Please take a moment and register for our members’ only webinar, May 2025 Outlook & Update on Wednesday April 30, 2025, at 2:00 PM EST here:

 

 

Please join us for an Almanac Investor Member’s Only discussion of recent market action with time for Q & A at the end. Jeff and Chris will cover their outlook for May 2025, review the Tactical Seasonal Switching Strategy ETF, Sector Rotation ETF, and Stock Portfolio holdings and trades. We will also share our assessments of the economy, tariffs, Fed, inflation, geopolitical events as well as relevant updates to seasonals now in play.

 

If you are unable to attend the live event, please still register. Within a day of completion, we will send out an email with links to access the recording and the slides to everyone that registers.

 

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4/24/2025: Dow 40049.95 | S&P 5472.11 | NASDAQ 17166.04 | Russell 2K 1952.82 | NYSE 18895.41 | Value Line Arith 10174.39

 

Seasonal: Neutral. Although May is the first month of the “Worst Six Months” for DJIA and S&P 500, NASDAQ’s “Best Eight Months” last until June and in post-election years, May has been better. Since 1950, in post-election years May ranks #4 for DJIA and S&P 500, #2 for NASDAQ and #1 for Russell 2000. Average gains in post-election year Mays range from 1.3% by DJIA to 3.6% by Russell 2000. 

 

Fundamental: Mixed. Next week Q1 Advance GDP will be released, but the Atlanta Fed’s GDPNow model is estimating a Q1 decline of 2.4% as of their April 24 release. Even their alternative, gold adjusted, model is forecasting a 0.4% decline. The unemployment rate has ticked up to 4.2% with 228,000 new jobs in March. Inflation is cooling again with easing energy prices but remains above the Fed’s 2% stated target. Does any of this really matter though? Tariff driven headline risk is still high. Negotiations are underway though no official new trade deals have been announced yet.

 

Technical: Bottom in? Early April’s waterfall decline did significant damage to technical indicators. Numerous support levels failed and “death crosses” appear on DJIA, S&P 500, NASDAQ, and Russell 2000 charts. However, it appears the healing process has begun. Indexes have bounced from the lows, at least partially retested them and could be tracing out a new “w” bottom pattern. Before this pattern can be called successful, resistance at old support levels will need to be overcome. Levels to watch are around DJIA 40500, S&P 500 5500, NASDAQ 17600. Above these levels are respective declining 50-day moving averages.

 

Monetary: 4.25 – 4.50%. It seems the Fed is not going to cut rates until it is ready to or the next crisis hits. As of today, April 24, there is essentially no chance for a rate cut in May and just a 62.7% probability of a cut in June according to the CME Group’s FedWatch Tool. They were late when inflation rapidly accelerated and are just as likely to be late on the opposite side of the curve.

 

Sentiment: Sinking. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 23.5%. Correction advisors are at 41.2% and Bearish advisors were at 35.3% as of their April 23 release. From the report, it was noted that Bullish advisors are currently at the lowest level since November 2008. Bearish advisors are at levels last observed around the fall of 2022 near the end of the bear market. The spread between bulls and bears is negative. Sentiment suggests reduced risk as those that wanted out of the market are out and in cash. But, with tariff uncertainty remaining it may still be reasonable to hold higher levels of cash.

 

The market’s bounce off the tariff turmoil is gathering some momentum and that is encouraging. Our Post-Election Year Seasonal Pattern chart below supports the continuation of this relief rally at least for the near term from now through sometime in the early-June to early-August timeframe. The continuing retreat in CBOE Volatility index (VIX) from around 60 back down to under 30 is also supportive.

 

 

On the positive side of the ledger, our January Indicator Trifecta was 2 out of 3 with the important January Barometer up, but the Santa Claus Rally was down. A positive January Barometer bodes well for the full year, but some significant damage has been done. The Dow’s December Closing Low indicator was breached in mid-January and after initially rallying the Dow fell considerably lower and remains below that level. 

 

In conjunction with the waterfall decline from the February high, February, March and Q1 all logged losses. April is also on track to register a loss with the S&P 500 down -2.3% at today’s close despite the sharp rally this week. With just four days left the Best Six Months (BSM) are down -4.0% for the S&P. When the market does not rally during the bullish season other forces are more powerful and when that season ends those forces may really have their say. Unless this rally continues to climb and puts April, the Best Six Months and the year in the black, the market is expected to struggle through Q3. (More on the implications of Down April and Down BSM below.)

 

Before our Dow and S&P Best Six Months Seasonal MACD Sell Signal Triggered on April 3 several stock and ETF positions were already stopped out. Following the April 3 BSM MACD Sell Signal we closed out the bulk of the Sector ETF portfolio, except Consumer Staples and Utilities and implemented stops on QQQ and IWM, which were subsequently stopped out. At that time, we added the basket of bond ETFs to the Tactical Seasonal Switching Strategy Portfolio. 

 

Last week we recommended some New ETF Trade Ideas that are currently working out well. These included buying back QQQ and IWM, buying more short-term bond ETFs SHV and SGOV on dips, adding to XLP and XLU and picking up the Euro, Yen, Swiss Franc and agriculture ETFs as hedges against the weakening U.S. dollar. So, we remain cautiously short-term bullish on stocks, yet diversified and defensive for the Worst Six Months and the current fluid political and geopolitical climate. Our 2025 Annual Forecast shifted April 3 to 50/50 for our base case of 8-12% gain and worst case scenario for flat to negative full-year performance with broad losses across most asset classes.

 

 

Several short-term bullish technical analysis indicators have been flashing green since the early April plunge on the tariff announcement and historic face-ripping rally a few days later, on the 90-day tariff pause news. The extreme volatility VIX spike above 50 and then retreating back below 30 is one. Another notably one was today’s Zweig Breadth Thrust. Based on the percent of advancing issues on the NYSE vs. the total of advancers plus decliners hitting a very low number and then quickly reversing. These abrupt changes in volatility and market breadth have a solid history of calling market bottoms

 

While these technical developments are quite constructive the nature of this decline and our other seasonal, post-election year and chart readings are keeping us skeptical. As you can see in the technical chart below of the S&P 500, today’s solid gains have yest to bring us back above the 5500-resistance level. This is the bottom of that failed W-1-2-3 swing bottom we were looking for at the beginning of April. It also in line with the bottom of the gap from the April 2 tariff announcement to the open the next day on April 3. If we can clear this level that would be constructive and suggest this relief rally can continue. But until we can take back the 200-day moving average and the election gap (orange circle) the market is likely to remain choppy through the summer.

 

 

Down April & Down Best Six Months 

 

Down Best Six Months is an ominous warning. S&P 500 has four days to rally 4.0% for the Best Six Months to turn positive. If the market can’t muster a rally that puts us back above the October 2024 close by the end of April the odds of further weakness increase. Bear markets ensued or continued in 14 of the last 16 down BSM since 1950. Only in 2009 and 2020 were the bear markets already over. But in those two instances the rally off the low was much greater than the current rally. The 6.5% DJIA rally off the 4/8/2025 pales in comparison to 2009’s 24.8% and 2020’s 30.9% rips. 

 

 

Finally, there is the concern that historically bullish April will also end up in the red. In the table below of all the years since 1950 when April was down for S&P 500 the market clearly struggles on average until Q4—though there are a few nasty Q4s in 1973, 1987 and 2000. Highlighted years in gray are most troubling. These are the years like 2025 where there was significant weakness at some point in Q1. 

 

 

Many of these years are down for Q1 as a whole, while a few have a big loss in one or more of the first three months of the year. All of them suffered further significant losses after the down April. Ten of these 12 were down on the year and nine were down substantially. So, we are not out of the woods yet.

 

In light of the these observations, we are comfortable sticking with our defensive Worst Six Months Strategy until we have more clarity in the economic and political arenas. For now, we sit tight and wait for a fatter pitch and more bullish indications.

 

 

Just one day after the announcement of surprisingly broad and larger than expected tariffs, the Seasonal MACD Sell signal for DJIA (and S&P 500) triggered. The initial shock of the tariff announcement saw DJIA drop nearly 4% on April 3 and then another 5.5% the following day. As a result of the brisk decline and only a modest rebound, DJIA’s 50-day moving average has fallen below its 200-day moving average (1) forming a “death cross.” Back in the old days from 1950-1982 it was a respectable bear market indicator, but not as much anymore as major market moves have sped up and recent “death cross” occurrences have tended, on average, to have modest or in some cases no additional losses after them.

 

As of the close on April 23, both the faster and slower moving MACD indicators applied to DJIA are positive (2) in response to the current market rebound. However, with market volatility still elevated, this signal could be just as quickly reversed as the last one that occurred on April 15. Significant technical damage has been done, and it is likely going to take time to repair.

 

 

During April DJIA recorded its second and third Down Friday/Down Monday (DF/DM) occurrences (3) of 2025. The weekly decline for April 4 was DJIA’s eighth worst weekly percent loss (-7.9%) since 1950 and third worst weekly point drop (-3269.04). Declines in that same week for S&P 500 (4) and NASDAQ were even greater with both suffering their worst ever weekly point losses. NASDAQ’s 10% drop was its tenth worst weekly percentage loss ever (5).

 

This week’s gains have bullishly recovered all of the losses from DJIA’s most recent DF/DM but given the headline driven nature of the market and the heightened levels of uncertainty the market has to contend with, more chop and volatility is not out of the question in the near term.

 

Weekly market breadth reached levels of extreme fear during the week ending April 4. Weekly Decliners outnumbered Weekly Advancers (6) by over 14 to 1. The last time this ratio was higher was in March of 2020, at the height of the market’s covid meltdown. Back then the ratio spiked over 15 to 1 in three out of four weeks. The recent spike suggests the lows could be in, at least in the near-term.

 

There was also a corresponding spike in New 52-week Lows (7) the week ending April 11 that supports the possibility that the market low is in. The last time New 52-week Lows were higher was during the last week of September 2022 when that year’s bear market ended for DJIA and then S&P 500 two weeks later. If uncertainty eases, look for Weekly New Lows to continue to retreat and Weekly New Highs to begin building.

 

Short-term Treasury yields continue to hold steady around 4.2% with the Fed still in “wait and see” mode with inflation. The overnight spike in longer-dated Treasury yields that likely contributed to the 90-day tariff pause decision on April 9, does not appear in the weekly data for the 30-year Treasury rate (8). Its yield appears to have reversed course, but it has only risen back to January levels. Stable or trending lower would be a more preferential situation for longer-term rates.

 

 

There is little doubt that a significant amount of uncertainty still hangs over the market, the U.S. economy, and the future of global trade. But based upon the retreat in CBOE Volatility index (VIX) from around 60 back down to around 30, our own waterfall decline research, and the Republican post-election year seasonal trend, the bottom could be in, at least in the short term. Additionally, the bounce, since the announcement last week that most of the tariffs were being paused for 90 days, has held and longer-dated Treasury bond yields appear to have calmed down.

 

 

Looking at the familiar S&P 500 Post-Election Year Seasonal pattern chart above, all of the patterns show some degree and duration of strength from around now through sometime between early June to early August, before the next bout of seasonal weakness could arrive. The 90-day tariff pause, if it does last the full length, would theoretically end in the first half of July and could be a potential catalyst for additional market weakness and volatility sometime in Q3.

 

Between now and then, we believe the market could give the Trump administration the “benefit of the doubt” and/or “until proven otherwise” with tariffs and associated negotiations. But the administration likely has a limited amount of time to start showing progress and announce new meaningful trade deals. Deals with Japan, and/or E.U. member countries are what we would consider meaningful.

 

Our “Best Six Months” MACD Seasonal Sell signal for DJIA and S&P 500 has triggered. NASDAQ’s Best Eight Months MACD Seasonal Sell signal has not triggered. The earliest it can trigger is June 2 this year. Based upon the prospects for a near-term rally, we are going to look to reestablish positions in Invesco QQQ (QQQ) and iShares Russell 2000 (IWM). QQQ can be considered on dips below a buy limit of $440.10. IWM can also be considered on dips with a buy limit of $182.75.

 

Consistent with our Seasonal Switching strategy short-duration bond ETFs, SHV and SGOV can also still be considered on dips. With the Fed determined to also “wait and see,” TLT, AGG, and BND are on Hold. Whether or not tariffs will result in inflation remains to be seen, but it does appear as though the bond market is embracing that possibility with higher long-term interest rates.

 

 

In consideration of the elevated risk that still exists in the market, we are going to look at new trades that have been working recently or could potentially benefit from the weakening U.S. dollar. Historically, commodities and foreign currencies have benefited from a softening dollar. The U.S. dollar has broken through key support around the 100 level and its 50-moving average is below its 200-day moving average confirming the bearish trend.

 

 

There are three currency ETFs that currently look attractive as the U.S. dollar weakens, FXE, FXY, and FXF. They represent the Euro, Japanese Yen and Swiss Franc respectively. FXF also tends to benefit from increases in gold price. FXE, FXF and FXY can all be considered on dips. Suggested buy limits and stop losses are in the table below.

 

Invesco DB Agriculture (DBA) provides exposure to coffee, live cattle, corn, cocoa, soybeans, wheat, sugar, lean hogs, feeder cattle and cotton via its futures contract holdings. DBA can be considered on dips below $26.40. If purchased, set an initial stop loss at $25.10.

 

Existing positions in XLP and XLU can also still be considered near current levels or on dips.

 

 

May officially marks the beginning of the “Worst Six Months” for the DJIA and S&P. To wit: “Sell in May and go away.” Our “Best Six Months Switching Strategy,” created in 1986, proves that there is merit to this old trader’s tale. A hypothetical $10,000 investment in DJIA compounded to a gain of $1,352,316 for November-April in 74 years compared to just $2,910 for May-October (STA 2025, page 54). The same hypothetical $10,000 investment in the S&P 500 compounded to $1,175,668 for November-April in 74 years compared to a gain of just $13,472 for May-October.

 

May has been a tricky month over the years, a well-deserved reputation following the May 6, 2010 “flash crash”. It used to be part of what we once called the “May/June disaster area.” From 1965 to 1984 the S&P 500 was down during May fifteen out of twenty times. Then from 1985 through 1997 May was the best month, gaining ground every single year (13 straight gains) on the S&P, up 3.3% on average with the DJIA falling once and NASDAQ suffering two losses. 

 

In the years since 1997, May’s performance has been erratic; DJIA up fifteen times in the past twenty-seven years (four of the years had gains exceeding 4%). NASDAQ suffered five May losses in a row from 1998-2001, down –11.9% in 2000, followed by fifteen sizable gains of 2.5% or better and seven losses, the worst of which was 8.3% in 2010 followed by another substantial loss of 7.9% in 2019.

 

 

Post-election Year Mays have historically performed well, registering average gains on DJIA and S&P 500 of 1.3% and 1.6% respectively. DJIA and S&P 500 have advanced in every post-election year May beginning in 1985. Russell 1000 has been up eleven years straight in post-election year Mays. NASDAQ and Russell 2000 have also recorded impressive average gains of 3.0% and 3.6% respectively. 

 

 

Over the last 21 years, the first three days of May have historically traded higher, and the S&P 500 has been up 18 of the last 27 first trading days of May. Bouts of weakness often appear around or on the fourth, sixth/seventh, and twelfth trading days of the month while the last four or five trading days have generally enjoyed respectable gains on average, but the last day of May has weakened noticeably with only NASDAQ fractionally advancing.

 

Post-election year May historical performance is impressive when compared to the recent 21-year trend. Early strength has lasted until around the sixth trading day with average gains exceeding 1%. A brief period of weakness has occurred between the sixth and ninth trading days, but afterwards the trend has been briskly higher through the end of May. The divergence between DJIA/S&P 500 and NASDAQ, Russell 1000 and Russell 2000 that begins just after mid-May, is due to additional years for data. DJIA and S&P 500 were much weaker during post-election years from 1953 to 1981. 

 

Monday before May monthly option expiration has been stronger than monthly expiration day itself. S&P 500 has registered only eleven losses in the last thirty-five years on Monday. Monthly expiration day is a loser nearly across the board except for Russell 2000 with a slight average gain (+0.01%). The full week had a bullish bias that is fading in recent years with DJIA down seven of the last nine and S&P 500 down six of the last eight. The week after options expiration week tends to favor tech and small caps. NASDAQ has advanced in 25 of the last 35 weeks while Russell 2000 has risen in 26 of the last 35 with an average weekly gain of 0.82%.

 

 

 

Yesterday’s big bounce on news of President Trump’s 90-day pause on large reciprocal tariffs for all countries but China has staved off financial crisis at least for now but has done little to alleviate shaken nerves and confidence. At the lows today the market gave back roughly two-thirds of the historic one-day rally and ended up giving back about a third at the close today. We are still in a trade war with China and the 90-day pause doesn’t change that. Less equity exposure appears to be the most prudent course of action until we get more clarity on tariffs, trade wars and economic data.

 

There is a lot to unpack here that we will be covering over the next several issues. With the Best Six Months in the red we will examine the implications of that as well as the continuing bearish post-election year trends we have been tracking. There are also several comparisons to historical market years in the 1930s, 1970s and others that are analogous to 2025 that we will present. 

 

We will continue to dig into fundamentals, technicals, market internals, interest rates, economic readings and sentiment for indications a bear bottom has been reached, and the recovery has begun. For now, the market is suffering from a crisis of confidence. The Worst Six Months begin in May and the Best Six Months were bad. There is a long history of bear markets and recessions in post-election years. 

 

A quick look to pages 174 and 175 of the 2025 Stock Trader’s Almanac detailing the Best and Worst Days of the stock market shows that yesterday was NASDAQ’s second-best day behind January 1, 2001, and a top ten day for the other indexes. But a closer look reveals that these were all bear markets. Only in March 2020 during the early days of Covid was a quick bottom delivered, in fact the shortest bear market on record at just 40 days for Dow and 33 for S&P 500 and NASDAQ (2025 Almanac, pages 133-34).

 

At first blush you might equate this to the Covid decline, but this time around the selloff has been manufactured and there do not appear to be massive fiscal stimulus or Fed rate cuts coming to the rescue. Today we will examine the history of these types of Waterfall Declines. Volatile market action that culminates in deep, fast selloffs as we have experienced over the last couple of months and most acutely over the last several days often result in sharp recoveries.

 

Headline causes of each of these historic waterfall declines are all different and yet investor, trader and money manager behavior remains rather similar. Fear has once again exposed the market’s overvaluation and weaknesses. This time it’s the fear of tariffs, trade wars, recession, financial crisis and global instability. Before this was Covid in 2020 and in 2022 it was the Russia-Ukraine war, rampant inflation and aggressive Fed rate hikes.

 

Like the previous occurrences of waterfall declines in the table below the market reacted to fear and sold off fast and hard. It’s too early to tell if this waterfall decline is over or how fast and far the recovery will be. As we continue to analyze the current situation a thorough review of the history of waterfall declines and their subsequent recoveries should provide some much-needed perspective.

 

Most bear market bottoms since 1950 were preceded by precipitous declines. These plunges, or waterfall declines, ranging from 12-28% and 2-4 months in duration, were responsible for creating the feelings of outright fear, desperation and helplessness that characterize investor sentiment at bear market bottoms. Remarkable however, is the fact that it only took 3-8 months for the rebound from those bottoms to reach the levels where the final declines began.

 

This phenomenon was first documented in December 1974 by our illustrious founder and sage, the late, great Yale Hirsch. In the January 1975 issue of this newsletter’s predecessor dated December 11, 1974, this discovery enabled Yale to accurately forecast a 38.5% rise in the Dow from December 1974 closing low of 577.60 to 800. The headline read “Dow 800 By April 1975” – one of Yale’s many bold, prescient and amazingly accurate forecasts. 

 

Also astounding is how this pattern has recurred at practically every bear market bottom since. For this current study we have gone back a little further than Yale’s original work and examined every bear market since 1950. Two bear bottoms did not qualify (1982 & 1987) as they did not meet our waterfall decline criteria and two were slightly off (1957 & 1984). The waterfall declines in August 2015 and December 2018 were not bear market bottoms. The rest fit the bill to a tee.

 

 

 

It is too early to tell if the bottom is in. Our analysis shows that while a lot of damage has been done, we have not reached the lows yet. While we may be close to the lows in level, it appears that they will be tested over the coming weeks or months. Technical support at S&P 5000 is tenuous at best and below that is the July 2023 highs/January 2024 lows around 4600-4700, then the 2023 lows around 4000-4100. Below there are the pre-covid highs and 2022 lows in the 3400-3500. We blasted through all near-term support so where the market finds support next is anybody’s guess. 

 

We remain concerned about the tariff trade war, economic weakness and increased likelihood of recession. Geopolitics is off the front page right now, but a trade war with China in play brings potential heightened tensions in the Pacific theater on top of continuing hostilities in the Russia-Ukraine war and the Mideast. 

 

This too shall pass. But it’s not likely over yet. If you could put away your phone and turn off the TV for six months, it probably wouldn’t be a horrible idea. The time to buy over the next several weeks and months will present itself. For now, sit tight and keep your powder dry, the bear has reared its head and recession is quite possible.

 

 

The final drop to the 1982 bottom was not as severe as the others and ended the 16-year secular bear market that had ruled the market since 1966. Unemployment peaked at its post-WWII high of 10.8% and the snapback rally reclaimed the level of the final decline in eight days. The 1987 Crash, caused by a technical glitch at the New York Stock Exchange, created a 34.2% freefall in 17 days which took nearly 2 years to reclaim.

 

1957’s nascent decline may have been exacerbated by the passage of the Civil Rights Act of 1957 and the related racial standoff in Arkansas. The rebound here took ten months, somewhat longer than the others. AT&T’s breakup in January 1984 likely awoke the bear. The sideways action from February to the July 1984 bottom made this waterfall decline and rebound the exception. As mentioned above August 2015 and December 2018 were not bear market bottoms. All of the remaining 19 bear-market-bottom final waterfall declines were triggered by an exogenous event or major financial/economic calamity. 

 

 

Cold war machinations spooked the market in 1960 when the USSR shot down a U.S. U-2 spy plane in Soviet territory in May and Castro seized U.S. oil refineries in June-July, which led to Cuban embargo, which largely remains in effect over 60 years later. JFK’s 1962 crackdown on the steel industry in April sent Wall Street reeling. When the U.S. escalated military action in the Vietnam theater in 1966 by firing into Cambodia, bombing Hanoi and pumping up troop levels near half a million, the market blew up as well.

 

More trouble in Vietnam and swelling protests here in the States, culminating in the Kent State and Jackson State shootings, forced a bottom in May 1970. Nixon’s halt on the convertibility of gold and the implementation of wage and price controls tipped the scales in 1971 and helped push the market lower. Nixon’s resignation on August 9, 1974 set off the final plunge of the 1973-74 bear. An increase in Social Security taxes and minimum wage hike in late 1977 helped facilitate the last gasp of the 1976-78 bear.

 

With inflation sky-high in January 1980, President Carter imposed economic sanctions on the USSR in retaliation for the Soviet invasion of Afghanistan. The February 1980 attempt by the Hunt brothers to corner the silver market sent the stock market over the edge and then President Carter forced the U.S. boycott of the Moscow Summer Olympics in April. 

 

 

With the junk bond debacle, the S&L crisis and the breakup of the Soviet Union in full swing, Iraq’s August 1990 invasion of Kuwait knocked the market into a tailspin. Over the backdrop of the Clinton-Lewinsky affair and President Clinton’s impeachment, a global financial crisis in the summer of 1998 forced the Russian ruble to collapse and noted hedge fund Long Term Capital to fail, creating one off the shortest bear markets on record. 

 

With the market on shaky ground in the summer of 2001, the terrorist attacks on September 11 closed the market for four days. When it reopened the following Monday, the Dow suffered its worst weekly loss since 1940. In 2002 corporate malfeasance, trouble in Afghanistan and Iraq War drums had stocks on the ropes. WorldCom failed in July and President Bush addressed the U.N. on the “grave and gathering danger” in Iraq in September.

 

In 2008 the subprime mortgage fiasco had completely morphed into a global financial crisis, the likes of which we have not experienced for decades, and fear of depression loomed. Lehman was allowed to go belly up on September 15 after the government took over Fannie Mae and Freddie Mac and orchestrated the rescue of several large financial institutions and subsequent bailout of others. 

 

Finally, on October 1, the U.S. Senate passed the $700 billion bailout bill. The Dow proceeded to plunge, falling for the first eight trading days of October in a row, suffering its worst weekly loss ever. DJIA initially hit bottom on November 20 at 7552.29 and rallied to close out 2008, but suffered a second waterfall decline before finally reaching bottom on March 9, 2009, at 6547.05.

 

In 2011 the European Union was mired in a sovereign debt crisis while here in the states, Congress was deadlocked and initially unable to come to terms over raising the U.S. debt limit. The U.S. lost its AAA credit rating, consumer and investor confidence fell and DJIA dropped 16.3% in 2.5 months from July to October.

 

In the following table the “Worst Months” performance of DJIA, S&P 500, and NASDAQ have been separated by year of the four-year-presidential-election cycle going back to 1951 for DJIA and S&P 500 and 1971 for NASDAQ. NASDAQ’s “Worst Months” are July through October compared to May to October for DJIA and S&P 500. In 18 post-election year “Worst Months” periods, DJIA has averaged a meager 1.41%. S&P 500 is a modestly better +2.82%, while NASDAQ’s average is +3.57%. Frequency of gains or percentage of time higher in post-election years “Worst Months” ranges from 66.7% by S&P 500 to a solid 72.2%.

 

Despite gains occurring frequently in post-election year “Worst Months,” average performance for either a four- or six-month period is not all that exciting. Potentially of greater concern this year, is past Republican post-election year “Worst Months” (shaded in light gray in table below) as 2025 is continues tracking this historically bearish seasonal pattern. In past Republican post-election years, average performance is negative across the board, DJIA –2.83%, S&P 500 –2.13%, and NASDAQ –2.61%.

 

 

The worst of the tariff induced selloff may or may not be over yet. Economic growth is slowing, odds of a recession have risen abruptly, the U.S. is in a trade war with China, and this week’s tariff pause does not seem like a guarantee. Our research and history do suggest current market volatility is likely to recede, but it could be several months or longer before this happens. 

 

 

In accordance with last Thursday’s Seasonal MACD Sell signal email Issue, SPDR DJIA (DIA) and SPDR S&P 500 (SPY) have been closed out of the portfolio using their respective average prices from April 4. DIA was sold at a 9.2% loss and S&P 500 had a 11.6% decline, excluding dividends and any trading costs. Despite a relatively early MACD Sell signal, the market did not offer any meaningful respite from tariff induced heavy selling until yesterday, April 9.  

 

NASDAQ’s Seasonal MACD Sell signal has not triggered but associated positions in Invescos QQQ (QQQ) and iShares Russell 2000 (IWM) were stopped out on April 4 when they both closed below their respective stop losses. We had placed stop losses on these positions in the event the market did continue to break down, which it did initially. Today’s giveback of Wednesday’s sizable gains does suggest the closure of QQQ and IWM could still end up being a prudent action as market volatility and risk is still elevated despite the worst of tariffs being paused for 90 days, maybe. 

 

New positions in TLT, AGG, BND, SHV, and SGOV have been added to the portfolio as detailed in Thursday’s Seasonal MACD Sell issue. SHV and SGOV can be considered at current levels. TLT, AGG, and BND have exposure to long-dated Treasury bonds that have historically exhibited more price volatility than short-dated funds such as SHV and SGOV. The recent spike in long-dated Treasury bond yields was apparently a factor in the partial pausing of tariffs and warrants some additional caution. SHV and SGOV are currently our preferred bond ETFs due to their relatively stable prices and short duration bond holdings.

 

As a reminder, traders/investors following the Best 6 + 4-Year Cycle switching strategy detailed on page 64 of the Stock Trader’s Almanac 2025 should heed this year’s Seasonal MACD Sell signal for DJIA and S&P 500. 2025 is playing out like past weak Republican post-election years detailed on page 28 of the 2025 Almanac.

 

 

 

In accordance with Thursday’s Seasonal MACD Sell signal email Issue, iShares DJ Transports (IYT), SPDR Financials (XLF), SPDR Health Care (XLV), SPDR Industrials (XLI), Vanguard REIT (VNQ) and SPDR Materials (XLB) have been closed out of the portfolio using their average prices on April 4. The average loss across these positions was 10.2% excluding dividends and trading costs. This is a disappointing result, but decades of experience have proven it is best to stick to our strategy, especially during periods of high risk and elevated uncertainty when losses can explode suddenly.

 

Positions in Global X Copper Miners (COPX), SPDR Energy (XLE) and First Trust Natural Gas (FCG) were also closed out using their respective average prices on April 4. With odds of recession surging, these positions have been especially hard hit. As of today’s close, XLE and FCG are below our exit prices, while COPX, likely aided by gold’s rebound, is only modestly higher.

 

SPDR Technology (XLK) was stopped out on April 3 and was closed out of the portfolio using its average price on April 4.

 

SPDR Consumer Staples (XLP) and SPDR Utilities (XLU) are on Hold. XLU was added to the portfolio on April 4 when it dipped below its buy limit of $74.75. Before considering additional purchases, we would like to see the Treasury bond market calm down. If interest rates continue to move higher, XLP and XLU could come under pressure again.

 

 

 

Over the past four weeks, through the close on April 9, the Almanac Investor Stock Portfolio retreated 2.0% compared to a 2.5% decline by S&P 500 and a 5.6% loss by Russell 2000. In total, eight stock positions have been recently stopped out, seven since the start of April. Three were stopped out in the Small Cap section, four Mid-Caps and just a single Large Cap position. Five of the eight were stopped out with an average gain of 52.5%, however, the average loss for the declining positions was 24.0%. As of today’s close, the majority of the stopped-out positions are below their respective stops.

 

Prior to the market’s recent waterfall decline, the cash balance in the portfolio had been slowly expanding as the weakest positions began getting closed out in January and again in late February/early March. This rising cash balance did mitigate some damage and is likely to continue to do so as the market searches for clarity. With the “Worst Months” for DJIA and S&P 500 arriving early and market volatility spiking, new buying is likely to remain limited.

 

All remaining positions in the portfolio are on Hold. What remains has thus far proven to be somewhat resilient. 

 

 

 

On days like today it is important to remember to stay calm and not react emotionally. We will rebound from this as we have every time in the past. But it is time to honor our stops and strategies to preserve capital and wait for the proverbial fatter pitch. So, we are selling some positions that have hit our stops and the seasonal trades affected by our Best Six Months MACD Seasonal Sell Signal that triggered today. Please refer to the details in the accompanying article and updated portfolio tables.

 

The market’s response to Trump’s tariffs has been swift and damaging, increasing the odds of our 2025 Annual Forecast Worst Case Scenario up to 50% from 10%. Any remaining optimism has been quashed in the past 24 hours. The announced tariffs appear to be even worse than the worst case. They were neither limited nor focused, and instead broad ranging with over 180 countries being hit at significantly higher levels than expected. 

 

Many countries have vowed to retaliate and there is pushback from many fronts. Yet the Trump administration appears to have already dug their heels in on these tariffs on one hand and on the other they say they are open to negotiations if other countries offer something phenomenal. This back and forth creates more confusion and uncertainty exacerbating trade war, stagflation, recession and bear market fears.

 

As we wrote in last week’s April Outlook and reiterated in yesterday’s Monthly Members’ Webinar, there is no way to sugar coat this. The market is telling us there is more trouble ahead: Down Q1, tracking bearish post-election patterns and breaking through several technical support levels. Today’s nosedive is likely not the end of this downtrend. Further downside is expected. 

 

Today we broke through another technical support level at 5500 on the S&P 500 and canceled the W-1-2-3 swing bottom set up in the box on the chart. We have also broken the uptrend line from the April and August 2024 lows. We are now sitting at the 5390-support level near the September 2024 low. A break below S&P 5390 and 16200 on NASDAQ brings the August and April lows into play.

 

 

 

We have updated the One-Year Post-Election Seasonal Pattern chart through today’s close. We have removed a few lines and left only the worst-case scenario trends for clarity. Once again 2025 is shaping up more like the old school weak republican president post-election year performance noted on page 28, Stock Trader’s Almanac 2025. Overall, the market is firmly in correction mode although the Russell 2000 hit bear market levels today.

 

 

Remember the late Edson Gould’s wise words we have invoked several times recently: “If the market does not rally, as it should during bullish seasonal periods, it is a sign that other forces are stronger and that when the seasonal period ends those forces will really have their say.”

 

Retaliation is likely which will only compound the stresses on the market resulting in more chop, volatility and likely further losses. As of today’s close, our Worst-Case Scenario odds are around 50% and Base Case is 50%. Someone could blink and the tariff unwind could unfold quickly, but that may just be wishful thinking. Conditions still could change quickly. If for some reason the market can get positive for the year in the next few weeks we could change our view. 

 

But for now, we are moving to sidelines and will await the next major buying opportunity. One way or another, the market will move past tariffs and begin looking for a recovery. The next opportunity could be later this year, possibly in late Q3 or early Q4.

 

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.

 

 

 

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 4. 

 

Per the Seasonal Switching Strategy, continue to HOLD Invesco QQQ (QQQ) and iShares Russell 2000 (IWM) as NASDAQ’s “Best Eight Months” ends in June. In the event the market doesn’t find some support and stage at least a modest rally in the near term, we have added suggested stop losses to IWM and QQQ in the portfolio table below.  

 

For this “Worst Months” period we are once again 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 position in iShares Short Treasury Bond (SHV) with a Buy Limit of $110.20. Contrary to its name, SHV is NOT a short bond fund, instead it holds short-duration Treasury bonds that mature in less than one year. You can view all relevant information at https://www.ishares.com. 

 

Consider establishing a position in iShares 0-3 Month Treasury Bond (SGOV) with a Buy Limit of $100.50.

 

Although we would consider SHV and SGOV to be low-risk/low-reward options given their relatively stable prices, they currently have respectable yields. Even if the Fed does cut interest rates, the short-duration nature of their respective holdings is likely to keep their prices relatively stable as their yields adjust.

 

Consider establishing a position in Vanguard Total Bond Market (BND) with a Buy Limit of $74.25. 

 

Consider establishing a position in iShares Core US Aggregate Bond (AGG) with a Buy Limit of $99.75.

 

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 but because of their broad bond market exposure their price moves tend to be more subdued than purely long-dated Treasury bond yields. Should the U.S. slip into recession and should Treasury yields decline, BND and AGG could see moderate price appreciation.

 

Consider establishing a position in iShares 20+ Year Treasury Bond (TLT) with a Buy Limit of $92.50. 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/or the Fed delays lowering rates, TLT could retreat. TLT is likely best for aggressive traders with a higher risk tolerance.

 

Buy limits for SHV, SGOV, BND, AGG, and TLT are currently above market prices and represent our suggested maximum price to pay. For tracking purposes, all five positions will be added to the Tactical Seasonal Switching Strategy portfolio using their respective average prices on April 4. 

 

Lastly, consider a position in cash and/or a money market fund. Options yielding around 4% are available. An allocation to cash or a money market fund will likely be the least nerve-racking position should market volatility remain elevated 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 2025 should heed this Seasonal Sell signal and consider moving into suggested bond ETFs above or similar cash and cash equivalents.

 

 

 

Sell iShares DJ Transports (IYT), SPDR Financials (XLF), SPDR Health Care (XLV), SPDR Industrials (XLI), Vanguard REIT (VNQ) and SPDR Materials (XLB) as correlating seasonalities end soon. For tracking purposes IYT, XLF, XLV, XLI, VNQ and XLB will be closed out of the portfolio using their respective average prices on April 4.

 

Sell Global X Copper Miners (COPX), SPDR Energy (XLE) and First Trust Natural Gas (FCG). Today’s worse than major index performance by these ETFs suggests the odds for slower growth and recession have increased. COPX, XLE, and FCG will also be closed out on April 4 using their respective average prices.

 

As of today’s close, SPDR Technology (XLK) has been stopped out. Sell XLK.

 

Continue to Hold SPDR Consumer Staples (XLP). Historically, consumer staples have been a defensive sector during periods of uncertainty and market retreats. XLP’s advance today suggests this remains valid even now.

 

SPDR Utilities (XLU) can still be considered on dips. XLU also has a respectable history of being a defensive sector.

 

 

Today’s Seasonal MACD Sell Signal for DJIA and S&P 500 marks the early beginning of the “Worst Six Months.” Between now and when NASDAQ’s Seasonal MACD Sell Signal triggers (earliest it can trigger is on June 2 this year), the portfolios will likely be shifted toward a defensive stance.

 

Remaining stock and ETF holdings will be continuously reevaluated in upcoming email Issues. Additional weak and/or underperforming positions may be closed out, stop losses may be raised, and new buying may be limited. We will also evaluate the addition and timing of new positions in sectors that have historically performed well in the Worst Six Months and during periods of elevated market uncertainty.