August 10, 2019 BDH Blog Post

NASDAQ COMPOSITE 7959.14    -0.56%

Market Performance

The three major market averages had one of their wildest rides this past week with a waterfall decline on Monday (worst decline of the year), followed by a recovery, and then a weak close on Friday. For the week the NASDAQ Composite fell 0.56%, the S&P 500 Index closed down 0.46% to 2918.65, and the DJIA declined 0.75% closing at 26,287.44

For the:                 YTD       

NASDAQ            19.95%    

DJIA                    12.69%    

S&P 500              16.43%     

BDH Strategy        2.68%        

Indicator #2 issued a SELL signal on Monday, but then issued a BUY signal on Thursday, leaving the BDH Dashboard on a NEUTRAL “2”.

Other Market Segments

Not surprisingly, GLD had a blockbuster week was up 3.95%, rising 9 of the past 11 weeks, and closing at the high for the year. Likewise, GDX had another positive week up 5.73%.  Also, oil prices fell this week with USO losing 1.74% its fourth consecutive weekly decline, and $Brent got clobbered down 7.29%

Not unexpectedly, on the fixed income side, TLT (iShares 20+ Year Treasury Bond ETF) advanced a big 2.59% after its 4.04% advance the prior week. Thus, reaching another 2019 new high.  Similarly, IEF (iShares 7-10 Year Treasury Bond ETF) gained 0.88%.

Market Internals Improve

The percentage of the NYSE stocks are above their 200-dma declined again to 54.50% from 58.16% last week. More importantly, the percentage of NYSE stocks above their 50-dmas also declined to 41.86% from 48.1% the prior week. Thus, the internal market has weakened during the past three weeks.

Moreover, the number of new 52-week NYSE new highs decreased to 363 from 603 the prior week, a large fall for one week. And the number of new lows increased again to 398 from 250 the prior week.

Dashboard Indicator Review No Change Overall

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator gave a SELL signal on Monday of this week, and then a BUY signal on Thursday, thus ending the week unchanged.

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a slow MACD SELL signal (upper oneon June 7, 2019 while the faster MACD (lower one) also had a SELL signal 4 days earlier.  Please refer to upper chart to review these signals.  Note that the fast MACD had a BUY signal on Friday.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest August 7, 2019 Bullish Percentage reading was 21.7% down from 38.49% from the previous week. This was one of the largest percentage points declines over a one-week period, most likely resulting from the big decline on Monday.  Nevertheless, this indicator remains on its BUY signal of November 29, 2018.

Indicator #8 NASI Summation Index and MACD.  This indicator finally had a SELL signal on July 25, thereby cancelling its June 14 BUY signal (See chart below).

Dark   Liquidity

The link is as follows:

www.dark-liquidity.com/index.php/strategies

You can go to www.dark-liquidity.com first and then hit strategies.  Our strategy is 16th best out of 23.

BDH Decision Page – BDH Dashboard ETFs 

Copy and paste the DecisionPage link into your browser:

https://www.etfscreen.com/buydonthold/bdh-decision-page.php

On ETFscreen.com, the Decision Page indicated that 9 ETFs out of 44 have “pass” ratings compared to 10 the prior week. There were 35 “fails”.  

You can easily check the top performers for the past 5-days and one month by going to the “Additional Fund Stats” tab on the right side of the BDH Decision Page, and arraying the Rtn-5d and Rtn-3mo column, respectively heading from high to low.  If you check the performance over the past five days by hitting the down carat you will note that the three short ETFs are high in the ranking and all with “pass” ratings.  That is to be expected in a market with high volatility and downward pressure

 Chart of All BDH Signals

Here is a chart showing all Dashboard buy and sell signals, paste it in your browser.  It may take a day or two to update as that is done by a subscriber.

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

Top 5 ETFs – 100% Invested – PDP, XLY, XHB, XLP, QQQ


As you will note on the Top 5 ETF Tracking table provided in the attachment (only provided to subscribers), the current ETF performance is provided since their purchase on the June 11 open.  The portfolio is in the red by 0.34%. compared to the market averages return of 0.56%., thus the difference is 90 basis points.   Also, all these five ETFs have a fail rating.  For the YTD the BDH strategy is up 2.68% compared to the average of the major averages which is up 16.36%.

 I decided to eliminate all the current stops as mentioned in my interim update earlier in the week to avoid whipsaws.  That turned out well, as all ETFs moved up for the week after the Monday decline. You should determine how and if you use stop LIMITs in this volatile market.  If you make the stops too tight (e.g., 5% or less), then you could get stopped out quickly, and if your stops are too wide (e.g. 10-15%), then you may be giving up too much of your principal.  With the current world situation where news came come out at any time, perhaps the use of stop LIMITs should be reconsidered, as big whipsaws can create an untenable investing environment.

Game Plan Going Forward

Although the market is still very near all-time highs and the intermediate and long-term trend is positive, the short-term trend is now hard to classify.  So, what do we do here? We watch the portfolio and wait.  We are in a weak period through September, so we may have a much deeper decline or just bounce around in a trading range until the expected surge higher in the 4th quarter, if history is any guide.  Or the market may surge during the next two months which would be totally unexpected.

    Interim updates are sent to subscribers during the week, as needed.     Any subscriber who has recently sent in a payment and has not received this regular blog today should email me at lesmasonson@yahoo.com so I can check my records and correct any oversight.

Remember that you are responsible for your investments and how you manage them. This website was developed for educational purposes only and is not responsible for any actions you take with your investments.  If you decide to follow the BDH strategy, then you are 100% responsible for your investment outcome.  Make sure to check the BDH indicators daily during times when the market is volatile like now.  Just bookmark the 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 own risk profile.

Les

Leslie N. Masonson, MBA, CCM, is President of Cash Management Resources, a financial consulting firm that he founded in 1987. He is an ETF Strategist and currently actively trades ETFs on a daily basis Masonson’s 47-year working career has spanned financial advisory services, trading, investing, banking operations management, teaching, and cash/treasury management consulting. He was a Financial Advisor for six years offering investment management services to retail clients. Much earlier, he worked at three large banks for a total of 17 years as a Vice President at Citibank, an Assistant Vice President at Bank of America, and an Assistant Secretary at Irving Trust Company. He has written more than 140 articles – interviews with traders, software product and book reviews – for numerous financial publications including Technical Analysis of Stocks & Commodities (TASC), Active Trader, SFO and Futures magazine, as well as on Amazon. He has lectured on investing on several cruise lines including Crystal, Celebrity, and Norwegian. In November 2003, he spoke at the Intershow Online Investor’s Expo, on “Successfully Trading Stocks for a Living.” As of September 2016, he has been the ETF Columnist for TASC. Masonson has been researching and investing in the stock market for 60 years. He has invested in mutual funds, stocks, options, futures, ETFs, and commodities. Masonson has read more than 625 books on investing and trading, and he is proficient in technical analysis. He has used many investing and trading software programs over the years, including Telescan, OmniTrader, DTN, TradeStation, ULTRA, VectorVest, High Growth Stock Investing, TheWizard, and ETFReplay.com, as well as many brokerage charting programs including Fidelity Active Trader, Think or Swim, Interactive Brokers Trader Workstation, and Schwab’s StreetSmart Edge. He has been interviewed on business radio stations, as well as on cable TV on the Financial News Network and CNBC. The Wall Street Journal, USA Today, Institutional Investor, Bottom Line/Business, Inc., Las Vegas Review-Journal, and Advertising Age have interviewed him. His latest book Buy DON’T Hold: Investing with ETFs Using Relative Strength to Increase Returns with Less Risk was published in May 2010. He has previously authored the following books: All About Market Timing: The Easy Way to Get Started, (McGraw-Hill, November 2003 and translated into Chinese in February 2010) as well as the Second Edition published in April 2011, Day Trading On The Edge: A Look-Before-You-Leap Guide to Extreme Investing, (AMACOM, 2000), Cash Cash Cash: The Three Principles of Business Survival and Success, (Harper Business, 1990), Corporate Cash Management: Techniques and Analysis, (Dow-Jones Irwin, 1985. Co-edited with Frank Fabozzi), and the Corporate Treasury Management Manual (A.S. Pratt & Sons, 1998. Editor and Contributor). In April 2011, his first ebook was published with the title Profiting from ETF Rotation Strategies in Turbulent Markets. Masonson received a BBA in Finance and Investments from The City College of New York and an MBA in Operations Research from Bernard M. Baruch College. His master’s thesis title was “Statistical Evaluation of the Relative Strength Concept of Common Stock Selection.”

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