November 29, 2020 Blog Post

NASDAQ COMPOSITE 12,205.85 +11.86% for the MONTH

NASDAQ +2.96% for the week

Market Performance Has Been Stellar in November

This month’s stock market performance is the mirror opposite of October, but with even a more pronounced advance to all-time highs. As the chart below shows, the NASDAQ Composite has closed the week at an all-time high after a dazzling November. This past week in the market was a solid performance the NASDAQ up 2.96% , the S&P 500 up 2.27%, and the DJIA large-cap blue chips up 2.21%.  The year to date and monthly performance is provided below.  Clearly,

Our ETF portfolio has substantially beaten all the market averages this past month and has more than doubled the return of the S&P 500 all with risk as the portfolio was not always 100% invested.

                                       Month             YTD

Dow-Jones Industrials    +12.9%           +4.81%

NASDAQ Composite       +11.9%           +36.0%

S&P 500                            +11.3%           +12.3%

BDH Strategy                    +17.6%          +26.7%

During the month there were five BDH intra-month Dashboard changes. On November 5, Indicator #5 had a buy signal, then a sell signal on November 18, and then another buy signal on November 24.  Indicator #6 had a rare sell signal on November 24, as it hit 55.8% on November 17 and then fell below the key 50% level on November 24. Indicator #8 had a buy signal on November 12.  None of these signals impacted our strategy or caused a change in the overall market buy signal.

 Looking at the first chart below, you will note that the NASDAQ has recovered nicely from its early November lows.  It held the critical 100-dma and never triggered an Indicator #2 sell signal and has subsequently rose above all key moving averages.

Market Internals

The percentage of NYSE stocks above their respective 200-dmas stands at 87.1% a much improved reading from the 51.74% from last month and above high reading of 74% in January 2020 and 75% in January 2019.  Note that the current reading is the highest in years.  Higher readings occurred in September 2009 at 93%, and in 2004 at 91%.  So we are in rarified territory where a downdraft could occur at any time.  Whether it will or not remains to be seen. On the other hand the percentage of NYSE stocks above their respective 50-dmas experienced an amazing comeback rising to  87.2% from its prior month reading of 27.26%. New 52-week highs on the NYSE rose above 400 compared to a measly 83 last month.

BDH DASHBOARD – BUY “3”

The BDH Dashboard (attached as separate item) rose to a “3” hold on November 24 from a  “2” hold on October 29.

Indicator #2 NASDAQ Composite Index and 100-dma. Its last BUY signal was on May 2, 2020 which is still in effect.

Indicator #5 NASDAQ Composite with MACD. This indicator had a BUY signal on November 24 negating its last sell signal on November 18.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest November 24, 2020 Bullish Percentage reading was 44.4% down from 55.8% the week prior resulting in a SELL signal. Remember, a rise above 50% and then a fall that level constitutes a sell signal. The last buy signal was on December 7, 2018 so this sell signal was a long time in coming.  This new SELL signal should be a note of caution in this euphoric market.   It will not last forever.

Indicator #8 NASI Summation Index and MACD. This indicator issued a BUY signal on November 12, as the slow MACD confirmed the index crossover.  Note that the fast MACD experienced a faster positive crossover.

BDH Decision Page – BDH Dashboard ETFs

The link to the BDH Decision Page is as follows: https://www.etfscreen.com/buydonthold/bdhdecision-page.php

On ETFscreen.com Decision Page, there were 43 ETFs with a “pass” rating compared to 13 last month, showing the market’s significant rebound. The screen indicates that the technology related ETFs (5 out of top 9  ranked ETFs) have soared outpacing all the others and masking the market’s mixed performance. The Top 6 on the current BDH Decision Page are TAN, QCLN ARKK, ARKW, and ARKK.

You can easily check the top performers for the past 5-days and one month by clicking on the “Additional Fund Stats” tab on the right side of the BDH Decision Page, and arraying the “Rtn5d” and “Rtn-1mo” columns, respectively heading from high to low. If you check the performance over the one month by hitting the down carat you will note that the best performing ETFs in our 46 ETF universe were XOP, XLE, QCLN, BRF and TAN.

Dark- Liquidity.com

At www.dark-liquidity.com/index.php/strategies scroll down the page to see the Buy – Don’t Hold Signal History and Strategies Performance – Masonson sections. You will see the performance of all ETFs in the portfolio .

The BDH strategy is now ranked 7th up two notches from last month and 11th from three months ago. Note that all the higher ranked portfolios are based on the NASDAQ Composite which makes our ranking stand out with a more diverse portfolio. The dark-liquidity BDH table shows the current portfolio of ARKW, CLOU, XLV, QCLN and XHB. Clearly, performance of ARKW (104%), CLOU (26%) and recently added  QCLN (13%) have accelerated the portfolio profits. XLV has constantly disappointed in the last three months, but I will stay with it for now.

Top 5 ETFs –100% Invested

The BDH portfolio ETF portfolio has performed very well this year, beating both the S&P 500 and DJIA year-to-date, but 9 percentage points behind the NASDAQ Composite. The BDH portfolio first peaked around October 12 with 20% annual  gain,  but was only up 9.18% for the year last month.   Now, this month it up a whopping 26.8% year-to-date.

The interim update on November 8 recommended selling HACK on the open on November 9 and replacing it with QCLN.  That’s what we did.  So far QCLN has worked out well.  It is shown in the dark-liquidity.com table.

Game Plan Going Forward – Market At Highs Going Into Year-End

Can the market keep advancing? Absolutely. Will it? No one knows. Although we are in the sweet spot of the year, where November was phenomenal and upcoming December, things may not work out this time.  Historically speaking, the S&P 500 has risen 71% of the time in November and December with an average gain of 2.3%. That has already been exceeded fivefold  just in November.

Use the stop LIMITs that best suit your personal situation. . Be careful here as the markets can change direction at any time. Being forewarned with a defensive strategy is the key to investing successfully.

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.”

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