ETF Trades & NASDAQ’s Best Eight Months: Natural Gas and On Hold
By: Christopher Mistal
June 07, 2018
NASDAQ’s Best Eight Months Update
As of the market’s close today, the slower moving MACD indicator applied to NASDAQ was positive. With NASDAQ’s modest loss today, a one-day decline of over 3.2% (245.48 points) would be needed to turn NASDAQ’s MACD Sell indicator negative. 
[NASDAQ Daily Bar Chart]
When NASDAQ’s MACD Sell indicator becomes negative, we will issue our NASDAQ Seasonal MACD Sell signal and begin clearing out remaining technology and small-cap positions held in the Almanac Investor ETF Portfolio. We will also review current holdings in the Stock Portfolio and take action where needed.
June Sector Seasonalities
June offers one high-probability seasonal trading opportunity. This trade is based upon the NYSE ARCA Natural Gas index (XNG) and takes advantage of seasonal weakness in natural gas stocks beginning in mid-June through the end of July. XNG enjoyed a rally from early April until late May, but is now beginning to show signs of waning upward momentum.
[XNG Daily Bar Chart with 1-Year Seasonal Pattern]
First Trust ISE-Revere Natural Gas (FCG) has been following a similar pattern as XNG, rallying from early April into mid-May. Its 50-day moving average bullishly crossed above its 200-day moving average in mid-May just as FCG topped out. Stochastic, relative strength and MACD indicators applied to FCG are all negative. FCG could be shorted on any rally up to resistance around $22.76 or on a breakdown below support at $21.90. If shorted, an initial stop loss at $24.05 is suggested.
[First Trust Natural Gas (FCG) Daily Bar Chart]
Natural gas supply is plentiful and inventories are building. This is likely to pressure its price and the shares of the companies that explore, develop and produce it could suffer as well. Mild weather conditions are also dampening demand as air conditioners remain on light duty and their associated electrical demand remains subdued. 
ETF Portfolio Updates
In accordance with our Seasonal Sell Signal Alert for DJIA and S&P 500, long positions in SPDR Consumer Discretionary (XLY), SPDR Financial (XLF), SPDR DJIA (DIA) and SPDR S&P 500 (SPY) were all closed out of the portfolio using their respective average prices on May 3. Selling this early in May ultimately proved ill-advised as the major indexes went on to log respectable full-month gains. However, because technology and small-cap positions remained in the ETF Portfolio, these positions did benefit nicely.
In preparation for the end of NASDAQ’s “Best Eight Months,” stop losses have been raised significantly for IYW, XLK, IWM and QQQ. See table below for exact values. When we issue our NASDAQ Seasonal Sell signal, we will close these positions out of the portfolio.
Defensive positions in XLV, XLU, TLT, AGG and XLP are on Hold. When we issue NASDAQ’s Seasonal Sell signal we will reevaluate these positions and may increase the size of these positions.
Short trade ideas, IYT and XLB are around unchanged as of yesterday’s close. XLB was shorted yesterday when it traded above $60.40 intraday. SPDR Financials (XLF) has been rallying, but has not yet traded at or near $29.26, the price we would like to short it at. IYT and XLB short positions are on Hold.
[Almanac Investor ETF Portfolio – June 6, 2018 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in AGG, IBB, IWM, QQQ, TLT, XLU and XLV.