Michael Bowman First Trust NASDAQ Global Auto Index Fund CARZ-Q BUY Feb 07, 2014

It makes sense to look at a basket of auto companies. The trouble with this ETF is that it is Cap rated. He likes this. A lot less risky to buy an ETF then to buy an individual car company.

Holds about 38 different global auto companies. You simply buy this ETF when people are buying cars, in the springtime. Currently, the chart shows that this is moving sideways, so it is not there yet. This has been delayed because of weather. He is expecting this is going to change within the next 2-3 weeks. When there is a breakout above the $40.60 level, it will be off to the races. Seasonality for the sector is very strong and runs from around now, right through until around April, and on average, the index goes up about 9% for a 2 month period.

Auto sector has done extremely well. Sales in 2013 were hitting all-time highs. Still a little concerned about that. This ETF will have over 50% of it in Germany and Japan and probably 26% will be composed of Daimler, Honda and Toyota. Because there had been such great car sales, the average car on the road now is 11 years. Much prefers car part manufacturers, but unfortunately there are no ETFs for this area. If the global economic recovery continues, car stocks will go higher, but he thinks we need to be a bit more cautious here.

(Top Pick Mar 13/14, Up 0.29%) Didn’t do much this year. Sell it.

From February into April has been a good time to be moving into the auto sector, because that is when most cars are sold. Chart shows a little bit of a bottom at around $30, but this could potentially move back up to $38 over the next few months. This has been a strong seasonal trade at about 8.5% average, 76% of the time.

(Top Pick Feb 29/16, Up 3.75%) Automakers and parts. We have peak auto sales and record results. But the stocks have not been outperforming, so that is a sign you should exit the position.