Seasonal MACD and ETF Portfolio Updates By: Christopher Mistal | November 02, 2017 | Email | Print

As of today’s close, our Seasonal MACD Buy Signal is still on Hold. Our 8-17-9 MACD “Buy” indicator applied to DJIA and S&P 500 is still negative (blue arrows in charts below). NASDAQ’s MACD “Buy” indicator turned positive on Monday, October 30.

 

The criteria to issue our Seasonal MACD Buy Signal is a new buy signal using our 8-17-9 MACD indicator on or after the first trading day of October and DJIA, S&P 500 and NASDAQ must be in agreement.

 

This criterion has not been met yet. A one-day DJIA advance of 167.57 points (-0.71%) would turn DJIA’s MACD positive and S&P 500 needs to advance 10.31 points (0.40%) for its MACD indicator to turn positive. However, if NASDAQ were to slip 65.05 points (0.97%) in a single day then its MACD indicator would turn negative.

 

 

 

In the following chart DJIA, S&P 500, NASDAQ and Russell 2000 have been plotted in the top pane while cumulative, daily advance/decline lines appear in the lower panes. (NYSE Comp A/D line is presented for DJIA). NASDAQ and Russell 2000 A/D lines clearly peaked in early October and have been trending lower since. NYSE and S&P 500 A/D lines appear to have peaked in the second half of October and have been moving sideways to slightly lower since.

 

 

This suggests there is some weakness below the surface of the major indexes. Even though Russell 2000 continues to linger on either side of 1500, it last closed at a new all-time high on October 5. NASDAQ closed at a new all-time high on Tuesday, October 31, but its declining A/D line is signaling fewer and fewer stocks are participating in the cooling rally. Some additional sideways to lower trading by the indexes is not out of the question and a mild pullback could go a long way to ease extremely bullish sentiment readings. Such a pullback would make a far better entry point than now.

 

If a pullback does not materialize and instead the major indexes just move sideways for a while longer that could be sufficient to build a base of support from which they can move higher during the Best Months, November to April.

 

 

Over the past two weeks since last update only iShares DJ Transports (IYT) has been added to the portfolio. IYT traded under it buy limit earlier today. Its “Return” will be calculated during the next update. IYT can still be considered on dips below its buy limit.

 

Two of four defensive positions held during the Worst Months were stopped out. iShares 20+ Year Bond (TLT) and iShares Core US Aggregate Bond (AGG) both closed below their respective stop losses on October 24. Both positions were closed out of the portfolio using their respective average prices on October 25. Excluding dividends and any trading fees, TLT and AGG were closed out for fractional losses.

 

ProShares UltraShort Bloomberg Crude Oil (SCO) was stopped out on October 26 and closed out of the portfolio on the following trading day using its average price from the 27th. OPEC and other oil exporters’ commitments to maintain supply cuts in place longer undermined typical seasonal weakness in oil.

 

Last update, DIA, IWM, QQQ and SPY, appeared in the portfolio table in preparation for when we issue our Seasonal MACD Buy signal. These will be the positions we will use to trade the “Best Six/Eight Months.” Buy Limit and Stop Loss values will be added when we issue our Seasonal MACD Buy signal.

 

Positions with Buy Limits can still be considered on dips. Some of the ETFs (most notably technology-related positions) are currently well above their respective buy limits as the possibility of a mild pullback still exists. If they are not added, we will consider adding them when we issue our Seasonal MACD Buy signal. Continue to hold GLD and SLV.