September 1, 2019 BDH Blog Post

NASDAQ COMPOSITE 7962.88    +2.72%

BDH Dashboard Now On “3” BUY Signal

Market Performance

The three major market averages finally had a positive weeks after four consecutive down weeks.  For the week the NASDAQ Composite gained 2.72% for the, the S&P 500 Index closed up 2.79%, and the DJIA advanced the least most up 3.02% after being down the prior six weeks in a row.  

For the:                 YTD       

NASDAQ            20.01%    

DJIA                    13.19%    

S&P 500              16.74%     

BDH Strategy        4.05%        

Both Indicators #2 and #5 issued BUY signals on Thursday August 29th , ending the week on a BDH strategy BUY signal of “3”.  Subscribers were provided with an interim update during the week.  No action was needed as we were in a 100% invested position

All three major averages are below their 50-dmas, but they are all above theirs 200-dmas. 

Other Market Segments

Not surprisingly, GLD almost had a another positive fell short by closing down 0.29%. resting after an 11 of the past 13 weeks advance, and almost closing at the high for the year again. Interestingly, GDX did even better closing at another yearly high up 0.74%.  Oil prices had a mixed result with USO gainng 2.41%, while $Brent went the other and fell 0.15%.


Surprisingly, on the fixed income side, TLT (iShares 20+ Year Treasury Bond ETF) had another up week up a 0.90% closing at another all-time high. Similarly, IEF (iShares 7-10 Year Treasury Bond ETF) gained 0.20% closing at its high for the year.  Amazingly fixed income shares, especially TLT, have done exceedingly well this year and have outperformed many stocks and stock indexes.

Market Internals Deteriorate Again

The percentage of the NYSE stocks are above their 200-dma finally advance to 50.99% from 45.53 % the week before and from 58.16% the 5 weeks earlier. More importantly, the percentage of NYSE stocks above their 50-dmas also advance to 37.70% from 29.28% a week earlier and from 48.1% five weeks before that. Thus, the internal market is trying to get back to prices five weeks ago, but is not there yet.

Surprisingly, the number of new 52-week NYSE new highs decreased to 352 from 411 the prior week, and from 603 five weeks before that. Likewise, the number of new lows increased to 310 from 229 the prior week.  This strange occurrence was the result of lower prices during the week before the end of week advance, and is a measure over the course of a week, not a daily number. During the past few months there have been a large number of non-equity NYSE securities, such as preferred issues, munibonds, REITs, and other bond types that have appeared on the new highs list which have inflated the number.  That means that the underlying equity market is actually much weaker than it appears on the surface.

Dashboard Indicator Review Two Changes

Indicator #2 NASDAQ Composite Index and 100-dma. This indicator gave a BUY signal on Thursday August 29. Note the chart blue arrow pointing out the rise above the 100-dma.

Indicator #5 NASDAQ Composite with MACD.  This indicator had a BUY signal on Thursday August 29.

Indicator #6 AAII Weekly Investor Sentiment Survey Bullish Percentage. The latest August 28, 2019 Bullish Percentage reading was 26.1% down 0.5 percentage points from the previous week. This indicator issued another confirming BUY signal on August 21, as it when from below 25% to above 25%.  There have been numerous confirming BUY signal along the way from its last major BUY signal in December 2018.

Indicator #8 NASI Summation Index and MACD.  This indicator is very close to a buy signal if the MACD crosses higher this week. Refer to second chart below:

Dark   Liquidity

The link is as follows:

www.dark-liquidity.com/index.php/strategies

You can go to www.dark-liquidity.com first and then hit strategies.  Our strategy remains 14th 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 20 ETFs out of 44 have “pass” ratings compared to 13 the prior week. Also, the first 17 ETFs all had  “passes”.  

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 three short ETFs –PSQ, SH, and DOG–are the lowest in the ranking and all with “fail” ratings.  Just last week these three ETFs had the highest ranking in the 5-day performance category.  That shows you how quickly the markets can change direction.

 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 – 100% Invested – PDP, XLY, XHB, XLP, QQQ


The Top 5 ETF table is only provided to subscribers with their weekly email blog post.  Currently, we are holding all the five ETFs mentioned above in equal portions. Since the 6/11/2019 purchase date the ETF portfolio is up 1.03% compared to 0.81% for the three major averages.

As a few weeks ago, I decided to eliminate all the current stop LIMIT orders to avoid whipsaws.  So far that has turned out well, as all ETFs moved up this past week. You should determine how and if you use stop LIMITs in this volatile market.  If you make the stops too tight (e.g., 5% or less), then you could get stopped out quickly, and if your stops are too wide (e.g. 10-15%), then you may be giving up too much of your principal.  With the current world situation where news can come out at any time, the use of stop LIMITs should be evaluated in the current environment, as big whipsaws can create an untenable investing environment where you would be going in and out of the market too frequently creating short-term capital gains and losses in non-retirement accounts.

Game Plan Going Forward

Currently, the market is below its all-time highs of July 26, 2019.  The short-term trend is contained in the purple box on the upper chart with a resistance level of 7700 on the NASDAQ Composite on the low end and 8065 on the top of the box. A break-out of this box on either the upside or downside will likely determine the market trend through year-end. We don’t know which way the market will go from here based on developments in the political, economic, and financial arenas, so stay invested for now and use defense as you see fit. We are in the weakest month of the year (September), so expect more volatility in this month and in October.

    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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