March 29, 2020 – Market Gains 10% for the Week

NASDAQ 7052.38 +662.86 or +9.05%for the week

Market Performance

This was another week for the record books with the DJIA gaining12.84% after a loss of 17.3% the week before.  This was one of the best weeks in the stock market.  On Tuesday through Thursday the DJIA skyrocketed 3960.24 points for a gain of 21.3%, a record.   Don’t forget that the market is coming off a huge decline, so that this type of advance is not as impressive as it appears since we have a long way to go to get back to the DJIA’s all-time high of 29551.42 on February 12.  This requires a 36.5% gain from this past Friday’s close.

Friday opened lower had a rally and then faded into the last 30 minutes which is not a good sign. Interestingly, the DJIA decline on Friday of 915.39 points was similar to the drop of the March 20 Friday point decline of 913 points.

The point and percentage moves up and down were stunning, as the following table depicts for the DJIA:

DATE DOW’S POINT CHANGE  FROM MARCH 23-27 DOW’S % CHANGE
March 23 -582.05 -7.45%
March 24 +2112.96 +11.40%
March 25 +495.64 +2.4%
March 26 +1351.62 +6.38%
March 27 – 915.39 -4.06%

For the week and year-to-date, the devastation was still apparent, although the NASDAQ Composite is holding up the best with large technology and biotech issues in that index:

For the:               WEEK           2020 YTD          

NASDAQ           +9.05%           – 16.39%    

DJIA                   +12.84%         – 24.18%    

S&P 500              +10.26%        – 21.34%     

BDH Strategy       -0.56%          –   6.69%     

BDH Strategy Comes Through In Flying Colors  

The BDH strategy has lost only 6.69% year-to-date.  This is 9.5 to 15 percentage points less than the three major averages. Our strategy will always lose less in corrections and bear markets, since it has the technical tools to identify trend changes and exit before the damage gets out of hand.  Getting out of the market before major damage has occurred is worth tens of thousands of dollars to investors to protect capital.  The BDH will always excel in bear markets, but may not do as well in bull markets, as buy-and-hold does better if we are in a sustained uptrend.  However, at the end of the day all that matters is how much our portfolios do in our lifetime over bull and bear markets.  The worst situation occurs when scared investors sell at market bottoms and don’t get back in at all or much later after most of the market rally is behind them.

The market has breached its long term trend lines from 2009 and 2011 on an intra-day basis as  the monthly chart of the S&P 500 below shows.  Note that I placed two support lines on the chart below of the monthly S&P 500 Index at 2352 and 2131, respectively.  The MACD on this monthly chart has issued a sell signal so the future price movement is tilted to the downside until such a time as the market stabilizes and moves higher.

Market Internals Remain at Extremely Low Levels Seen at Major Market Bottoms

The percentage of the NYSE stocks above their 200-dma increased slightly to 6.33% from 4.16% the prior week.  These are the lowest reading since October 2008 when it registered 2.25%.  More importantly, the percentage of NYSE stocks above their 50-dmas also rose slightly to 4.77% from3.44% the prior week (see chart below).  This compares to an October 2008 reading of 1.25%.  Usually all readings below 15% on both these indicators resulted in significant rallies within a few days of reversing off these low levels. The question is when and if a rally occurs imminently or takes more time to develop because of the unknown timetable of the coronavirus pandemic in the U.S.  The  chart below shows the NYSE Bullish Percentage of NYSE Percent of Stocks Above 50 Day Moving Average chart so you see the dramatic deterioration.

Likewise, the number of new 52-week NYSE new highs fell again to 13 from 23 last week and  from 309 the week before that, a further deterioration.  In a week with the market averages up 10%, the number of new highs should increase not decrease.  This is troubling. On the positive side, the number of new NYSE 52-week lows decreased to 894 from 2,714 the prior week, and 2,536 the week before that.  

For the week, GLD (Gold) skyrocketed 8.66% % after falling the prior week. GDX (gold miners) rebounded another 18.6% after rising 8.16% the prior week. USO also got killed gain falling 9.51% after losing 29.02% the week before and collapsing 20.3% the week before that.   USO was at $13.18  on December 30, 2019 and closed Friday at $4.47, a massive decline of 66% in three months. Even TLT, a 20-year treasury bond did well this week up 5.19% after a gain of 3.57% the week earlier. 

BDH DASHBOARD – “3” BUY  Signal

On March 26, both Indicators #5 and #8 issued BUY signals, with both the faster and slower MACD crossing over to the upside.

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator  gave its last SELL on March 5, 2020.  Its last BUY signal was on October 14, 2019.  Refer to $comp chart below.  Notice that the current NASDAQ price is still 16.6% away from a BUY signal on this indicator.

Indicator #5 NASDAQ Composite with MACD.  This indicator had a BUY signal on March 26, 2020. (See second t chart below).

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest March 25, 2020 Bullish Percentage reading was 32.9% down 1.4 percentage points from the previous week.  This indicator is still on its long-term buy signal, and never went to a sell signal with this massive sell-off which is surprising.

Indicator #8 NASI Summation Index and MACD.  This indicator issued a BUY signal on  Thursday, March 26, 2020.  Refer to $NASI chart below.

Top 5 ETFs –50% Invested and 50% Cash

On Thursday I emailed subscribers two interim updates with a recommendation to buy five ETFs with a 10% position each as we had a “3” Dashboard  BUY signal.  None of these ETFs has a “pass” rating on etfscreen.com as they were still well off there prior highs.  So I selected a diversified few that were doing well the last week or so and had the best performance.  This is not the normal approach, but we are not in normal circumstances.  If you prefer to invest in other ETFs that is certainly your call based on your risk tolerance and diversification needs.

The portfolio is now 50% invested and 50% in cash as specified in the Thursday night double interim updates to subscribers only.  The current positions are ARKK, XHB, SMH, TAN, and HACK.  They were purchased on Friday at the opening price and closed lower, as the market tanked in the last 30 minutes.  The remaining 50% will be invested at an appropriate time and when that occurs an interim update will be emailed to all 2020 subscribers.  Note that the performance for the week of these 5 ETFs was down for the week as they were purchased on a Friday which ended up down while the market was up for the week.

BDH Decision Page – BDH Dashboard ETFs 

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

On ETFscreen.com, the BDH Decision Page indicated that only 1 ETFs (TLT) out of 46 has “pass” ratings which was the third week in a row of this occurrence, showing massive internal market price deterioration.

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 week by hitting the down carat you will note that the best performing ETFs in our 46 ETF universe last week were XAR, XHB, XLU, VNQ and XLRE.

Dark   Liquidity

The link is as follows:

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

The BDH strategy is now ranked 7th down from 6th the prior week.   The dark-liquidity table shows the current portfolio as purchased on Friday.

Game Plan Going Forward – Potential Extreme Danger Ahead

Currently, we are in a 4-day very short-term uptrend.  The bottom may have been made intra-day on Monday, as I’ve stated for the past four weeks, only to be proven wrong.  On Monday  the NASDAQ Composite hit a 6632 intra-day low, about 50 points lower than the intra-day low on March 18, both shown by the two red arrows to charts above.  So this double bottom may be the final low.  Normally, as explained in the first interim update on Thursday, the final low may not come until a few months or weeks down the road, as was the case in 1987 and 2008-2009. At the minimum, NASDAQ Composite needs to exceed its 200-dma at 8402.47 before addition purchases are to be considered

Renewal for 2020 — Weekly Blog Post Insted of Weekly

The next subscription period for the BDH Blog begins this coming Wednesday on April 1, 2020 and runs through March 31, 2021. The price for the 1-year renewal is $40.  I have decided to continue the service for this period, so renewals are welcomed.  Anyone who subscribes any time during the next year will be charged the full $40, so if you are on the fence, there is no reason to wait as the market’s moves should be managed well going forward.

The subscription service provides a monthly blog post and interim updates as they occur. This website will have delayed information so only subscribers will have the latest

portfolio and Dashboard signals.

If you want to renew, please send me a check, cash or a payment for $40 through PayPal directed only to masonson@optonline.net NOT lesmasonson@yahoo.com.  Please be sure to use the “Friends and Family” option on PayPal otherwise you will pay a fee of at least $1 and my payment amount will be reduced by that amount.  I want to thank all of those who have already renewed, and hope other current subscribers see the value in renewing.

Regards, Les Masonson

5550 Witney Drive, Apt. 312

Delray Beach, FL 33484

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, if you use them, 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.”

Leave a Reply

Close Menu