NASDAQ’s Best Eight Months Update & Basket of Defensive Stocks
By: Christopher Mistal
June 14, 2018
As of the market’s close today, the slower moving MACD indicator applied to NASDAQ remains positive. NASDAQ’s strong momentum has led to a string of new all-time highs and correlating positions still held in the ETF Portfolio continue to perform. With NASDAQ’s gain today, a one-day decline of over 2.3% (179.36 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.
Defensive Stocks for the “Worst Months”
These 21 stocks were selected from the top performing sectors for the “Worst Six Months.” The sectors we focused upon were Healthcare, Information Technology, Consumer Staples and Utilities. Due to their defensive nature and interest rate sensitivity, many consumer staples and utilities stocks are currently not in favor and many do not exhibit the technical strength we frequently require. But, this also means many of these stocks are not trading at 52-week or all-time highs and have more attractive valuations than other corners of the market. In a bid to potentially further reduce risk; this basket is comprised mostly of large-cap stocks with valuations in excess of $5 billion. Only four mid-cap trade ideas survived the screening process.
We first sifted through the universe of nearly 8,000 U.S. traded stocks for those with a market cap of at least $1 billion and average daily volume of 100,000 shares or more on average over the past twenty trading sessions. Then we winnowed the list down to only those stocks with relatively low price-to-sales and price-to-earnings ratios. From there we searched for stocks that were exhibiting consistent and/or growing revenue and earnings trends.
We then dug into numerous individual company charts before settling on these final 21 stocks. Our underlying theme was to find reasonably priced stocks within the four sectors that have exhibited the most consistent returns during the “Worst Six Months.” Yields for this basket of stocks range from a low of 1.75% by Church & Dwight (CHD) to a high of 5.48% by Southern Co (SO). The entire basket average yield is 2.81%.
We will look to add these 21 stocks, in the table below, near current levels. We will allocate a hypothetical $2000 from the cash position in the portfolio to each position. For each stock we have provided the ticker, name, sector, PE, price-to-sales ratio, market value, a dividend yield and a suggested buy limit and stop loss. 
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[Almanac Investor Defensive Stock Basket June 13, 2018 Closes]