August 17, 2019 Blog Post

NASDAQ COMPOSITE 7895.99    -0.79%

BDH Dashboard on “1” SELL Signal

Market Performance

The three major market averages had another wild week with continued volatility this past week.  There was a large advance on Tuesday, but that was all given back and more by Thursday.  The market then rallied Friday to reduce the losses. For the week the NASDAQ Composite fell by 0.79% for the third consecutive week, the S&P 500 Index closed down 0.97%, and the DJIA declined the most by 0.53%, down five weeks in a row.  

For the:                 YTD       

NASDAQ            19.00%    

DJIA                    10.97%    

S&P 500              15.23%     

BDH Strategy        2.18%        

Indicator #2 issued multiple BUY and SELL signals on Monday, Tuesday and Wednesday ending with a SELL signal on August 14 leaving the BDH Dashboard on a SELL “1”.  Subscribers were provided with an interim update on Wednesday

Other Market Segments

Not surprisingly, GLD had a another positive but more volatile week up 1.08%, rising 10 of the past 12 weeks, and closing at the high for the year again. However, GDX had large decline down 3.68%.  Oil prices rebounded from the prior week with USO gaining 1.06%, finally rising after a prior fourth consecutive weekly decline, and $Brent had a very slight gain up 0.19%.

Not unexpectedly, on the fixed income side, TLT (iShares 20+ Year Treasury Bond ETF) had another spectacular week up a big 4.34% beating its prior week’s gain of 2.59%, and 4.04% a week before. Thus, reaching another 2019 new high.  Similarly, IEF (iShares 7-10 Year Treasury Bond ETF) gained 1.32% closing at its high for the year.  Amazingly fixed income shares, especially TLT, have done exceedingly well this year and have outperformed many stocks and stock indexes.

Market Internals Deteriorate Again

The percentage of the NYSE stocks are above their 200-dma declined again to 49.91% from 54.50% the week before and from58.16% the week before that. More importantly, the percentage of NYSE stocks above their 50-dmas also declined to 33.47% from 41.86% a week earlier and from 48.1% the week before that. Thus, the internal market has weakened dramatically during the past three weeks.

Moreover, the number of new 52-week NYSE new highs decreased slightly to 373 from 363 the prior week, and from 603 the week before that. And the number of new lows increased again to 440 from 398 the prior week, and from 250 the week before that.

Dashboard Indicator Review One Change

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator gave a SELL signal on Wednesday August 12 and 14 and a BUY signal on August 13, thus ending on a SELL signal for the week. Note the chart pointing out the drop below the 100-dma.

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a slow MACD SELL signal (upper oneon July 19, 2019.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest August 14, 2019 Bullish Percentage reading was 23.2.7% up 1.5 percentage points from the previous week. This indicator remains on its BUY signal of December 7, 2018.

Indicator #8 NASI Summation Index and MACD.  This indicator remains on its SELL signal of July 25.

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 remains 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 10 ETFs out of 44 have “pass” ratings compared to 9 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 in the Top 5 ETF Tracking table provided in the email 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 0.85% since then compared to the market averages return of    -0.56%., thus the difference is only 29 basis points.   Also, note that four of these ETFs have a fail rating.  For the YTD, the BDH strategy is up 2.18% compared to the average of the major averages which is up 15.07%.

 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 has moved away from its all-time highs around July 26, 2019, the intermediate and long-term trend are still positive, the short-term trend is down. We need to surpass the resistance line on the NASDAQ Composite at 8176 and then take out the high of 8339 to have a positive short-term trend.  That may take a number of weeks or months to happen based on developments in the political, economic, and financial arenas.

 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 to the 200-dma (purple line on upper chart) or perhaps retest the December lows at 7292 before a market surge occurs.

Stop Limits have been removed from the current portfolio to avoid big intra-day whips which could knock us out the market just at the wrong time – a rebound and move higher.

    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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