
Conclusion — Market Ready to Take Out Highs?
The stock market can go either way at this point. The French elections today may impact the market opening tomorrow depending on the assessment of the results. It is not clear if the market will be able to rally and break into new high ground as we approach the normally week seasonal period of May through October. No one knows which way it will go. I am using a 5% trailing stop LIMIT to protect capital. You should use your own defensive approach. Don’t give up too much of your profits if the market begins to decline again.
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.