The Stock Trader's Almanac

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Almanac Investor Alert

DOW MACD Sell Triggers 4/21/2009
2008-2009 Best Six Months+MACD Timing Changes

MACD Today's Buy Date Close Close
DOW 10/20/2008 9265.43 7969.56 -1295.87 -13.99%
S&P500 10/20/2008 985.40 850.08 -135.32 -13.73%
NASDAQ 10/17/2008 1711.29 1643.85 -67.44 -3.94%

Despite a decent rebound today the Dow Best Six Months MACD SELL Signal triggered on today’s close. However, the S&P 500 Best Six Months MACD Sell signal has not triggered. A modest rally of 7.72 S&P points tomorrow will continue to keep the S&P’s MACD Sell Signal from triggering. It will take a more substantial rally in the Dow of 190.80 points tomorrow for the Dow’s MACD Sell Signal to turn positive.

Though this is the “Official” MACD Seasonal SELL Signal for the Dow, prudence is the best course of action. We’ll sit tight for the next day or so and if something dramatically changes tomorrow we’ll issue another alert. Otherwise we’ll update you again in the regular Thursday Weekly Email Alert. At this time, begin planning and consider using any strength to sell Dow or S&P 500 positions in your seasonal switching portfolio and lightening up on other long positions on rallies.

Our Almanac Investor Portfolios on page 11 of the newsletter and the last page of the ETF Lab have been out of these seasonal switching positions since late February. We remain mostly in defensive issues and those poised to benefit from government stimulus, infrastructure building and alternative energy.

We expect a selloff from the recent rally that drove the Dow up 24.2%, the S&P 500 up 28.5% and NASDAQ up 31.9% in just six short weeks. A test of the March lows is likely. Last year we were rightfully concerned after the first negative Dow Best Six Months with MACD timing since 1983. This year’s even worse performance makes this the first back-to-back loss since 1950. We do not deem this a positive sign.

Although this year’s Dow Best Six Months with MACD timing was abysmal, this is only the 9th loss in its 59-year record ­ and the second since 1983. We would be hard pressed to find another long-term, simple investment strategy that can best these results.

The NASDAQ remains in its “Best Eight Months” which runs through June and we will begin looking for a MACD Sell for the NASDAQ at the beginning of June.

STANDARD TRADING GUIDELINES!
BUY LIMITS ARE GOOD TILL CANCELLED.
ALL STOPS EFFECTIVE ONLY WHEN THE STOCK CLOSES BELOW THE STOP PRICE.
ALWAYS SELL HALF ON A DOUBLE.


Please Trade Carefully.
Jeffrey A. Hirsch, Editor
J. Taylor Brown, Director of Research


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Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this Email issue. The information presented in this Almanac Investor has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of the editor, its employees, or affiliated companies may, in some instances, include securities mentioned in this Almanac Investor Alert. Additional disclosures can be found at www.stocktradersalmanac.com.