Seasonal MACD Update: Indicators Reset
By: Jeffrey A. Hirsch & Christopher Mistal
October 22, 2020
As of today’s close, our Seasonal MACD Buy Signal is still on Hold. Our 8-17-9 MACD “Buy” indicators applied to DJIA, S&P 500 and NASDAQ are now negative. Recent market weakness, noted in last update, has persisted long enough to produce a sell crossover. This crossover on all three indexes has reset MACD. We will continue to monitor MACD for its next positive crossover. 
The criteria to issue our Seasonal MACD Buy Signal:
1. A new buy signal crossover using our 8-17-9 MACD indicator AND
2. The crossover must occur on or after the first trading day of October AND
3. DJIA, S&P 500 and NASDAQ MACD indicators must all be in agreement.
Based upon today’s closing prices, same-day gains of at least 533.98 points (1.88%) for DJIA, 76.66 points (2.22%) for S&P 500 and 453.51 points (3.94%) for NASDAQ are needed to satisfy the above criteria.
[S&P 500 MACD Chart]
Up 85% of the Time: Halloween Trading Strategy Treat Next Week
Next week provides a special short-term seasonal opportunity, one of the most consistent of the year. The last 4 trading days of October and the first 3 trading days of November have a stellar record the last 26 years. From the tables below:
Dow up 77% of the time, 20 of last 26 years, average gain 2.05%, median gain 1.45%.
S&P up 85% of the time, 22 of last 26 years, average gain 2.11%, median gain 1.60%.
NASDAQ up 85% of the time, 22 of last 26 years, average gain 2.67%, median gain 2.30%.
Russell 2000 up 77% of the time, 20 of last 26 years, average gain 2.31%, median gain 2.55%.
Many refer to our Best Six Months Tactical Seasonal Switching Strategy as the Halloween Indicator or Halloween Strategy and of course “Sell in May”. These catch phrases highlight our discovery that was first published in 1986 in the 1987 Stock Trader’s Almanac that most of the market’s gains have been made from October 31 to April 30, while the market tends to go sideways to down from May through October.
Recent market weakness has held off our Seasonal MACD Buy Signal so far, but it could trigger anytime now. Uncertainty abounds with surging covid-19 cases, a heated presidential election and persistently elevated unemployment. However, each day that passes is one day closer to a covid-19 vaccine. Interest rates are low and ample liquidity is available to support the market and the economy. Additional fiscal stimulus also appears to be coming soon. Debate continues on the amount, but both parties do appear to agree it is needed in one form or another.
[DJIA Table]
[S&P 500 Table]
[NASDAQ Table]
[Russell 2000 Table]