Blog

Feb 10

ETF.com’s Inside ETFs Conference

       (Jan 26-29, 2014 at the Westin Diplomat in Hollywood, FL)

 

     This is the world’s most comprehensive ETF conference offered annually in Florida where attendees (mostly financial advisors, wealth managers, and knowledgeable retail investors) extracted the latest knowledge and information of the current state of the booming ETF industry.  Currently, in the U.S. over 1,500 ETFs are available valued at about $1.7 trillion.  With over 1,500 attendees had many opportunities to increase their knowledge-based among the break-out sessions, presentations, exhibitor displays and materials and also featured speakers including Jeremy Siegel, Jeb Bush, Sally Krawcheck, and Liz Ann Sonders.  A large number of ETF vendors and key players were available in the Exhibit Hall and in the hallways of the beautiful Westin Diplomat hotel.  Every major ETF provider and issuer was on premises.

     The exhibit hall was packed with many firms explaining their ETF offerings and capabilities.  Going around the exhibit hall I met many knowledgeable professionals  including vendors, Registered Investment Advisors and ETF Strategists who provided insights into their product offerings and where they saw the industry going.  There were many new firms compared to two years ago when I last attended this conference.  I collected about ten pounds of brochures and information sheets to review after the conference to reference during the writing of my upcoming book titled All About ETF Momentum Strategies to be published by McGraw-Hill in the last quarter of this year.

     One major announcement by IndexUniverse was their rebranding from IndexUniverse to ETF.com which more clearly defines their focus.   According to a January 27th Press Release:

 “ETF.com,the world’s leading authority on exchange-traded funds (ETFs), announced today the launch of its flagship website, offering investors free access to the latest news, ratings, strategies, data and research designed specifically for ETFs.

 ETF.com includes access to ETF.com Analytics, which offers full analyst coverage of 1,500+ funds, screening tools and downloadable data. ETF.com offers the broadest and deepest analysis of ETFs, helping investors identify the best funds in more than 400 categories, drawn from traditional asset classes such as equities and fixed income as well as commodities, currencies and more.”

     Moreover, their ETF Analytics product which was formerly a subscription-based $2000 a year license is now totally free. According to Jim Wiandt, founder and CEO of ETF.com: “We want to change the investing world by offering institutional-caliber ETF analytics and data to everyone.”

      This powerful analytics program provides the capability to select ETFs based on the user or client’s needs which meet specific characteristics that are user-selected.  There are ETF ratings provided which focuses on efficiency, tradability, and fit.  Additionally, the dedicated ETF research team offers their insight and commentary on each ETF.  Lastly, the program offers an “Analyst Pick” with the highest recommended funds in each ETF category. 

     This product, with millions of dollars in development costs, offers institutional-quality data and an analytics engine that is second to none.  Retail investors now have a sophisticated ETF research tool at their fingertips.  This is particularly useful for self-directed investors who want to build their own portfolios and need to      determine the key characteristics and data points of each ETF.  Additionally, financial advisors who manage their clients’ portfolios with ETF components will have the ability to apply their due diligence to each recommended ETF where all the key information is in one place.  To use the analytics product, go to the following URL:

 http://www.etf.com/etfanalytics/etf-finder

      Overall, this ETF conference provided me with latest information that will help me become a smarter ETF investor and hopefully a more successful one.

Feb 08

COMP February 7 2014

Market Review

All three major averages came back by week’s end, after a big drop on Monday, to finish the week in positive territory.  For the week, the S&P gained 0.81% closing at 1797.02 slightly below critical support of 1800 and below its 50-dma.  The DJIA gained 0.61% to close at 15794.08 below critical support 16000, as well as below its 50-dma. Finally, the NASDAQ closed at 4125.86 up 0.54% above critical support at 4100, but above its 50-dma.   So far year-to-date the BDH ETF portfolio is up 0.18% compared to a loss of 2.9% for the three market averages. 

Bond ETF prices had a mixed with the equity market’s volatility.  Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI February 7 2014

Indicator Review – No Changes

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover SELL signal on January 23th. (Refer to first chart again).   However, the MACD is basing and starting to turn up.  Another positive week in the market could trigger a BUY signal on this indicator.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest February 5th bullish percentage reading was 27.3% which was much lower than the January 29th bullish percentage reading of 32.2%. Investors are now much less bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.   This indicator remains on its previous SELL signal.   Remember a weekly reading below 25% and then a higher weekly reading thereafter would generate a BUY signal.

Indicator #8 NASI Summation Index and MACD.  The index crossed below its 5-day ema on January 23, while the MACD has crossed downward on January 27.  Therefore this indicator is now on a SELL signal.

Dashboard on a SELL Signal

The latest Dashboard data is presented in the link below:

 Dashboard-V2-February 7 2014

A chart of the buy and sell signals is presented here:

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

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date is up 0.18% compared to a loss of 2.9% for the three major averages, with the NASDAQ showing the best relative performance down only1.74%.

Top 5 ETFs – 100% in Cash

Note that on the etfscreen.com/buydonthold Decision page shows that only 4 out of 42 ETFs have a “pass” rating compared to the same number for the past three weeks.  This low number of “pass” ratings clearly indicates that the market is under selling pressure.  However, a continued market upswing will result in many ETFs crossing above their MACD for a “pass” rating.

Conclusion – Market Had a Solid Advance after Early Weakness

The stock market experienced one of its worst days of the year on Monday, had a small advance on Tuesday, hit new intra-day lows on Wednesday, and then closed with two strong days.  If it can sustain the recent two-day rally, then rising prices will result and a Dashboard BUY signal will be generated.  If not the market will continue its decline and being in cash is a safe place to be.

Mid- week I will send out a separate blog covering the highlights of the etf.com Index Universe conference that I attended.

 

Feb 02

COMP January 31 2014

Market Review This Past Week

All three major averages took a drubbing for the past two week with all averages still with a negative MACD crossover status.  Just input $INDU and $SPX in the first chart ticker symbol box to see those indexes and their MACD negative crossovers.

After many winning weeks the market’s direction has finally turned down.  For the week the S&P lost only 0.43% still closing below critical support of 1800 and below its 50-dma at 1782.59.  The DJIA again declined the most at 1.14% to close at 15698.85 well below critical support 16000, as well as below its 50-dma. Finally, the NASDAQ closed at 4103.88 down only 0.59% with critical support still holding at 4100, and below its 50-dma.   So far year-to-date (month of January) the BDH ETF portfolio is up 0.18% compared to a loss of 3.53% for the three market averages.  All Top 5 ETFs were sold out at their respective 3% trailing stops.

Bond ETF prices ended the week on another burst upward for the fourth week of positive movement. Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI January 31 2014Indicator Review – One Indicator Change This Week

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover SELL signal on January 23th. (Refer to first chart again). 

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest January 29thh bullish percentage reading was 32.2% which was lower than the January 22nd bullish percentage reading of 38.1%. Investors are much less bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.   This indicator remains on its previous SELL signal.

Indicator #8 NASI Summation Index and MACDThe index crossed below its 5-day ema on January 23, while the MACD has crossed downward on January 27.  Therefore this indicator is now on a SELL signal.

Dashboard Now on a SELL Signal

The latest Dashboard data is presented in the link below:

Dashboard-V2-January-31-2014

A chart of the buy and sell signals is presented here:

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

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date (2014 only) is up 0.18% compared to a loss of 3.53% for the three major averages, with the NASDAQ showing the best relative performance down oonly1.74%.

Top 5 ETFs – 100% In Cash

QQQ was sold at its 3% trailing stop on Monday thus joining the other four ETFs in the cash mode.  The current statistics are as follows:

BDH Blog January 31, 2014

Note that on the etfscreen.com/buydonthold Decision page shows only 4 out of 42 ETFs have a “pass” rating compared to the same number the week before that.  This low number of “pass” ratings clearly indicates that the market is under selling pressure.

Conclusion – Market Had Back-to-Back Weekly Price Declines

The stock market has started the year with a negative monthly performance.  Indicator #8 had a SELL signal this week.  The market is now in a short-term downtrend so cash is king right now.

Next week I will report on the etf.com Index Universe conference that I attended this past week

Jan 28

Market Bulletin

With Monday’s wildly swinging stock market, Indicator #8 MACD had a negative crossover therefore  issuing a SELL signal.   Also, the last ETF in the portfolio was sold at its 3% trailing stop.   Therefore the portfolio is 100% in cash.

A full report will be provided this coming weekend.

Jan 26

COMP January 25 2014

Market Review This Past Week

All three major averages took a drubbing this past week with all averages having a negative MACD crossover status.  Just input $INDU and $SPX in the first chart ticker symbol box to see those indexes and their MACD negative crossovers.

After many winning weeks the market’s direction has finally turned down.  For the week the S&P lost 2.63% closing below critical support of 1800 and below its 50-dma at 1790.29.  The DJIA declined the most at 3.52% to close at 15879.11 below critical support 16000, as well as below its 50-dma. Finally, the NASDAQ closed at 4128.17 down only 1.65% with critical support still holding at 4100, and still above its 50-dma.   So far year-to-date the BDH ETF portfolio is up 0.94% compared to a loss of 2.84% for the three market averages (refer to Top 5 screen).  Even though the Dashboard is on a NEUTRAL rating, note that four of the five Top ETFs were sold at their 3% trailing stops.

Bond ETF prices ended the week on another burst upward for the third week of positive movement. Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI January 25 2014

Indicator Review – One Indicator Change This Week

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover SELL signal on January 23th. (Refer to first chart again). 

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest January 22th bullish percentage reading was 38.1% which was lower than the January 15th bullish percentage reading of 39.0%. Investors are slightly less bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.   This indicator remains on its SELL signal.

Indicator #8 NASI Summation Index and MACDThe index crossed below its 5-day ema on January 23, while the MACD has almost crossed downward.  Therefore this indicator is not yet on a SELL signal, but it very close to one.

Dashboard Now on a Neutral Signal

The latest Dashboard data is presented in the link below:

 Dashboard-V2-January-25-2014

A chart of the buy and sell signals is presented here:

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

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date (2014 only) is up 0.94% compared to a loss of 2.84% for the three major averages.    

Top 5 ETFs – 20% Invested

The ETF portfolio had four sells this week as the 3% trailing stops were hit by week’s end.  Only the QQQ is still in the portfolio, but is also very close to triggering its stop as indicated on the table in the following link:

Top 5 ETF Tracking January 24 2014

Note that on the etfscreen.com/buydonthold Decision page now only 4 out of 42 ETFs have a “pass” rating compared to 16 out of 42 ETFs the week before that.  This large increase indicates a much more negative tone to the market.

Conclusion – Market Finally Has a Bad Week

The stock market has started the year slowly with a small loss after three weeks in the DJIA and S&P 500, and a small gain in the NASDAQ Composite, but that has now turned into a negative return for the three major indexes.  Indicator #5 had a SELL signal this week.  The market is now in a downtrend so extreme caution is urged.  Indicator #8 is near an imminent SELL signal which would result in a Dashboard “1” SELL signal.  QQQ is almost very near a trailing stop SELL signal which could easily be triggered on Monday.

 

Jan 19

COMP January 17 2014

Market Review This Past Week

The DJIA and the NASDAQ Composite continued their winning ways this week, while the S&P 500 faltered slightly. For the week the S&P closed at 1838.70 down 0.20%, the DJIA advanced only 0.13% closing at 16458.56.  The NASDAQ closed at 4297.58 up 0.55% to a new high for the year. So far year-to-date in January 2014, the BDH ETF portfolio is up 1.59% compared to a loss of 0.23% for the three market averages (refer to Top 5 screen). 

It is interesting to note that only the NASDAQ Composite of all three of the major indexes had positive MACD crossover BUY signal this past week.  Just input $INDU and $SPX in the first chart ticker symbol box to see those indexes and their MACD negative crossovers.

Bond ETF prices ended the week on another burst upward for the second week of positive movement. Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI January 17 2014

Indicator Review – One Indicator Change This Week

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover BUY signal on January 16th. (Refer to first chart again). 

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest January 15th bullish percentage reading was 39.0% which was lower than the January 8th bullish percentage reading of 43.6%. Investors are less bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.   This indicator remains on its SELL signal.

Indicator #8 NASI Summation Index and MACDThe index crossed above its 5-day ema on December 20, while the MACD crossed upward on December 26 Thus, this indicator is on a BUY signal as of December 26.

Dashboard Now on a New Buy Signal

The latest Dashboard data is presented in the link below:

 Dashboard-V2-January 17, 2014

A chart of the buy and sell signals is presented here:

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

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date (2014 only) is up 1.59%compared to a loss of 0.25% for the three major averages.    

Top 5 ETFs – 100% Invested

The ETF portfolio is fully invested as of the open on December 26, 2013. The current portfolio of 5 ETFs consists of IBB, XLI, QQQ, XLB, and IWM.  Note that two of these  ETFs have a “fail” rating as they experienced a MACD downward crossovers.  The current Top 5 ETFs are shown in the following link:

 Top 5 ETF Tracking January 17 2014

Note that on the etfscreen.com/buydonthold Decision page now only 16 out of 42 ETFs have a “pass” rating compared to 10 out of 42 ETFs the week before that.  This minor increase indicates a slightly more positive tone to the market. Remember that in the blog two weeks’ ago in the review of 2013 performance, I changed the ETF ranking sell criteria to 20 instead of 10 to minimize premature ETF sales.

Conclusion – Market Continues to Hold Its Ground

The stock market has started the year slowly with a small loss after three weeks in the DJIA and S&P 500, and a small gain in the NASDAQ Composite.  Indicator #5 had a BUY signal this week.  The market is in a tight trading range the past three weeks, and only the NASDAQ Composite has broken out to the upside.  Stay tuned and keep your stops in place.

 

Jan 11

COMP Jan 10 2014

This week’s blog consists of two parts:

 Market Review This Past Week

The S&P 500 and the NASDAQ Composite continued their winning ways this week, while the DJIA faltered slightly. For the week the S&P closed at 1842.37 up 0.60%, the DJIA declined losing only 0.20% closing at 16437.05. The NASDAQ closed at 4174.66 up 1.03% to a new high for the year. So far year-to-date in January 2014, the BDH ETF portfolio is up 0.54%  compared to a loss of 0.40% for the three market averages (refer to Top 5 screen). 

It is interesting to note that all three of the major indexes had MACD crossover sell signals this past week.  Just input $INDU and $SPX in the first chart ticker symbol box to see those indexes and their MACD negative crossovers.

Bond ETF prices ended the week on a burst upward on Friday. Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI  Jan 10 2014

Indicator Review – No Change This Week

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover SELL signal on January 6th. (Refer to first chart again). 

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest January 8th bullish percentage reading was 43.6% which slightly higher than the January 1st bullish percentage reading of 43.1%. Investors are a bit less bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.   This indicator remains on its SELL signal.

Indicator #8 NASI Summation Index and MACDThe index crossed above its 5-day ema on December 20, while the MACD crossed upward on December 26 Thus, this indicator is on a BUY signal as of December 26.

Dashboard Now on a Neutral Signal

The latest Dashboard data is presented in the link below:

 Dashboard-V2-January 10, 2014

A chart of the buy and sell signals is presented here:

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

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date (2014 only) is up 0.54%compared to a loss of 0.40% for the three major averages.    

Top 5 ETFs – 100% Invested

The ETF portfolio is fully invested as of the open on December 26, 2013. The current portfolio of 5 ETFs consists of IBB, XLI, QQQ, XLB, and IWM.  Note that four of these  ETFs (except for IBB) have a “fail” rating as they experienced a MACD downward crossover.  The current Top 5 ETFs are shown in the following link:

 Top 5 ETF Tracking January 10 2014

Note that on the etfscreen.com/buydonthold Decision page now only 10 out of 42 ETFs have a “pass” rating compared to 18 out of 42 ETFs the week before that.  This decline could be the beginning of a correction or just  a slight pause. Remember that in last week’s blog review of 2013 performance I changed the ETF ranking sell criteria to 20 instead of 10 to minimize premature ETF sales.

Conclusion – Market Continues to Hold Its Ground

The stock market has started the year slowly with a small loss after two weeks.  Indicator #5 on the NASDAQ Composite had a SELL signal this week, as did the MACD on the other two major averages (not tracked for MACD signals in the BDH strategy).  However, the NASDAQ’s  MACD  could easily revert upward this week and issue a BUY signal with any type of rally.  The market is in a tight trading range the past two weeks.  It will break out soon and we will then know which direction is going in.  Stay tuned and keep your stops in place.

It is interesting to note that the world’s largest hedge-fund firm with about $150 billion in assets, Bridgewater Associates,  had only  a 5.3% return in its Pure Alpha Fund in 2013 and actually lost 3.9% in its All Weather Fund.  The average hedge-fund scored a gain of 9.3% in 2013 according to data from HFR.  Even the savviest professionals did not do so well in 2013, compared to the powerful market advance in the major averages  (Wall Street Journal, January 9, 2014).

Part II.  Inside ETFs 7th Annual Conference Presented by IndexUniverse January 26-29, 2014 in Hollywood, FL

Investors interested in expanding their knowledge of ETFs, especially those residing in Southern Florida, should consider attending this world-class conference held at the Westin Diplomat Hotel in Hollywood, Florida from January 26-29, 2014.   I attended this conference in January 2011 and found it to be a very worthwhile comprehensive ETF educational experience. Not only are there 30 or so high-quality informative sessions, but also all the major ETF vendors and are present in the exhibit area and industry professionals are available for interaction.  I highly recommend this conference.  For further details go to www.indexuniverse.com or www.InsideETFsConference.com or call 415 659-9029.  The cost to attend is $345.

 

Jan 05

comp January 3 2014

Note:  This is a revised blog to correct the Dashboard Headline which was incorrect.

This week’s blog consists of three parts:

 Part I: Market Review This Past Week

The stock market continued its upward march on Monday and Tuesday to close 2013 on the highs for the year.  However, the market hit a downdraft on Thursday and Friday to start the year on a negative note.

For the week the S&P closed at 1831.37 down 0.54%, the DJIA declined the least, losing only 0.05% closing at 16469.99. The NASDAQ closed at 4131.91 down 0.59%.

So far year-to-date in January 2014, the BDH ETF portfolio is down 0.93%  compared to a loss of 0.86% among the three market averages (refer to Top 5 screen). 

Bond ETF prices remained flat to up slightly depending on its portfolio composition. Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI JANUARY 3 2014

Indicator Review – One SELL Signal This Week

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover BUY signal on December 23. (Refer to first chart again). 

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest January 3rd bullish percentage reading was 43.1% which was much lower than the December 25th bullish percentage reading of 55.1%. Investors are now far less bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.   Remember that this indicator is now is below 50% resulting in a SELL signal.

Indicator #8 NASI Summation Index and MACDThe index crossed above its 5-day ema on December 20, while the MACD crossed upward on December 26 Thus, this indicator is on a BUY signal as of December 26.

Dashboard Remains on BUY Signal

The latest Dashboard data is presented in the link below:

Dashboard-V2-January 3, 2014

A chart of the buy and sell signals is presented here:

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

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date (2014 only) is down 0.93% compared to 0.87% for the three major averages.    

Top 5 ETFs – 100% Invested

The ETF portfolio is still fully invested as of the open on December 26, 2013. The current portfolio of 5 ETFs consists of IBB, XLI, QQQ, XLB, and IWM.  Note that QQQ has a “fail” rating as there was an MACD downward crossover.  The current Top 5 ETFs are shown in the following link:

Top 5 ETF Tracking January 3 2014

Note that on the etfscreen.com/buydonthold Decision page now only 18 out of 42 ETFs have a “pass” rating compared to 30 out of 42 ETFs the week before that.  This decline could be the beginning of a correction or just  a slight pause.

Conclusion – Market Ends the Year on Its Highs

The stock market has now powered ahead for its best performance since 1997.  This is a tremendous achievement considering all the potential land mines this year.  The first two days of 2014 are indicating a slow start.  Be aware that Indicator #6 is now on a SELL signal resulting from a very high bullish sentiment reading that pierced the 50% reading to the downside this past week.  Thus the Dashboard is on a NEUTRAL signal.  Be careful here and make sure your stops are in place to minimize the impact of any losses.

Part II.  Review of 2013 Performance

This past year was one of the best performing years for the stock market since 1997.  For the year, the DJIA jumped 26.5%, the S&P 500 advanced 29.6%, and the NASDAQ Composite catapulted 38.3%.  Not so for the BDH strategy which increased only 6.10%.  This performance was very disappointing.   Interestingly, the average hedge fund run by  highly-paid professionals advanced about 11.5%, after fees, which is also well below the market averages.

During the year there were eight Dashboard buy signals ( “3” only, not counting “4”) and seven Dashboard  sell signals.  The most recent signals lost money as the market reversed direction soon after the new signal was given, so any gains were quickly given up.  Moreover, the 3% recommended stop LIMITs produced more losses than gains.  In retrospect, the 3% stop LIMIT order worked against the strategy as it was much too tight resulting in numerous whipsaws in and out the market.  Also, the same or a quite similar basket of ETFs were re-entered at a later time at a higher price on multiple occasions.

The overriding rationale for recommending a 3% stop was to protect profits as this market has advanced smartly since the March 2009 bottom. I thought that the market would have a normal correction that would reduce the profits. The fact that the S&P500 did not experience a decline of more than 7% worked against the success of this recommendation.  Moreover, the market did not have a correction of 10% or more during 2013 which was very unusual.

Obviously, in retrospect, the best strategy in 2013 was to hold an equity ETF portfolio all year long making changes for those the dropped below rank 10 and replacing them  with higher ranked ETFs.  At no time should the portfolio have been in cash. However, since no one can foretell the future that approach was not followed.

Going forward in 2014, I initially recommend that the 3% Stop LIMIT be used as the market is overdue for a decent correction.  After the next correction, whether it is 5% or 10% or more, I will recommend going back to the original stop LIMITs of 7% for U.S. equity ETFs and 10% for international equity ETFs.  As always, you are encouraged to decide on your own stop loss order percentage that best fits your risk own tolerance.

The rule to sell an ETF in the portfolio if it drops below rank 10 appears to be too tight, as ETFs fell below that level and then rebounded back into the top rankings.  Going forward the ranking for selling an ETF will be set at 20 to provide more time for a rebound.

The BDH strategy should perform well in 2014, especially if there is a correction of 10% or more, since the portfolio will be in cash for a significant portion of the correction based on a timely Dashboard SELL signal. 

Part III.  Inside ETFs 7th Annual Conference Presented by IndexUniverse January 26-29, 2014 in Hollywood, FL

Investors interested in expanding their knowledge of ETFs, especially those residing in Southern Florida, should consider attending this world-class conference held at the Westin Diplomat Hotel in Hollywood, Florida from January 26-29, 2014.   I attended this conference in January 2011 and found it to be a very worthwhile comprehensive ETF educational experience. Not only are there 30 or so high-quality informative sessions, but also all the major ETF vendors and are present in the exhibit area and industry professionals are available for interaction.  I highly recommend this conference.  For further details go to www.indexuniverse.com or www.InsideETFsConference.com or call 415 659-9029.  Cost is $295 prior to January 10th and $345 thereafter.

Dec 27

COMP December 27 2013

Market Review

The stock market continued to explode higher as the  year-end rally kicked in on schedule  closing the week with additional gains.  Coupled with no financial or economic bad news in the U.S. or overseas the market marched ahead to hit new yearly highs on Thursday. 

All three indexes closed near yearly highs with the S&P 500 and DJIA hitting all-time highs this past week.  For the week the S&P closed at 1841.40 up 1.27%%, the DJIA gained the most at 1.59%, closing at 16478.41. The NASDAQ closed at 4156.59 up a respectable 1.26%. So far year-to-date, the BDH ETF portfolio is up 6.15% as of Thursday night, according to dark-liquidity.com.  This compares with the NASDAQ Composite’s 38.50% performance, S&P 500 performance of 29.28%, and the DJIA performance of 24.79%. 

Bond ETF prices closely lower for the week and most closed Friday with the lowest prices of the week.. Please type in ETF ticker symbols IEF, TLT, BOND, SHY or AGG or others one at a time to see their current week’s performance.

NASI December 27 2013

Indicator Review – BUY Signal This Week

Indicator #2 NASDAQ Composite Index and 100-dma.  This indicator remains on its January 3 BUY signal with the index price well above its 100-dma. (Refer to first chart). 

Indicator #5 NASDAQ Composite with MACD.  This indicator had a clear-cut MACD crossover BUY signal on December 23. (Refer to first chart again). 

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage.  The latest December 25th bullish percentage reading was a whopping 55.1% which was much higher than the December 18th bullish percentage reading of 47.5%. Investors now are overly bullish (contrary indicator) looking out six months ahead, than they were two weeks earlier.  Moreover, the previous 50%+  reading occurred on 2/9/2012.  Remember that when this indicator drops below 50% in a subsequent week that would be a SELL signal. The earliest that could come is next Thursday morning.

Indicator #8 NASI Summation Index and MACDThe index crossed above its 5-day ema on December 20, while the MACD crossed upward on December 26. Refer to second chart. Thus, this indicator is on a BUY signal as of December 26.

Dashboard Remains on a New BUY Signal

The latest Dashboard data is presented in the link below:

 Dashboard-V2-December 27, 2013

A chart of the buy and sell signals is presented here:

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

Note that the latest BUY signal may not have been posted on this chart yet.

Dark Liquidity BDH Performance Statistics

www.dark-liquidity.com/BDHV2new.php independently tracks the BDH performance. The Dashboard ETF portfolio year-to-date as of Thursday night is up 6.15% but is well below that of the three major indexes where two of the averages have advanced more than quadruple that figure.    The last two Dashboard BUY signals have resulted in losses as the market reversed downward soon after the buy signal was given.  This was not unexpected, since these signals occurred near market tops rather than at market bottoms which is the more normal situation.

Top 5 ETFs – 100% Invested

The ETF portfolio is now fully invested as of the open on December 26, 2013.The current portfolio of 5 ETFs were purchased with no overlap of sectors.  So VGT and IYT were not purchased as mentioned in Thursday interim blog, but were replaced by XLB and IWM.  The latest Top 5 table is as follows:

Top 5 ETF Tracking December 27, 2013

Note that on the etfscreen.com/buydonthold Decision page now 30 out of 42 ETFs have a “pass” rating compared to 19 out of 42 ETFs the week before that.  The fact that now 71%  of the ETFs have a “pass” rating compared to only 42% the week before indicates a strengthening market.

Conclusion – Market Blasts Ahead (but be extremely careful here)

The stock market, as measured by the S&P 500 Index, is on target for its best performance since 1996.  This is a tremendous achievement, considering all the potential land mines this past year.  This latest BUY signal is again occurring at exactly the wrong time, as the Dashboard normally should be giving BUY signals near market lows or corrections.  Therefore, this latest BUY signal should be viewed with extreme caution, as it may turn out to be the third losing signal in a row.  The odds are that the stock market will go higher somewhat higher before entering a corrective phase.  Nevertheless, the AAII Investor Sentiment Survey  bullish reading of 55.1% is a concern, as excessive bullishness usually occurs at market tops.  Market tops can take time to form and go on for weeks or months or they can form and then collapse quickly.

Remember that you are solely responsible for your own investments and decisions.

 

Dec 26

COMP December 26 2013As the stock market keeps powering ahead it is not surprising that a Dashboard BUY signal has occurred as of the close of the market today.  As you can see in the first chart for Indicator #2, the MACD  of the NASDAQ Composite crossed decisively to the upside on December 23.

Today, Indicator #8 had an upward MACD crossover as well which confirmed the index crossover of its 5-day ema on December 20.  See second chart.

Here is the latest Dashboard:

Dashboard-V2-December 26, 2013

Therefore the Top 5 ETFs will be purchased on Friday’s open.

The ETFs purchased are IBB, QQQ, XLI, XLB and IWM.  You will notice that VGT (rank #4) is also a technology ETF so it was repetitive of QQQ and therefore not selected.  Likewise, IYT was an Industrial ETF ranked 8th was repetitive of XLI and not selected.  Both of these ETFs are at least 85% correlated with the ETFs already in the portfolio so they are not included.  This situation will result in a change of the criteria to eliminating an ETF.  Now if an ETF in this portfolio drops to rank 12 rather than rank 10 it will be sold.

Extreme caution is urged in taking this BUY signal as it is occurring at market high rather than at a low.  Also, the last two buy signals under similar circumstances sustained losses.

A full blog report will be provided this weekend.

NASI December 26 2013