Over the past two weeks, the stock market has been consolidating its gains with weekly moves of less than 0.5%. This is not unexpected in light of the big gains since election day. For the week, the DJIA and NASDAQ Composite were up around 0.46%, compared to the S&P 500 gained only 0.25%.
For the year-to-date, the DJIA has gained 14.40%, compared to 10.76% for the S&P 500, and 9.09% for the NASDAQ. The BDH strategy is up 4.55% for the year.
All three major averages are well above their 50-, 100- and 200-dmas. There were only 314 new 52-week NYSE highs compared to 676 two weeks ago which shows an interernal deterioration. The number of new lows has been steady in the 70 range for the past three weeks.
The percentage of NYSE stocks above their 50-dmas is steady at 69.35%. The percentage of stocks above their longer-term 200-dma has declined to 65.93% from 68.54% two weeks ago. So, overall the market is holding on to most of its gains, although showing signs of weakening.
Bond prices remain near their yearly lows, having giving up all their gains for the year since the July highs. Likewise Gold (GLD) had a flat week and is trying to stay above the January lows which are close by. Oil ETFs made little progress last 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 #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 December 8 (refer to first chart’s MACD indicator).
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest Decemer 21, 2016 Bullish Percentage reading was 44.6% down from 44.5% the prior week. This indicator remains on its long term buy signal with numerous confirmations along the way.
Indicator #8 NASI Summation Index and MACD. This indicator finally had a SELL signal on December 14,2016, as the MACD had a slightly negative crossover, and the Index fell below the 5-day EMA as well. This signal resulted in a BDH Dashboard “3” BUY reading. Refer to second chart with the two circled areas. This SELL signal could easily be reversed to a BUY if the NASDAQ powers ahead next week or beyond.
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 Now on “3” BUY Signal
Here is the latest Dashboard:
Dark Liquidity BDH Performance Statistics
www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The BDH strategy performance has taken a hit over the past few months with trailing stops kicking in and the market’s quick turnaround. For the year-to-date, BDH is up only 4.55%. It is in 13th place out of a 18 strategies followed by that website. See the “Strategies Summary” link on the top of their page.
Top 5 ETFs – 100% Invested
The portfolio is 100% invested as of November 11. On December 13, XOP was sold at $42.72 as it hit its 5% trailing stop. On December 14, XLE was bought in its place at $77.46 since the BDH strategy was on a “4” BUY signal.
Since the latest BDH BUY signal, the ETF portfolio has gained 6.27% compared to a gain of 8.81% for the three major averages. If our portfolio of ETFs is able to outperform the averages, the gap between the BDH YTD performance and the three averages should shrink.
Note that all our five ETFs have a “fail” rating caused by a MACD negative crossover in the last seven trading days. This indicates that the market may be turning lower in the coming days or weeks, so stay alert.
Check out the 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. You will note the strong performance XOP and UGA in the Commodities sector, SMH XLF, IYT, XLE and VGT in the Sectors, and BRF in the International sector
Currently, only 8 ETFs have a “pass” rating out of 52, which is a major negative change from 27 two weeks ago. Repeat :Note that all our five ETFs have a “fail” rating caused by a MACD negative crossover in the last seven trading days. This indicates that the market may be turning lower in the coming days or weeks, so stay alert.
Conclusion — Market Rests
The stock market has had an amazing run since the election. No one predicted it. However, a number of technical indicators are starting to turn down. The daily MACD on many ETFs and stocks has already crossed to the downside. Normally the market rallies into the last week of the year and the first few days of the New Year. We’ll see if that is the case this time around. So enjoy the ride as long as it lasts, and make sure your personal stop limits are placed on all positions to protect principal. I am using a 5% trailing stop.
Enjoy a Merry Christmas and Happy Hanukkah, and a great New Year!
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.