Market Hits New Highs

Buy DON’T Hold Blog Posting for April 28, 2019

APRIL 28, 2019 MARKET REVIEW — NASDAQ Closes at 8146.40 + 1.85% for week

The markets had a record breaking week with the S&P 500 and NASDAQ Composite making new all-time highs. After a slight pause the week before, the market had a convincing surge higher on Friday to record levels.

For the week, DJIA lost 0.06%, the S&P 500 advanced 1.20%, and the NASDAQ Composite jumped 1.85%.  On Tuesday April 23, Indicator #5 experienced a BUY signal resulting from both the slow and fast MACD crossing to the upside (See chart below).  On the same day Indicator #8 issued a SELL signal (lower chart).  Therefore, the Dashboard remained on its 4/18/2019  “3”BUY signal.

Our portfolio remains 100% in cash. For the year-to-date  the DJIA is up  13.779%, the S&P is up 17.27%, and the NASDAQ is up 22.77%.  This compares to  BDH’s 2019 performance of 3.02%. GLD advanced  0.83%, the first weekly advance in 5 weeks, but GDX fell 0.19% for tits third weekly loss. Oil prices also lost after surging to new 2019 highs earlier in the week with USO down 1.73%, while $BRENT down slightly at  0.47%.  On the fixed income side, TLT was up 0.74%, and IEF rose 0.56%..

The  percentage of the NYSE stocks are above their 200-dma rose slightly to 64.30% from to 63.32% the previous week.  More importantly, the percentage of  NYSE stocks above their 50-dmas also rose slightlyl to 66.82 from  66.53% the week before. In a rising market at all-time highs this is a weak performance, and should be above 85%.

The number of new 52-week NYSE highs was 293 this past week compared to 260 the week before.  This is very low for a market at highs.  The number should be over 800.

Dashboard Indicator Review – Two Changes — But Remaining on BDH “3” BUY  

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator remains on its February 4, 2019 BUY signal.

Indicator #5 NASDAQ Composite with MACD.  This indicator issued a slow MACD BUY signal (upper one) on April 23, 2019 while the faster MACD (lower one) had a BUY signal as well.  Please refer to upper chart to review these signals.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest April 23, 2019 Bullish Percentage reading was 33.5% down 4.1 percentage points the  prior week, the second week of decline.  This reading is always taken by AAII on Wednesday and reported on Thursday.   This indicator remains on its BUY signal.

Indicator #8 NASI Summation Index and MACD.  Note the upper Index has crossed below its 5 day –ema the prior week.  Now the slow MACD has turned down as well.

The current Dashboard is attached as a separate file in this email.

Dark Liquidity

The link is www.dark-liquidity.com/index.php/strategies

You can go to www.dark-liquidity.com first and then hit strategies.  Our strategy is 17th 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 34 ETFs out of 44 have ” pass” ratings.  Note that 6 of the top 8 ETFs on the Decision Page are a Technology related.

 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

Now that the market has finally made new highs, the question is where does the market go from here?  I wish I could give you the answer, but I nor anyone else can.  A few things to keep in mind:

  1.  This is a Pre-election year.  Reviewing the four years in the Presidential Election Cycle, historically speaking, indicates that overwhelmingly  the pre-election year historically has been the strongest performer of the four years.  The market’s performance this year already would be considered a great year if it ended this past Friday.
  2. Sell in May and Go Away – We are entering this well-known seasonal period beginning on Thursday.  According to The Stock Trader’s Almanac 2019 edition the May 1- October 31 period since 1950 generated a DJIA average annual return of – 0.8%, compared to a gain of 9.1% for the November 1 to April 30 period (using the DJIA MACD indicator sell and buy dates respectively, instead of the fixed May 1 and  November 1 dates).  More recently, according to Barron’s (April 29, 2019, page 5) in the last five years, the DJIA  gained an average of 4.31% in the May to October period compared to gain of 5.48% in the November to April 30 period.  So more recently the Sell in May strategy has not shown the more normal result.
  3. The market internals – number of new 52-week highs, NYSE bullish percentage, negative MACD crossover of NASDAQ Composite and many tech stocks—are much weaker than they should be at this market precipice.  That means that only selective market industries and sectors are carrying the market to new heights.  And those leaders can easily falter and the market swoon would begin.
  4. Buying into the market at this juncture is much more risky than after a 10% or more correction.  That is not to say that the market cannot go higher from here.  The key to investing is too lose as little as possible and be defensive when necessary.  I for one have a high risk tolerance, but I will not enter the market personally at this point.
  5. For those of you that are more aggressive investors and want to enter the market at this juncture, I suggest you consider SMH, XHB, VNQ, XLY and EEM – a diversified portfolio – with appropriate stop LIMITs in place.  Another more conservative approach is to just buy a 50% poisiton VTI which is the Vanguard Total Stock Index ETF which will give you complete US market exposure, and  a 50% position in VXUS which is Vanguard Total International Stock ETF (non-US).

Interim updates are sent to subscribers during the week, as needed.   No interim updates were sent this past week.  Any subscriber who has recently sent in a payment and has not received my interim today before 12 noon 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 two 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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