Faster moving MACD “Buy” indicators applied to DJIA, S&P 500 and NASDAQ are all positive as of today’s close. With all three indices confirming, we are issuing our Seasonal MACD Buy Signal.
Throughout the balance of the year, and even more so during the “Worst Months,” we have maintained a cautious/defensive outlook and approach. New longs were substantially limited, and cash was a preferred holding. While our seasonal research suggested a market turn sometime in late-Q3 or early Q4. This turn may have finally arrived. The Fed has briskly raised its key rate and is closer to the end of a significant tightening cycle. Treasury yields have eased, and the U.S. dollar appears to be softening while signs of growth slowing and inflation easing continue to accumulate. These developing conditions hint at a less aggressive Fed.
Make no mistake headwinds remain numerous, and volatility is likely to persist in the near-term with some back fill of recent gains a possibility. But the market is forward looking, and the worst is either past or will soon pass. Q3 earnings expectations have been sufficiently lowered that it would not be at all that surprising to see a sizable number of “surprise beats” when earnings season commences in earnest around mid-October.
Seasonal factors have been well-aligned throughout the year. Though never a certainty, we will stick with the system and begin establishing new long positions.
Tactical Seasonal Switching Strategy ETF Portfolio Trades
Buy SPDR DJIA (DIA), SPDR S&P 500 (SPY), Invesco QQQ (QQQ), and iShares Russell 2000 (IWM) in the Almanac Investor Tactical Seasonal Switching Strategy Portfolio. These positions will be equally weighted in the portfolio. Buy limits for DIA, SPY, QQQ and IWM are initially today’s closing price plus 1% (closing price times 1.01 = buy limit). For tracking purposes, these ETFs will be added to the portfolio using their respective average prices on Wednesday, October 5. This price will be calculated by summing the high and low prices and dividing by two.
We will continue to hold defensive “Worst Months” positions in iShares 20+ Year Treasury Bond (TLT), iShares Core US Aggregate Bond (AGG) and Vanguard Total Bond Market (BND). We will be adding tight stop losses to these positions in Thursday’s scheduled email Alert.
Sector Rotation ETF & Stock Portfolios
We anticipate releasing our annual Sector Rotation ETF and New Stock baskets in this week’s email Alert, currently scheduled to be released after the close on October 6.