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.
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 3.
Continue to HOLD Invesco QQQ (QQQ) and iShares Russell 2000 (IWM) as NASDAQ’s “Best Eight Months” ends in June.
Once again for this “Worst Months” period we are going to present some low-fee ETFs where cash from the positions that are being closed out can be used 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 $110.15.
Consider establishing a partial position in iShares 0-3 Month Treasury Bond (SGOV) with a Buy Limit of $100.35.
Although we would consider SHV and SGOV to be low-risk/low-reward options given their relatively stable prices, they have respectable yields. With longer dated Treasury bond yields creeping higher and uncertainty as to when the Fed may begin reducing rates, our preferred funds are SHV and SGOV at this time.
Consider establishing a partial position in Vanguard Total Bond Market (BND) with a Buy Limit of $71.65.
Consider establishing a partial position in iShares Core US Aggregate Bond (AGG) with a Buy Limit of $96.65.
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 $91.50. TLT’s holdings are more concentrated than the holdings of BND or AGG and its price has historically moved in a greater range. Should long-dated interest rates decline substantially, TLT could experience an outsized price advance relative to other bond ETFs. However, should inflation accelerate and the Fed delays lowering rates, TLT could slide lower. TLT is likely best for aggressive traders with a higher risk tolerance.
Lastly, consider a position in cash and/or a money market fund. Options yielding 4% and more are widely 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 2024 do not need to heed this Seasonal Sell signal. However, it is still a good reminder to review existing holdings and consider a cautious stance.
Almanac Investor Sector Rotation ETF Portfolio Trades
Sell SPDR Health Care (XLV), iShares DJ Transports (IYT), SPDR Industrials (XLI), SPDR Materials (XLB) and Vanguard REIT (VNQ) as correlating seasonalities end in May. For tracking purposes XLV, IYT, XLI, XLB and VNQ will be closed out of the portfolio using their respective average prices on April 3.
SPDR Financial (XLF) and Global X Copper Miners (COPX) were sold when they traded above their respective auto-sell prices in March. iShares Biotech (IBB) was sold in accordance with last month’s update.
SPDR Utilities (XLU) was added to the portfolio on March 12 when it traded below its buy limit. XLU can still be considered on dips.
All remaining holdings in the Sector Rotation Portfolio are on Hold.
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 3 this year), 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.