ETF Trades & NASDAQ’s Best Eight Months: Technology Shares Stall
By: Christopher Mistal
June 03, 2021
NASDAQ’s Best Eight Months Update
As the number of vaccines administered has continually climbed and COVID-19 cases have fallen, traders and investors have shifted from stay-at-home stocks to reopening stocks. As a result, technology shares have taken a breather this year. Even though they have eased from previous highs, the Invescos QQQ (QQQ) position held in the Tactical Seasonal Switching Strategy was still up 14.0% as of yesterday’s close since last November. 
[NASDAQ Daily Bars and MACD Sell Indicator Chart]
In the chart above, NASDAQ’s essentially sideways trading since February is clearly visible in the upper pane. In the lower pane the current status of our Seasonal MACD Sell indicator remains positive but is slowly fading. As of today’s close, it would take a one-day loss of 348.15 NASDAQ points (2.56%) to turn MACD negative.
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/or 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 setup. XNG has been rallying since last October with only the briefest of pauses along the way. Expanding energy demand mainly due to the reopening economy has been driving energy costs higher and in turn the stocks that constitute XNG higher. 
Natural gas and crude oil both plummeted last year and their rebounds only appear to be gathering momentum with the new administration taking action to reduce carbon emissions over the long term by terminating leases and pipeline projects. The market appears to be factoring in increasing demand along with the potential for reduced supply in the not-too-distant future which is not the ideal setup to short a sector.
[NYSE ARCA Natural Gas Index (XNG) Weekly Bars and Seasonal Pattern]
Sector Rotation ETF Portfolio Updates
Three bullish and one bearish Sector seasonalities come to an end in June. Starting at the top of the table on the bottom of page 92 in the 2021 Stock Trader’s Almanac, the bullish trade based upon XNG comes first. Our correlating ETF position, first presented in January, First Trust Natural Gas (FCG), traded above its auto-sell in February and was closed out for a relatively quick 25.2% gain excluding any trading costs or dividends.
The next seasonality to end is a bearish period for gold and silver stocks based upon the Gold and Silver index (XAU). We passed on this setup earlier as inflation concerns muddled the fundamental outlook and the technical setup appeared less than ideal. This decision proved prudent as XAU rallied along with gold and silver during this time. Positions in SPDR Gold (GLD) and iShares Silver (SLV) have advanced since last update and are on Hold.
Lastly, we come to the Consumer sector, Discretionary and Staples. SPDR Consumer Discretionary (XLY) was up 12.8% at yesterday’s close and is on Hold. We will close out XLY when we issue NASDAQ’s Seasonal MACD Sell signal. In the meantime, XLY’s stop loss has been raised to a relatively tight $168.28. SPDR Consumer Staples (XLP) however, can be considered on dips below a buy limit of $69.70. Staples has a solid historical record of weathering the “Worst Six Months” well with a combination of a high frequency of gains and average performance even before considering any dividends paid.
iShares DJ US Tech (IYW) is on Hold. This position will be closed out when we issue NASDAQ’s Seasonal Sell. IYW’s stop loss has been raised to a snug $90.62.
In addition to XLP, SPDR Healthcare (XLV), iShares NASDAQ Biotech (IBB) and SPDR Utilities (XLU) can all be considered on dips below their respective buy limits. Similar to consumer staples, these sectors have a solid historical tendency to hold up and/or outperform during the Worst Months.
Wrapping up the Sector Rotation portfolio are Global X Copper Miners (COPX) and United States Copper (CPER). COPX and CPER are on Hold. Stop losses have been raised as copper has historically reached a peak in May and/or early-June.
[Almanac Investor Sector Rotation ETF Portfolio – June 2, 2021 Closes]
Tactical Seasonal Switching Strategy Updates
We will continue to maintain a neutral bias in the Tactical Seasonal Switching portfolio until NASDAQ’s Seasonal MACD Sell triggers. At that time the portfolio will shift to a conversative stance for the balance of the Worst Months. Barring another sizable sell off, the odds of another blowout Worst Months like last year are historically not great compared to the likelihood of the more typical sideways and volatile trading.
Bond positions, AGG and BND can still be considered on dips below their respective buy limits. Invescos QQQ (QQQ) is on Hold. Disappointingly, iShares Russell 2000 (IWM) was stopped out on May 12 when it closed below $212.00. Nonetheless, IWM was still up nearly 29% since last November. 
[Almanac Investor Tactical Seasonal Switching Strategy ETF Portfolio – June 2, 2021 Closes]