Recent weakness following the Ides of March arrived on cue
with historical seasonal trends as you can see in the chart above of the
“S&P 500 One-Year Seasonal Pattern Since 1949.” Weakness the week after
Triple Witching and at the end of March is rather typical as we have discussed on
this blog and as is detailed in the Stock
Trader’s Almanac 2021. The last several days of March often succumb to
end-of-Q1 selling pressures. Late-March weakness has frequently been recovered
early in April. The first couple of trading days of April have delivered
The last month of our “Best Six Months” is now upon us. So
it’s the perfect time to provide a refresher for longtime readers and primer
for those that have recently joined us. We do not simply “Sell in May and go
away.” We employ a more nuanced and subtle approach to how we implement our
Best & Worst Months Switching Strategies. We are not issuing the
signal at this time.
As we prepare for our upcoming Best Six Months Seasonal MACD
Sell Signal that can occur any time on or after April 1 there are several
factors and aspects of the strategy we’d like to be sure you’re up to speed on.
DJIA’s and S&P 500’s “Worst Six Months” are May through October. NASDAQ’s
“Worst Four Months” are June through October. We begin tracking DJIA and
S&P 500 for our “Best Six Months” MACD Seasonal Sell Signal on or after
April 1. We begin tracking NASDAQ for its “Best Eight Months” MACD Sell Signal
on or after June 1.
We will issue our Seasonal MACD Sell Signal when
corresponding MACD Sell indicators applied to DJIA and S&P 500 both
crossover and issue a new sell signal on or after April 1. We will not be
issuing our NASDAQ Best Eight Months MACD Sell Signal until on or after June 1.
Historical dates for the “Sell Signal” can be seen in the tables under the “Our Strategy” tab
on the website.
When we issue our DJIA and S&P 500 Seasonal Sell Signal Almanac
Investor eNewsletter subscriberswill
receive an email Alert after the close that day. At that time we will either
sell associated positions outright or implement tight trailing stop losses.
Additional bearish/defensive positions in: iShares
7-10 Year Treasury (IEF), iShares
20+ Year Treasury (TLT), iShares
Core US Aggregate Bond (AGG), Vanguard
Total Bond Market (BND), ProShares
Short Dow 30 (DOG), ProShares Short
S&P 500 (SH) and/or other protective strategies may also be considered.
All current stock and ETF holdings will be reevaluated at
that time. Weak or underperforming positions can be closed out, stop losses can
be raised, new buying can be limited and we will evaluate the timing of adding
positions in sectors that perform well in the Worst Six Months and presenting subscribers
with a new basket of defensive stocks.
Now that those end-of-Q1 pressures have been
alleviated we expect April to deliver its usual upside performance. In fact, recent
weakness sets up well for an April rally. An April rally would in turn set up a
solid Best Six
Months MACD Seasonal Sell Signal. With only 7 S&P 500 losses in the
last 31 years, April has been a consistent performer. April is the first month
of the second quarter and welcomes in the new earnings season, which promises
to help buoy stock prices as year-over-year comparisons should be improved over
last year’s Covid-impacted numbers.