Seasonal MACD Update: Uncertainty Remains Elevated
By: Christopher Mistal
October 08, 2020
As of today’s close, our Seasonal MACD Buy Signal is on Hold. Our 8-17-9 MACD “Buy” indicator applied to DJIA, S&P 500 and NASDAQ all turned positive in late September. 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. These criteria are not satisfied.
[S&P 500 MACD Chart]
Although the major indexes are currently modestly positive for the month of October through today’s close, recent trading appears to suggest the full month could prove bumpy and a better buying opportunity is yet to come. Uncertainty remains elevated. Fiscal stimulus is on, then it is off and then it is on again. Election Day also appears to still be an unknown. Polling data seems to work well for predicting the popular vote outcome, but not as well when it comes down to Electoral College votes.
Our “Best Months” Seasonal Switching Strategy has outperformed over the long-term despite years like 2020 when seasonality was temporarily overridden. September market weakness along with a choppy start to October suggest seasonality is returning. Should this prove accurate then waiting for our Seasonal MACD Buy signal is the prudent decision.