October 13, 2019 – BDH Blog Post

NASDAQ COMPOSITE 8057.04   +0.93 % Week

Market Performance

As I mentioned last week; “Anyone who did not look at the market all week would conclude that it was a calm week.  Nothing could be further from the truth, as there were violent swings….” This week was no different as news resulted in a wild roller coaster ride during market and after hours caused by concerns about our China trade  policy. Both the S&P 500 and DJIA shattered three weeks of losses, while the NASDAQ was higher for the second consecutive week.

On Friday the market took off like a rocket with the DJIA up over 520 points at one point, and the NASDAQ Composite over 150 during the day, only to come back to earth by the end of the day with the DJIA up only 320, and the NASDAQ up 106.  A weak close like this should be taken as a negative sign that profit taking was on the minds of institutions.

Friday’s action vaulted the NASDAQ over its 50- and 100-dmas, as well as the blue resistance line at 8050, rising to 8115 before closing at 8057.  Notice that the candlestick for that day is called a “gravestone Doji” (circled in purple) as it has a long upward wick but closed nearly where it opened (8047).  This is normally a candle that precedes a price decline, but not always.  In any event it is an ominous sign.

During the week Indicator #2 had a SELL signal on October 7, but a reversal BUY signal on October 11, so there was not change from the “2’ NEUTRAL situation.

The chart below shows the multiple swings above and below the 100-dma during the last two week causing multiple changes in the status of Indicator #2.  

For the YTD:                       

NASDAQ 21.43%; DJIA 14.96%: S&P 500 18.49; and BDH Strategy 2.50%     

Other Market Segments

GLD experienced a loss of 1.32%, while GDX lost more at 3.23%. Oil prices finally rebounded rising 3.44%.    On the fixed income side, TLT (iShares 20+ Year Treasury Bond ETF) got creamed falling 3.80%, its second worst weekly performance since February 2018.  Similarly, IEF (iShares 7-10 Year Treasury Bond ETF) tanked 1.68%. 

Market Internals Are Trying to Stabilize

The percentage of the NYSE stocks are above their respective 200-dma rose slightly to 56.27% from 55.80% the week earlier. More importantly, the percentage of NYSE stocks above their 50-dmas rose moderately to 59.63 from 52.44% a week earlier. Amazingly, this last indicator was as low as 40% on October 2 and 27% in August.

The number of new 52-week highs moved up slightly to 231 from 218 the prior week. Looking at the new high lists shows above 50% are preferred, REITs and income related issues instead of pure equities.  This means that the equity portion of the market is not that strong. The number of new lows was stable at 147 compared to 144 last week.

Dashboard Indicator Review – Two Intra-week Changes

 But No Overall Change

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator gave a SELL signal on Monday October 7 and then a BUY signal on Friday October 11.   So overall no change in this indicator

Indicator #5 NASDAQ Composite with MACD.  This indicator had a SELL signal on Thursday September 24, and is on the verge of a new BUY signal as the MACD is about to experience a positive crossover imminently.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest October 9, 2019 Bullish Percentage reading was 20.3% down 1.10 percentage points from the previous week.  This is a very low reading that does not occur very often and usually identifies a buying opportunity when it rises above 25 in a subsequent.  When that occurs at this juncture it will be a confirming BUY signal as this indicator has been on a BUY signal since 12/07/2018, believe it or not.Indicator #8 NASI Summation Index and MACD.  This indicator had a Sell signal on October 1, but is trying to turn around to the upside.  A very strong week in the market should produce a BUY signal on the Index crossing its 5 dma with the fast MACD. Refer to chart on the next page

Dark Liquidity

The performance of the portfolio is independently tracked by dark-liquidity.com. The link is as follows:  www.darkliquidity.com/index.php/strategies.  View the Buy Don’t Hold results and you will see all the transactions that have occurred.

When you can go to the website check “strategies.” to see the results of 23 strategies that the site tracks.  Our strategy is ranked 12th  the same ranking as last week.

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 16 ETFs out of 44 have “pass” ratings compared to 15 the prior week, no real movement.  There were 28 “fails”. This data clearly indicates the weak underlying market even though we are not far from the year’s high point.

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 the five best performers.

 Chart of All BDH Signals

Here is a chart showing all Dashboard buy and sell signals, paste it in your browser.  It may take a day or two to update as that is done by a subscriber.

http://stockcharts.com/h-

sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p50034199149&a=250074893

 Top- 5 ETFs

There were no changes during the week, so it is not updated this week.  The portfolio holds 60% cash and QQQ and XHB.  YTD, our portfolio has a gain of 2.50% compared to 18.29% for the major averages.  Refer to attached spreadsheet for the details of performance and rankings.  The spreadsheet is only provided to subscribers.            

GOING FORWARD

The fact that both the DJIA and NASDAQ Composite both bounced intra-day off their respective 200-dmas seven days ago (refer to upper chart for NASDAQ bounce) and has rapidly risen is very positive.  However, the market is at a tipping point and can go either way from here.  October is typically a month where the market may initially fall (as it already has this Tuesday and mid-week the week before) before it rises into the end of the year.  Recommendations on what to do now are being provided to subscribers in their private blog update.

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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