ETF Trades & NASDAQ’s Best Eight Months: “Pass” & On Hold
By: Christopher Mistal
June 06, 2019
NASDAQ’s Best Eight Months Update
May proved to be a challenging month for the market and NASDAQ was not spared from damage during the month. The tech-laden index shed 7.9% in the month. This was worse than DJIA’s 6.7% decline and S&P 500’s 6.6% loss. Nonetheless, NASDAQ’s “Best Eight Months” last through June and thus far June has been much kinder with NASDAQ reclaiming over 2% of May’s losses already (as of mid-day June 6).
[NASDAQ Daily Bars and MACD Sell Indicator Chart]
In the chart above, NASDAQ’s tough May and its recent rebound are visible. NASDAQ’s MACD Sell indicator was negative and trending lower throughout the entire month of May, but recent strength has the indicator reversing that trend. Because NASDAQ’s MACD indicator was negative at the start of June, we are looking for a new sell signal to issue our Seasonal MACD Sell for NASDAQ. Before this can occur, MACD will need to first turn positive, which could happen in the next few trading days. 
When NASDAQ’s MACD Sell indicator turns negative again, 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 Portfolios. Until that time, all related positions are on Hold.
June Sector Seasonalities
There is only one new Sector Seasonality that begins in June, a bearish period for natural gas stocks that is based upon the NYSE ARCA Natural Gas Index (XNG). We are going to pass on this trade opportunity this time around as it looks like the stocks and the commodity could be closer to a bottom than a top. Natural gas, the commodity peaked at over $4.50 per mmBTU back in November/December of last year and has fallen to less than $2.40 per mmBTU this week. As a result, XNG is also not very far from its 52-week lows from last December.
[NYSE ARCA Natural Gas Index (XNG) Weekly Bars and Seasonal Pattern]
Sector Rotation ETF Portfolio Updates
In accordance with our Seasonal MACD Sell Alert for DJIA and S&P 500, positions in SPDR Financial (XLF), SPDR Industrials (XLI), SPDR Materials (XLB) and iShares DJ Transports (IYT) were closed out using their respective average prices back on May 2. As of yesterday’s close, only XLB was modestly higher while the others are lower now than one month ago.
During May’s selloff, positions in United States Copper (CPER), Global X Copper Miners (COPX), iShares NASDAQ Biotech (IBB), SPDR Energy (XLE) and First Trust Natural Gas (FCG) were stopped out. XLE and IBB are modestly higher now, but CPER, COPX and FCG are lower now than when they were closed out of the portfolio.
Last month’s new short trade ideas in gold and silver are struggling. SPDR Gold (GLD) was shorted on May 17 and was stopped out on June 3. iShares Silver (SLV) was shorted on June 3 and is near its stop loss. Throughout the year both had been slipping lower as trade and tariffs seemed to have little impact on price. However once the Fed began signaling its willingness to cut interest rates to support growth, gold and silver both responded with moves higher. We will continue to hold the short position in SLV and a position in DB Gold Double Short (DZZ) with a keen eye on stop losses. The recent spike higher by gold and silver could unwind just as quickly as it occurred especially if the market rebounds and the odds of a rate cut decline.
Remaining defensive positions in XLP, XLV and XLU are on Hold. iShares US Technology (IYW) is also on Hold.
[Almanac Investor Sector Rotation ETF Portfolio – June 5, 2019 Closes]
Tactical Seasonal Switching Strategy Updates
Our Seasonal MACD Sell Signal for DJIA and S&P 500 was nearly perfectly timed. It was the cue to lighten up on long exposure and begin adding some defensive positions. Currently the Tactical Seasonal Switching ETF Portfolio is essentially neutral. SPDR DJIA (DIA) and SPDR S&P 500 (SPY) positions have been closed and positions in bond ETFs AGG, BND and TLT have been established. Technology and small-cap related positions also remain as they historically remain in favor through June.
All positions in the Tactical Seasonal Switching Strategy portfolio are on Hold. Defensive positions moved higher while the market was retreating in May. NASDAQ and Russell 2000 positions will be held until when NASDAQ’s Seasonal MACD Sell Alert triggers.
[Almanac Investor Tactical Seasonal Switching Strategy ETF Portfolio – June 5, 2019 Closes]