As of today’s close, MACD indicators applied to DJIA and S&P 500 are positive. S&P 500 is positive by the widest margin and expanding (see blue arrow in second chart below). DJIA’s MACD indicator reflects the way DJIA has traded over the last four sessions: flat. Based upon today’s closes it would take a one-day S&P 500 decline of 215.02 points (5.25%) to turn its MACD indicator negative. DJIA’s one-day decline is much smaller at just 0.64% (213.92).
Continue to hold long positions associated with DJIA’s and S&P 500’s “Best Six Months.” We will issue our Seasonal MACD Sell signal
when corresponding MACD Sell indicators applied to DJIA
and S&P 500 both crossover and issue a new sell signal. We are
not issuing the signal at this time. Refer to the
April Outlook for a primer and refresher on the system.
Portfolio Updates
Over the last four weeks since last update through yesterday’s close, S&P 500 climbed 4.6% higher while Russell 2000 slide 2.7% lower. During the same time period the entire portfolio climbed a respectable 1.5% higher excluding dividends and any fees. Overall portfolio performance was held in check by a still sizable cash position and weakness in some small-cap positions. The majority of the portfolio’s gains came from our Large-cap stocks which advanced 5.9% due to strength in energy and utilities. Mid-cap stocks inched 0.8% higher on average while our Small-cap portfolio lagged, declining 0.6%.
Due to broad market small-cap weakness and the stabilization of 10-year Treasury yields, just three of the nine Small-cap portfolio holdings advanced over the last four weeks. Avid Tech Inc (AVID), KB Home (KBH) and Lemaitre Vascular (LMAT) enjoyed a gain since last update. The housing market has been making record price headlines on tight supply and strong demand which continues to aid homebuilders like KBH. Financials paused as the yield curve steepening that took place earlier in the year appears to have taken a breather.
Mid-caps were relatively quiet over the period with some positions enjoying modest gains while others were slightly lower. Taylor Morrison (TMHC) and Werner Enterprises (WERN) racked up most of the Mid-cap portfolio gains through yesterday’s close. TMHC is also a homebuilder while WERN is in the transportation sector. Both have been hot but are exhibiting some weakness today. JetBlue Airways (JBLU) has surged back to the price it was at before the pandemic effectively shut down most air travel over a year ago. From here any additional gains are likely to be slower as the industry continues to slowly recover.
With the exception of Amdocs (DOX), every position advanced over the last four weeks since last update. Success in the Large-cap portfolio was primarily the result of energy and utility related positions rebounding nicely in March. Utilities had sold off rather briskly as rates rose. This weakness appears to have been the typical seasonal low and the sector is off to a strong start for the remainder of its seasonally favorable period.
DOX was on track for a gain but got knocked down by a short seller’s report released on March 31. Management responded in a brief statement the following day and shares of DOX have remained above its stop loss and the low of $70.05 from March 31 has not been breached. DOX has been slowly recovering the losses. We will officially continue to Hold DOX as the short-sellers report appears to not be having a major and/or lasting effect on the company.
Kansas City Southern (KSU) has agreed to merge with Canadian Pacific (CP) in a stock and cash deal that was announced on March 21. Full details can be found on KSU’s website. KSU shareholders would receive $90 per share in cash and 0.489 shares of CP for each KSU share held. Thus far the response has been positive, and the combined companies would effectively connect all of North America. Hold KSU.
Please see table below for specific stop losses and current advice for each position in the portfolio. All other positions not already mentioned are on Hold. As a reminder, dividend paying and/or generally defensive positions held in the portfolio are shaded in light grey.