Seasonal MACD & Tactical Switching Strategy Portfolio Updates
By: Jeffrey A. Hirsch & Christopher Mistal
October 09, 2023
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.
[DJIA Daily Bar Chart]
[S&P 500 Daily Bar Chart]
[NASDAQ Daily Bar Chart]
Throughout the “Worst Months,” we have maintained a cautious/defensive outlook and approach. New long trade ideas were substantially limited while short-term bond ETFs and cash were the preferred holdings. Our seasonal-based research throughout the year indicated Q3 weakness followed by a market turn sometime in late-Q3 or early Q4. This rebound appears to be getting underway despite the apparent increase in uncertainty.
War and conflict in the Mideast are, sadly, all too familiar and Hamas’ invasion of Israel over the weekend only adds uncertainty to an already murky geopolitical outlook. The immediate market impacts have been a rebound in crude, renewed interest in gold and silver, and based upon bond ETF trading today, a modest flight to safety and a corresponding retreat in longer-term bond yields. However, the increased uncertainty also appears to be reducing the odds that the Fed will hike interest rates even further later this year. 
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 Q3 pullback has likely run its course. 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 in the ETF portfolios.
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 Tuesday, October 10. This price will be calculated by summing the high and low prices and dividing by two.
Continue to hold “Worst Months” partial 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 Issue.
Sell iShares Short Treasury Bond (SHV) and iShares 0-3 Month Treasury Bond (SGOV). For tracking purposes, they will also be closed out of the portfolio on Tuesday October 10 using their respective average daily prices.
Sector Rotation ETF Portfolio
In the Sector Rotation ETF Portfolio, if not already covered, cover short positions in IYT, XLI, and SOXX. Per last Thursday’s update, these three short positions were closed out, covered, on Friday.
Buy new long positions in XBI, XLV, IYW, IYT, IYZ, SOXX, XLY, XLP, XLF, XLI, XLB, XLK, VNQ, and IBB. Use a new 1% Buy Limit based upon today’s closing price for these positions as detailed above. For tracking purposes, these ETFs will be added to the portfolio using their respective average prices also on October 10.