MACD Update: On Hold & Stock Portfolio Updates: Use Dips to Accumulate
By: Christopher Mistal
October 11, 2016
As of today’s close, our Seasonal MACD Buy Signal is still on Hold. Our 8-17-9 MACD “Buy” indicator applied to S&P 500 had been positive since late September, but today’s decline has turned its MACD indicator negative. At the lows of the day, DJIA’s MACD indicator was also negative, but by the close it just managed to narrowly hang onto positive territory. If DJIA does not gain more than 67.5 points tomorrow, its MACD indicator will be negative. NASDAQ’s “Buy” Indicator has been negative every day this month except October 5.
[DJIA Daily Bar Chart]
[S&P 500 Daily Bar Chart]
[NASDAQ Daily Bar Chart]
In order to issue our Seasonal MACD Buy Signal, DJIA, S&P 500 and NASDAQ MACD “Buy” indicators need to signal a new “Buy” and be in agreement. To clarify further, the 8-17-9 MACD indicator needs to be positive across all three indices; DJIA, S&P 500 and NASDAQ on a closing basis then an email Alert will be sent.
Portfolio Updates
In the four weeks since last update, S&P 500 was up 0.2% while Russell 2000 gained 1.2% as of yesterday’s close. The Almanac Investor Stock Portfolio’s blend of cash, long and short positions resulted in a modest 0.3% overall gain over the same time period. Small-cap stocks in our portfolio performed best, advancing 0.9%. Mid-caps climbed 0.5% while Large-caps shed 3.1%. 
Much of the loss in the Large-cap portion of the portfolio can be attributed to three stocks, Union Pacific (UNP), CVS Health (CVS) and Continental Resources (CLR). All three were stopped out last week. The short position in CLR proved to be costly as it broke out to multi-year highs above $53.25 resulting in a 28.1% loss. CLR is clearly a momentum play as its advance was more than double of crude’s since their respective lows earlier this year. Its current run will come to an end especially if crude suddenly reverses course and hides lower.     
Mid-cap performance was lifted by the addition of three new positions from last month’s Stock Basket. Ameris Bancorp (ABCB), Sabra Healthcare REIT (SBRA) and Corelogic (CLGX) were all added when they dipped below their respective buy limits. ABCB was up 5.3% at yesterday’s close while SBRA’s modest gain essentially offsets CLGX’s mild loss. Scotts Miracle-Grow (SMG) also contributed to gains. However, the same weakness that allowed the addition of new trade ideas did result in Amerco Inc. (UHAL) being stopped out for a loss of 6.6%. This was the second time we traded UHAL and although there was a loss this time, the gain from the first trade was a robust 88%.
Small-caps have been outperforming recently after a long period of underperformance. A 0.9% gain is respectable considering the limited number of small-cap positions and the sizable cash balance. Lydall (LDL) and Sucampo Pharma (SCMP) accounted for the bulk for the Small-cap portfolio gains. 
With our Seasonal MACD Buy still on hold, we will maintain existing short positions and use dips to accumulate new trade ideas from September’s Stock Basket. Please refer to the updated portfolio table below for Current Advice about each specific position. Also note that several stop losses have been updated.
[Almanac Investor Stock Portfolio – October 10, 2016 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control did not hold any positions in the stocks mentioned, but may buy or sell at any time.