Tactical Seasonal Switching Strategy Update: More Bank Jitters Strike
By: Jeffrey A. Hirsch & Christopher Mistal
April 25, 2023
As of today’s close, slower moving MACD indicators applied to DJIA and S&P 500 are negative (arrows in the charts below point to a crossover or negative histogram on the slower moving MACD used by our Seasonal Switching Strategy to issue a sell signal). We are issuing our Best Six Months MACD Seasonal Sell signal for DJIA and S&P 500. NASDAQ’s “Best Eight Months” lasts until June.
[DJIA Daily Bar Chart]
[SP500 Daily Bar Chart]
Almanac Investor Tactical Seasonal Switching ETF Portfolio Trades
SELL SPDR DJIA (DIA) and SPDR S&P 500 (SPY) positions. For tracking purposes these positions will be closed out of the portfolio using their respective average prices on April 26. 
Continue to HOLD Invesco QQQ (QQQ) and iShares Russell 2000 (IWM) as NASDAQ’s “Best Eight Months” ends in June.
For this “Worst Months” period we are going to offer some low-fee options where to put cash from the positions that are being closed out ranging from relatively low-risk/low-reward to higher-risk/potentially higher reward. Please, consider your individual risk tolerance and investment objectives when choosing.
Consider establishing a partial position in iShares Short Treasury Bond (SHV) with a Buy Limit of $110.45
Consider establishing a partial position in iShares 0-3 Month Treasury Bond (SGOV) with a Buy Limit of $100.55.
Although we would consider SHV and SGOV to be low-risk/low-reward options given their relatively stable prices, they currently have quite respectable yields. When considering SHV and SGOV, please note that interest rates were still near zero just a little more than one year ago. The trailing 12-month yield of SHV and SGOV is still being impacted by the Fed’s rapid increase in interest rates over the last year.
Consider establishing a partial position in Vanguard Total Bond Market (BND) with a Buy Limit of $75.36
Consider establishing a partial position in iShares Core US Aggregate Bond (AGG) with a Buy Limit of $101.68.
We would consider BND & AGG to be moderate-risk/moderate-reward. Prices for BND and AGG have historically been more volatile than SHV and SGOV.
Consider establishing a partial position in iShares 20+ Year Treasury Bond (TLT) with a Buy Limit of $109.10. TLT’s holdings are more concentrated than the holdings of BND or AGG and its price has historically moved in a greater range. Should the U.S. slip into a recession and interest rates decline substantially, TLT could experience an outsized price advance relative to other bond ETFs. However, should a recession be avoided, and/or inflation accelerates, TLT could test its price lows of last October if the Fed is forced to raise rates even further. TLT is likely best for aggressive traders with a higher risk tolerance.
Lastly, consider a position in cash and/or a money market fund. The Fed has aggressively raised rates, and options yielding 4% or more are available. An allocation to cash or a money market fund will likely be the least nerve-racking position should market volatility spike during the “Worst Months.” It also has the potential advantage of making the summer months all that much more enjoyable. 
Traders/investors following the Best 6 + 4-Year Cycle switching strategy detailed on page 64 of the Stock Trader’s Almanac 2023 do not need to heed this Seasonal Sell signal. However, it is still a good reminder to review existing holdings and consider a more cautious stance.
[Almanac Investor Tactical Switching Strategy Portfolio – April 25, 2023 Closes]
Almanac Investor Sector Rotation ETF Portfolio Trades
Sell iShares DJ Transports (IYT), SPDR Industrials (XLI), and SPDR Materials (XLB) as correlating seasonalities end in May. For tracking purposes IYT, XLI, and XLB will be closed out of the portfolio using their respective average prices on April 26.
All remaining holdings in the Sector Rotation Portfolio are on Hold.
[Almanac Investor Sector Rotation ETF Portfolio – April 25, 2023 Closes]
Today’s Seasonal MACD Sell Signal for DJIA and S&P 500 marks the early beginning of the “Worst Six Months.” We do not simply sell and go away. Instead, today’s trades are the start of tactical adjustments that will be made in the portfolios. Between now and when NASDAQ’s Seasonal MACD Sell Signal triggers (earliest it can trigger is on June 1), the portfolios will be shifted toward a neutral stance. Positions that have historically performed well during the “Worst Months” will be held along with positions that correlate to NASDAQ and Russell 2000. 
All current stock and ETF holdings will be reevaluated in upcoming email Alerts. Weak or underperforming positions may be closed out, stop losses may be raised, new buying may be limited, and we will evaluate the timing of adding positions in sectors that perform well in the Worst Six Months and presenting you with a new basket of defensive stocks.