June 1, 2019 — Market Continues Its Down TRend

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.comwww.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.

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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