Latest Stock Buy or Sell? Make More Informed Decisions!

Markets. We have had a scare, with BREXIT having a big washout, followed by a huge snap back. That snap back occurred during the seasonal Summer rally period, from the end of June through to the earnings season. From a seasonal perspective, everything is working out quite well this year. We are now entering into the most volatile time of year for stocks. Over the next 2 months, September in particular, equity markets tend to be particularly weak. In September alone, the S&P 500 averages a decline of about .6%, and has only been positive 44% of the time. The TSX has only been positive 40% of the time, with a loss of 1.9%. It’s those declines that can really washout portfolio returns. We could see a volatility washout because volatility is exceptionally low right now and everybody is very complacent. The VIX has been hovering below 12, well below average for this time of year. The average is 20. With complacency reigning, it is probably not best to be overly aggressive in the market at this time. For investors that are wanting to hedge their portfolios, he would suggest doing it through Puts.

Seasonally, water stocks tend to do well in the summer. This one has had a phenomenal run for the last year, all the way from $50 to about $84 recently, and is now starting to pull back. It had become overbought. Investors are taking profits, and rotating into other areas. He would stay away.

Gold miners have a seasonal run between the end of July, all the way to the beginning of October. A better way to play this is through the ETF GDX-N, which is a broad basket of all of them. Eldorado is not performing as well as the broad group of miners. The chart shows a bit of underperformance against the market, and momentum has actually been diverging from price. Chart shows a double top. If we get a break below $5.16, the double top would suggest another $1.50 below that.

This has had a parabolic move, and he is always hesitant about getting into a parabolic move. You want to be getting into these when they are closer to support of their 20 or 50 day moving averages. This had its 20 day closer to the end of July, which would have been the ideal point. Seasonality is still positive and the chart is still positive. Technically the stock gapped higher today, and that the gap will act as a level of support.

This doesn’t have a seasonal chart, but technically it had a parabolic move up at the beginning of 2015, followed by a parabolic move lower. Now it has started to break higher again. Whether this is on news or otherwise, it has found some support. Momentum indicators are moving higher. Everything seems to be positive and then technicals are looking well.

Transportation stocks, airlines in particular, tend to do well September all the way through to the holiday season, about the November timeframe. They generally peak at the US Thanksgiving. We are currently in a period of seasonal weakness, and this one is showing that quite prominently right now. Chart shows a decline starting in April. If it can hold the $6.40 level, that would be an ideal point to enter for the seasonal play. If we break that, there is a bit of a descending triangle that suggest we could see a $.75 drop below the $6.40 level. You should have your stop level at that point, because losses could be substantial.

Natural gas? This has been interesting. Last week we saw the first draw down in natural gas inventories during the summer in the last 10 years. With consumption higher than average and production lower than average, it has drawn upon inventory levels. The chart on UNG-N shows a double top has formed, and the stock fell below its support level today, so there could be a bit of downside pressure. September all the way through to December is the period of seasonal strength for natural gas. Usually the peak is in Oct/Nov. September is an ideal time to pick this up.

(A Top Pick June 3/16. Up 5.23%.) Consumer staples tend to do well in the summer. Chart shows a strong upward trend from last September. The period of seasonal strength for this runs from June 20 to Nov 12^th, and tends to gain about 8.9% on average. It has been positive in the last 14 out of 20 periods.

(A Top Pick June 3/16. Up 1.36%.) When looking for yield in the summer, you want to shy away from the cyclical sector, and go towards these defensive assets. Fixed income products tend to do well. From May through to September/October, bonds tend to do well.

(A Top Pick June 3/16. Up 3.9%.) A basket of dividend stocks with covered calls being written against it. The thesis at the time was that we were in a range bound market, and you might as well click some yield.

Canadian REITs generally tend to do well in the spring and summer. It is now starting to break down. Chart shows a strong upward trend line which was just violated today. Investors are shying away from these defensive names, which have had substantial run ups from their low. Seasonality has worked out well, but it is now reaching that Sell signal. We are a month away from the seasonal peak, but you want to stay away from this for now.

Technology tends to do well from October all the way through to January. This company’s chart shows a declining trend from April, and there are no signs of it bottoming as of yet. There was a large washout recently, coming into August, and it is now starting to inch higher. It is not really recouping those losses and is holding below its 20, 50 and 200 day moving averages. When you have a stock below its 200 day moving average, that is generally a warning sign. It means it is really unloved and long-term holders are cautious about it. There is support at around $29.

Industrial oriented companies tend to do well from October all the way through to May. Chart shows a long channel of range bound trading, and this is just kind of bumping up against the 200 day moving average. Momentum indicators are trending lower, and are showing signs of a negative divergence. He wouldn’t be interested in this until it defines its direction.

Healthcare tends to do well in the summer, from about August all the right through to November. The chart has a nice double bottom at around $2.75, which implies that we could see a substantial move higher. If it can break above resistance at $6, you calculate the difference between the high ($6) and the low ($2.75), and that magnitude would be expected on the upside, but only if we break above resistance.

Transportation stocks tend to do well from about September all the way through to November, with an average gain of about 12%. October alone has tended to gain an average of 5.4%, and has been positive 80% of the time. Chart shows this broke above resistance, which goes back quite a way, and it is just trying to consolidate here. Momentum indicators are turning positive also. It looks good.