Market Recovers Mid-week Swoon

First, I wanted to mention that I have my website back up and running with a new host.  It is very basic and I will be working on it going forward.   The blog below is the same as on website, but is easier to read and review here.

MARKET REVIEW

The markets had a choppy week with the S&P 500 and NASDAQ Composite making little progress.  The NASDASQ Composite made a new intra-week high on Monday, fell hard Tuesday through Thursday, and then rebounded solidly on Friday gaining back those three day losses. This week’s Friday surge was similar to that of the previous Friday.

 On Tuesday May 1, Indicator #5 had a SELL signal, as the MACD (slow) crossed to the downside resulting in a “2” NEUTRAL Dashboard reading.  The faster MACD experienced this negative crossover on April 30. This reversed the April 23 BUY signal on this indicator. (See chart below).  An interim update was emailed to you on that date.

Note on the chart below that in the orange box we are in a tight trading range that will break one way or the other in the coming week (s).  We don’t know which way it will go.

Our portfolio remains 100% in cash. For the year-to-date the DJIA is up  13.62%, the S&P is up 17.50%, and the NASDAQ is up 23.04%.  This compares to BDH’s 2019 performance of 3.02%. GLD fell 0.59% for its fifth weekly loss in six weeks. Oil prices fell again for the second week in a row with USO down 1.68%, while $BRENT went down 1.09%.  On the fixed income side, TLT was up 0.09%, and IEF fell 0.21%..

The  percentage of the NYSE stocks are above their 200-dma rose slightly to 64.53% from to 64.3% the previous week.  More importantly, the percentage of NYSE stocks above their 50-dmas also rose slightly  to 68.17% from  66.82% the week before. In a rising market at all-time highs this is a weak performance, and  this percentage would normally be above 85%.

The number of new 52-week NYSE highs climbed to 420 this past week compared to 293 the week before, a nice increase in a jumpy market.  This is still a very low number of highs in a  market at new highs.  This number should be over 800.

Dashboard Indicator Review – One Change

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 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 1, 2019 Bullish Percentage reading was 39% up 5.5 percentage points from the prior week.  This reading is always taken by AAII on Wednesday and reported on Thursday.   This indicator remains on its BUY signal of November 29, 2018..

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 29 ETFs out of 44 have ” pass” ratings down from 34 the prior week..  Note that 6 of the top 7 ETFs on the Decision Page are Technology related.  This shows you that tech stocks have powered the NASDAQ Composite higher which is the index we use to determine buy and sell signals for Indicators #2, 5 and 8

 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 continually made new highs, the question is where does the market go from here?  I wish I could give you the answer, but I can’t.  A few things to keep in mind:

  1. Right now it is very risky to enter at the top of the market. And the BDH strategy is now on a “2” NEUTRAL signal. Buying into the market at this juncture is much more risky than after a 5% or more correction and is not recommended at this time.  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.
  2. 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.
  3. 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.
  4. 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.

Interim updates are sent to subscribers during the week, as needed.   One interim update was 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 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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