In addition to bullish election year and political alignment forces, broader market seasonality is also bullish. The “Best Months” begin with November and it is the #1 DJIA and S&P 500 month in election years. The best six-month consecutive span, November to April, has seen S&P 500 advance 77.0% of the time with an average gain of 7.1% in all years since 1950.
Despite numerous bullish factors, some market volatility and choppy trading are still possible. The Fed did cut interest rates by 0.25% today and will likely do so again at their December meeting, but the 10-year Treasury yield and mortgage rates have been steadily trending higher since mid-September. Softening economic growth and labor metrics appear to be the primary drivers for the Fed’s interest rate cuts. Inflation has retreated from its peak yet remains stubbornly above 2%. Geopolitical concerns remain numerous as well and now that the election has passed, the market could shift its focus back there.
In the near-term we anticipate the market will continue to work its way higher with more new all-time highs through yearend and most likely into early 2025. Post-election years have improved since 1985 with DJIA up 8 of the last 10 with an average gain of 17.2%. Three straight years of double-digit gains is impressive and not as farfetched as it may sound. S&P 500 did this as recently as 2019 to 2021. Prior to that from 2012 to 2014.
Sector Rotation ETF Portfolio Updates
Based upon data on page 94 of the Almanac, there are no sector seasonalities beginning or ending in November.
Per our October 11 email Issue when the
Seasonal MACD Buy Signal for DJIA, S&P 500 and NASDAQ triggered, all open sector ETF positions have been added to the Sector Rotation portfolio using their respective average daily prices on October 14. Existing positions in
iShares Biotech (IBB) and
iShares US Technology (IYW) were also added to on October 14 and their respective purchase prices have been updated to reflect the additional purchases. Late October market weakness offered more patient traders even better prices to establish positions in these ETFs.
Of the 11 new ETFs presented on October 3, six were higher and five were lower as of the market’s close on November 6. iShares Semiconductors (SOXX) is the weakest position, down 4.3%. SOXX gained slightly more than 2% today. The top performing position is SPDR Consumer Discretionary (XLY), up 6.3%. XLY extended that gain further today as well. Second best, SPDR Financial (XLF), up 6.2% also deserves a mention however, it did retreat modestly today. All ETFs presented on October 3 can still be considered at current levels or on dips. Suggested stop loss and auto sell prices have been updated to reflect the price the corresponding ETF position was added to the portfolio.
Gold and gold-mining stocks have had a solid 2024 as the precious metal climbed to numerous all-time highs. After suffering some sizable losses yesterday, VanEck Gold Miners (GDX) and SPDR Gold (GLD) did rebound today, but gold’s record setting run could be under pressure. Election uncertainty has been resolved, the 10-year Treasury bond yield is trending higher, and the U.S. dollar is also strengthening. Seasonal strength in gold and silver stocks has historically ended in December. As a result, GDX and GLD are on Hold and their stop losses have been increased.
Over the last two months we have attempted to add iShares Bitcoin Trust (IBIT) to the portfolio. Finding a buy limit proved more challenging than usual as Bitcoin trades 24/7 while IBIT does not. Bitcoin has demonstrated a reasonably solid Q4 rally during its lifetime and a strong tendency for outsized gains following presidential elections. Rather than fuss and nitpick over a buy limit, we are going to add IBIT to the portfolio on November 8 using its average daily price. IBIT can be purchased at or near its current price up to a limit of $43.75.
Tactical Seasonal Switching Strategy ETF Portfolio Updates
Per our October 11 email Issue when the
Seasonal MACD Buy Signal for DJIA, S&P 500 and NASDAQ triggered,
Invesco QQQ (QQQ),
iShares Russell 2000 (IWM),
SPDR DJIA (DIA) and
SPDR S&P 500 (SPY) have been added to the portfolio using their respective average daily prices on October 14.
QQQ, IWM, DIA, and SPY can still be considered on dips below their respective buy limits, if not already purchased. Based upon November’s recent 21-year history and its election-year pattern since 1950, the next opportunity could be ahead of Thanksgiving as the market has tended to consolidate gains from around Election Day through mid-month.
All bond ETFs, TLT, AGG, BND, SHV, and SGOV were also closed out of the Tactical Seasonal Switching portfolio on October 14. Excluding dividends and any trading fees, all five positions were closed for modest gains. TLT, AGG, and BND have all traded lower as long-dated yields continue to trend higher.
Disclosure note: Officers of Hirsch Holdings Inc hold positions in IBB, IBIT, QQQ, SPY & IWM in personal accounts.
Stock Portfolio Updates
Over the past four weeks through yesterday’s close (November 6), S&P 500 advanced 2.4% while Russell 2000 climbed 8.7% higher. Over the same period the entire stock portfolio gained 3.4% excluding dividends, interest on cash, and any trading fees. With the addition of the
17 new stocks presented on October 17, the cash position in the portfolio has been nearly cut in half. With earnings season wrapping up, we are currently considering a second basket of stocks, potentially in a week or two. We will also retain some cash to trade the Free Lunch basket (page 116 of Almanac).
On average, Large caps were the best, advancing 8.4%. Mid caps were second best climbing 5.3% while Small caps retreated a modest 0.6%. Emcor Group Inc (EME) and Leonardo DRS (DRS) continued to shine with solid gains for the large cap portion of the portfolio. Mid caps benefited from InterDigital (IDCC) surging higher on a massive 375% upside earnings surprise announced on October 31. Per standard trading policy, half of the original position in IDCC was sold when it traded above $173.20 (double its original price) for the first time on November 6. EME, DRS and IDCC are on Hold.
Super Micro Computer (SMCI) appeared to be on the road to recovery, but when an outside auditor walked away, fears of delisting fiercely returned, and its price was quickly cut in half. SMCI could get delisted, but the degree of certainty is likely far less than the recent price move suggests. We have taken profits on SMCI twice already. The remaining position is small and could quickly rebound if and/or when SMCI regains full listing compliance. SMCI is on Hold. At this time, given the extreme volatility SMCI is exhibiting, we would not consider additional purchases.
Shifting attention to the seventeen new positions in the stock portfolio, only three were modestly lower as of the market’s November 6 close and fourteen were higher. POWL, CUK, IESC, and GRMN were all up double digits or more. These four all gapped higher sometime in the last two weeks. These gaps in daily bar charts often end up getting filled or partially filled. Buy limits for POWL, CUK, IESC and GRMN have been adjusted and appear in the table below.
Sell Universal Stainless (USAP) at breakeven or better. For tracking purposes, we will close this position out if it trades above $44. USAP is being acquired for $45 per share, but the transaction is not expected to settle until sometime in Q1 of next year. The capital can likely be better utilized elsewhere.
Previously mentioned seasonal weakness ahead of and after mid-November could provide the next opportunity to add new stock ideas should they dip below their respective buy limits.
Please see the table below for updated advice, stop losses and buy limits where applicable.
Disclosure note: Officers of Hirsch Holdings Inc hold positions in AMAL, CUK, CXDO, FIX, GRMN, IBN, IESC, MCY, NECB, OSIS, POWL, SPXC, STRL, SVM, TRN, USAP, and WLDN in personal accounts.