Stock Portfolio & NASDAQ’s MACD Updates: Fed Takes It Easy
By: Christopher Mistal
June 20, 2019
With some help from the Fed’s ever-increasing dovish comments, the market has continued to exhibit strength this month. Even news that Iran shot down a U.S. drone failed to deter the bulls today. S&P 500 traded and closed at new all-time highs today while DJIA and NASDAQ moved closer to doing the same. The market has recovered its losses from May and slightly more but considering it has been approximately seven weeks the move is still not all that impressive. Confirmation of a decisive breakout is still lacking. New highs across the major indexes would be the first sign. Small-cap strength would be another sign that is still missing with the Russell 2000 sorely lagging.
As of the market’s close today, both the faster and slower moving MACD indicators applied to NASDAQ were positive. With NASDAQ’s gain today, a one-day decline of 10.0% (801.84 points) would be needed to turn NASDAQ’s MACD Sell indicator negative. A more plausible scenario will be a string of sideways and/or lower trading sessions. 
[NASDAQ Daily Bar Chart with MACD Sell Signal]
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 Portfolios. We will also review current holdings in the Stock Portfolio and act accordingly. Until that time, all technology and small-cap related positions in the portfolios are on Hold.
Stock Portfolio Updates
In the time since last update through yesterday’s close the Almanac Investor Stock Portfolio advanced 0.7% compared to a 0.1% gain by S&P 500 and a 1.3% loss from the Russell 2000. Large-cap holdings contributed the bulk of the advance across the entire portfolio, advancing 3.8%. Mid-caps also performed adding 0.8%. Small-cap portfolio positions did not do as well, down 0.7%. Mix Telematics (MIXT) was responsible for most of the small-cap decline. MIXT last earnings release is likely the culprit for is recent weak performance. Earnings did beat, but revenues were less than expected. Looking forward estimates remain firm and the company could rebound quickly, especially if small-caps in general return to favor.
A quick review of mid-cap holdings reveals three positions with gains since last update and one that has slipped lower. All three of the advancing positions are from last years defensive basket. Algonquin Power (AQN) advanced nearly 9.6%. NJ Resources (NJR) and One Gas (OGS) also advanced handsomely. Verint Systems (VRNT) remains positive since being added to the portfolio but is off its highs from a month ago. Most of VRNT’s recent weakness appears to be wide spread across its industry group, computer software-security. Many of the heavy hitters are also down after logging above average year-to-date gains during the first five months of the year.
Last but certainly not least, large-caps. This portion of the portfolio holds the largest concentration of defensive names. The best performing holding is Church & Dwight (CHD), up 53.2% excluding dividends. Abbott Labs (ABT) also enjoyed a notably gain of 7.1% since last update. However, there was one weak area in the large-cap portfolio, copper-related stock Freeport-McMoRan (FCX) was stopped out in mid-May.
As we await the arrival of NASDAQ’s Seasonal MACD Sell signal we will continue to maintain a neutral bias in the portfolios. Continue to Hold existing positions and limit new buying. Also consider taking some profits and take note of updated stop loss suggestions in the portfolio table below.
[Almanac Investor Stock Portfolio Table – June 19, 2019 Closes]