NASDAQ 8604.95 -0.34% for the week
Market Performance
April 2020 was the best month for the S&P 500 gaining 12.7%,the largest increase since January 1987. Moreover, the NASDAQ Composite advanced an astonishing 15.5%, the best performance since June 2000, both data points coming from the Stock Trader’s Almanac 2020 edition.
Don’t forget that March was one of the worst months in decades for the major averages, and we still have not made up the loss for March. After huge weekly gains the week of April 5 and 13th, the market has fallen minimally the last two weeks, with big down days on April 21, 28, and May 1. This Friday’s market rout eliminated all the gains for past week in one fell swoop.
For the: WEEK 2020 YTD
NASDAQ -0.34% – 4.10%
DJIA -0.22% – 16.87%
S&P 500 -0.21% – 12.38%
BDH Strategy -0.11% – 6.16%
The above chart shows that the NASDAQ Composite breached the 200-dma to the upside on April 22 and then six days later on April 27 vaulted above the critical 100-dma (Indicator#2), only to fall below the 100-dma on Friday, after going back and forth above and below this line on April 28, 20 and May 1. Right now the NASDAQ is sandwiched between the 100- and 200-dmas. Which direction it goes from here is anyone’s guess.
Note the lower faster MACD is about to make a negative crossover. If that occurs, then the BDH Dashboard will be on “2” Neutral signal. Right now as the attached Dashboard show, we are still on a BUY signal which has been the case since March 26, 2020.
Market Internals Remain at Extremely Low Levels Seen at Major Market Bottoms
The percentage of the NYSE stocks above their 200-dma settled at 14.16% down from 28% earlier last week, and up from 4.25% at the March lows. This low percentage still has a long way to go to reach the lofty level of 74% in January 2020. More importantly, the percentage of NYSE stocks above their 50-dmas also settled at 44.5% at week’s end after rising to 63% two weeks ago and up from 3.00% at the March lows.
On a positive note, the number of new 52-week NYSE new lows shrunk to 25 from 284 in early April from 2,714 and 2,536 during the worst two week periods. This is a very positive trend reversal.
For the week, GLD (Gold) declined 1.76% after reaching a yearly high the week earlier. GDX (gold miners) declined 1.89% after reaching its yearly highs the prior week. USO got crushed again dropping 8.3% closing at the lows for the year. USO has declined from $91 on February 18 to $18.86 on Friday. TLT, a 20-year treasury bond, fell 1.56% remaining in 5-week tight trading range.
BDH DASHBOARD – “3” BUY Signal Remains in Place
Indicator #2 NASDAQ Composite Index and 100-dma. This indicator gave its last SELL on Friday, May 1, 2020. Its last BUY signal was on April 29, 2020. Refer to $comp chart above.
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 April 29, 2020 Bullish Percentage reading was 30.6% up 1.3 percentage points from the previous week’s reading of 24.9%. This indicator just flashed another confirming BUY signal, as it rebounded from below the 25% trigger level the prior week. This indicator is still on its long-term buy signal of December 7, 2018, and has never gone to a sell signal even with the latest massive sell-off in February and March 2020.
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 –10% Invested and 90% Cash
Our only current position is a 10% position in HACK. TAN, XHB, SMH and ARKK were all sold at their stop LIMITs at 5% each. Unfortunately, I had placed the stops to tight and was knocked out of the market before they all rebounded in April. That cost about 10 percentage points of gain. Stop management is a difficult process since you don’t want to give up too much of your gains, but you also want to protect your principal if the market collapses.
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 43 1 ETFs out of 46 has a “pass” ratings. That shows the strength in the market rebound. Interestingly, TLT was the best 1-month and 3-month performer of all the 46 ETFs in our universe. The Top 5 ETFs in the table are ARKW, TLT, ARKK, XBI and CLOU.
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 five days by hitting the down carat you will note that the best performing ETFs in our 46 ETF universewere XHB, BRF,XOP, XLE and XRT all up 3.24% or more. The five best over the past month were: XOP, ARKK, XWEB, XLE and XHB all up over 29%.
Dark Liquidity
The link is as follows:
www.dark-liquidity.com/index.php/strategies
The BDH strategy is now ranked 10th a drop of 3 ranking from the prior week. The dark-liquidity table shows the current portfolio and all the year-to-date buys and sells.
Game Plan Going Forward –Unknown Direction
Currently, we are still in an unstable market with decking but high volatility, below the extreme levels of April 6 and 13. The market bottom may have occurred on March 23 or may be tested in the months ahead, as was the case in the 1987 and 2008-2009 market debacles. One factor to consider before putting any additional capital at risk is that the May through October period is considered the weakest 6 months of the year where the market tends to decline in most years.
Normally, with a BUY on the BDH Dashboard, we would be fully invested in the market, but we have recently sold out positions, so we are in a tough spot now. Certainly, at the minimum Indicator #2 needs to surpass and stay above its 100-dma so we have a maximum “4” buy signal. Moreover, if the NASDAQ declines from here and falls below the 200-dma that would indicate a negative situation and no further consideration of making purchases.
This paragraph only provided to subscribers with the recommendation on entering the market.
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 will provide interim Dashboard signal changes as they occur to the best of my ability. It is important to be pro-active, so as not to miss any Dashboard signals. Decide on and place your stop LIMITS or stops that meet your own risk profile.
