NASDAQ Closes at 7453.15
Market Review
The markets had another volatile week with the DJIA falling over 200 points at least three days this week. The DJIA has had six consecutive weeks of decline. Both the NASDAQ Composite and S&P 500 have done a bit better, with four weeks of consecutive down closes. All three major indexes have now closed below their respective 50-, 100-, and 200-dmas. This is the essence of a declining market. We will see if the market can regain the 200-dma this coming week.
For the week, the DJIA declined the most at 3.01%, the S&P 500 fell 2.62%, and the NASDAQ Composite declined the least at 2.41%.
For the: YTD May
NASDAQ 12.33% -7.9%
DJIA 6.38% -6.7%
S&P 500 9.78% -6.6%
The markets encountered turbulence and a downdraft during the month of May with the declines shown above. It was the worst performance since the market waterfall decline in December culminating in an almost 20% decline from the 2019 market highs. The DJIA sixweek decline is the worst since June 2011.
The market averages increased about 15% in in the 1st quarter, one of the best quarterly performances in recent history. So far, the “Sell in May” strategy is playing out in spades, although as we know it doesn’t play out that way every year.
Indicator #2 generated a SELL signal on Wednesday Mary 29th since the NASDAQ fell below 7573. That resulted in a “1” BDH Dashboard SELL signal. That is not an issue for us, as we have been in a 100% cash position for weeks.
The NASDAQ’s next support level is at 73332.92 shown at the cross of the green and red lines (just a coincidence that it is at that point). If that level fails, then 6953, then 6457, and then the December 14, 2018 low of 6190 are the next levels of support.
GLD was up 1.67% and just broke out of a 6-week trading range of $119.5 and $$122.80 with a gap opening on Friday and a gain of 1.35% to close at $123.33. Likewise, GDX broke out as well, but with a monster gain for the week of 4.96% of which 3.95% of the total occurred.
On the opposite side of ledger is the big drop in oil prices again for the second consecutive week with USO declining a big 9.24% and down five of the last 6 weeks. $Brent crude cratered even more down 9.75% for the week.
Not unexpectedly, on the fixed income side, TLT (iShares 20+ Year Treasury Bond ETF) was up a big 3.17% gain for its seventh consecutive weekly rise. and IEF (iShare 7-10 Year Treasury Bond ETF) gained 1.43% for sixth out of seventh weekly advance. These two defensive ETFs are at their highs for the year and are at their highest prices since July 5, 2016. Quite an unexpected accomplishment!
The percentage of the NYSE stocks are above their 200-dma declined to 43.32% from to 51.5% last week and 65% in May. More importantly, the percentage of NYSE stocks above their 50-dmas also declined more precipitously to 24.9% from 37.5% the prior week, 92% in February 2019 and 76% in April. Clearly the market is continuing to weaken with most issues doing poorly price wise.
The number of new 52-week NYSE new highs had receded to 234 this past week from 265 the week before, while the number of new lows had increased to 326 compared to 236 two weeks prior.
Dashboard Indicator Review – One Change
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator finally broke down and closed below the 100-dma line on May 29, 2019, thereby reversing its February 4, 2019 BUY signal.
Indicator #5 NASDAQ Composite with MACD. This indicator issued a slow MACD SELL signal (upper one) on May 1, 2019 while the faster MACD (lower one) had a SELL signal a day earlier. Please refer to upper chart to review these signals.
Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest May 29, 2019 Bullish Percentage reading was 24.8% down from 24.7% 7 days earlier This indicator remains on its BUY signal of November 29, 2018, but it is now below the critical 25% level for the second consecutive week Any move higher from this level will signal another buy signal confirmation.
Indicator #8 NASI Summation Index and MACD. This indicator is still on its April 23 SELL signal.
The current Dashboard is attached as a separate file in this email for subscribers only.
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 still 14th 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 only 11 ETFs out of 44 have “pass” ratings. And three of them are inverse ETFs – SH, PSQ and DOG. The other ETFs with “pass” ratings include VNQ, TLT, BRF, XLU, IEF, PFF, BOND, and DBA. These are mostly fixed income, a preferred, one emerging market, one real estate and one agriculture ETF. Note that 6 of the top 12 ETFs on the Decision Page are Technology related and all have fail ratings.
You can easily check the top performers for the past 5-days by going to the “Additional Fund Stats” tab on the right side of the BDH Decision Page, and arraying the Rtn-5d column heading from high to low.
Chart of All BDH Signals
Here is a chart showing all Dashboard buy and sell signals, paste it in your browser:
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893
Game Plan Going Forward – Unchanged for the Past Three Weeks
The market continues to decline and could go either way from here based on national and world events, as we’ve seen these past few years. Since our BDH strategy is 100% in cash, we can wait for the indicators to tell us when it is safe to re-enter the market.
Aggressive investors may want to participate in a further decline by buying any of the inverse ETFs which have a “pass” rating. They are SH, PSQ, and DOG. Be sure to check them out on their appropriate websites, as well as on www.etf.com, www.etfdb.com, and other sites. You need to understand the risks involved before putting one penny at risk. This suggestion is not part of the BDH strategy, but it is mentioned as an actionable approach for those who want to take advantage of falling prices. As usual, appropriate stop LIMIT orders should be used to limit losses if the market goes in the opposite direction to your positions.
Interim updates are sent to subscribers during the week, as needed. No interim update was sent this past week. 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 risk profile.
